CYNNY S.P.A. Head office, address FIRENZE - VIA DELLE ... · PDF fileNotes to the Financial...

ASSETS 31/12/2014 31/12/2013

A) AMOUNTS DUE FROM STOCKHOLDERS

Total amounts due from stockholders (A) 0 0

B) FIXED ASSETS

I - Intangible fixed assets

Gross value 1.503.932 837.383

Total intangible fixed assets (I) 1.503.932 837.383

II - Tangible fixed assets

Gross value 253.589 8.080

Total tangible fixed assets (II) 253.589 8.080

III - Financial fixed assets

Investments in:

Subsidiaries 130.622 22.036

Total subsidiaries 130.622 22.036

Other financial assets 73

Total financial fixed assets (III) 130.622 22.109

Total fixed assets (B) 1.888.143 867.572

C) CURRENT ASSETS

I - Inventories

Total inventories (I) 0 0

II) Receivables

Within 12 months 100.587 4.908

Total receivables (II) 100.587 4.908

III) Financial assets not amou. to fixed assets

Total finan. assets not amou.to fixed assets (III) 0

IV - Liquid funds

Total liquid funds (IV) 1.072.515 462.218

Total current assets (C) 1.173.102 467.126

D) ACCRUED INCOME AND PREPAID EXPENSES 503

Total accrued income and prepaid expenses (D) 503 0

TOTAL ASSETS 3.061.748 1.334.698

LIABILITIES 31/12/2014 31/12/2013

A) STOCKHOLDERS’ EQUITY

I - Capital stock 126.210 10.000

II - Additional paid-in capital 2.383.060 0

III - Revaluation reserves 0

IV - Legal reserve 0

V - Statutory reserves 0

VI - Reserve for own shares in portfolio 0

VII) Other reserves, distinctly indicated 0

Payment on share capital 2.509.270 10.000

Rounding difference to Euro -0,5 -1

Total other reserves (VII) -1 586.844

VIII - Profits (losses) brought forward -38.118 0

IX) Net profits (loss) for the year

Net profits (loss) for the year -1.070.103 -38.118

Retained earnings -38.118

Total stockholders’ equity (A) 1.401.048 558.726

B) RESERVE FOR RISKS AND CHARGES

Total reserve for risks and charges (B) 0 0

C) RESERVE FOR EMPLOYEE TERMINATION

INDEMNITIES16.628 4.950

D) PAYABLES

2) Convertible Bond 99.990

3) Shareholders financing 91.118

4) Long-term financial borrowings 1.371.427 0

7) Trade payables 74.787 651.378

14) Other current liabilities 76.597 28.526

Total payables (D) 1.622.801 771.022

E) ACCRUED EXPENSES AND DEFERRED INCOME 21.271

Total accrued expenses and deferred income (E) 21.271 0

TOTAL LIABILITIES 3.061.748 1.334.698

CYNNY S.P.A. Head office, address FIRENZE - VIA DELLE MANTELLATE , 8

Capital Stock paid Euro 126.210,00 full paid

Registered to the Chamber of Commerce of FIRENZE

The identification N. - N. of enterprises registry 06340560488

Financial Statements

BALANCE SHEET

Value-added tax identification number: 06340560488

No. Of the economic administrative registry (Rea): 620291

31/12/2014 31/12/2013

A) VALUE OF PRODUCTION

4) internally generated Fixed assets 278.239 136.502

5) Other profits and revenues

Other 138.724

Total other income (5) 138.724

Total value of production (A) 416.963 136.502

B) PRODUCTION COSTS

6) Raw, ancillary and consum.mater.&goo.for res. 9.245 1.828

7) Services received 502.179 27.556

8) Cost of rents 31.205

9) Payroll costs:

a) Wages and salaries 407.421 108.091

b) Social charges 112.532 20.604

c), d), e) Reser.for empl.term.Ind.,pens.&pay.cos. 26.335 7.326

c) Reserve for employee termination indemnities

Total payroll costs (9) 546.288 136.021

10) Depreciation, amortisation and writedowns: 30.566 0

a) amortisation 374

b) depreciation 30.192

c) writedowns

14) Other operating expenses 4.700 7.371

Total production costs (B) 1.124.183 172.776

Differen. betw.value and costs of prod.(A-B) -707.220 -36.274

C) FINANCIAL INCOME AND EXPENSES

16) Other financial income:

d) Other income:

Other financial income 7.465 2

Total other income (d) 7.465 2

Total other financial income (16) 7.465 2

17) Interest and other financial charges:

Other interest and financial charges 23.868 23

Total interest and other financial charges (17) 23.868 23

Total finan. income & expen.(C) (15+16-17+-17-bis) -16.403 -21

D) ADJUSTMENTS TO FINANCIAL ASSETS -239.489

Total adjustments (D) (18-19) -239.489 0

E) EXTRAORDINARY INCOME AND EXPENSES

21) Expenses

Other -1.300

Total extraordinary expenses (21) -106.991 -1.300

Total extraord. income and expenses (E) (20-21) -106.991 -1.300

Results before taxation (A-B+-C+-D+-E) -1.070.103 -37.595

22) Current income taxes, deferred and prepaid

Current income taxes 523

Total income taxes for the year (22) 0 523

23) NET PROFITS (LOSS) FOR THE YEAR -1.070.103 -38.118

PROFIT & LOSS STATEMENT

Notes to the Financial Statements CYNNY S.P.A.

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CYNNY S.P.A.

Head office, address FIRENZE - VIA DELLE MANTELLATE , 8

Capital Stock paid Euro 126.210,00 full paid

Registered to the Chamber of Commerce of FIRENZE

The identification N. - N. of enterprises registry 06340560488

Value-added tax identification number: 06340560488

No. Of the economic administrative registry (Rea): 620291

Notes to the Financial Statements 2014

The following is a courtesy English translation of the “Nota Integrativa al bilancio chiuso al 31/12/2014” of Cynny S.p.A. The terms of the official Italian version shall prevail in the event of any conflict with this English translation.

Introduction

The Financial Statements for the year ended December 31, 2014, in which the notes to the Financial

Statements form an integral part pursuant to and in accordance with article 2423, Civil Code subsection

1, and corresponds to the accounting records regulary held in accordance with Civil Code articles 2423,

2423 bis, 2423 ter, 2424, 2424 bis, 2425, 2425 bis, and the preparation principles in compliance with the

provisions of article 2423 bis, first paragraph of the Civil Code, and the evaluation criteria in Civil Code

article 2426.

This year’s Financial Statements was written in abbreviated form in conformity with the provisions of

article 2425 bis of the Civil Code per the use assumptions in subsection 1 of that article. Consequently,

the account notes omit what is indicated by number 10 of article 2426 and numbers 2, 3, 7, 9, 10, 12, 13,

14, 15, 16 and 17 of article 2427 as well as number 1, subsection 1 in article 2427 bis of Civile Code. In

addition, the present notes to the Financial Statements report information requested in numbers 3 and 4

of article 2428 c.c. and therefore the operations report in article 2435 bis, subsection 7 of the Civil Code

has not been drawn up.

The evaluation principles in Civil Code article 2426 are consistent with those used in the preparation of


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last year’s financial statements, and no exceptional cases have been found that would make exemptions

necessary to article 2423 bis, subsection two and 2423, subsection four of Civil Code.

Where applicable we have ve observed the principles and reccomendations of the Italian Accounting

Organism (Organismo Italiano di Contabilita’ – OIC) and, in the absence thereof, integrated with those

of the IAS/IFRS issued by the IASB in order to provide a true and fair view of the economic and

financial position. There are no elements of assets and liabilities that fall under multiple items in the

Financial Statements. After comparing the account balances pursuant to art 2423 ter, subsection 5 of

Civil Code, it was necessary to reclassify last year’s account balances.

In May of 2010 the OIC updated the national accounting principles according to developments in

accounting that had taken place since the OIC’s last revision of its principles. The final document was

published on August 5, 2014, setting forth new and approved accounting principles and standards at the

national level.

The challenging task of revisiting and updating the national accounting standards laid out in the OIC’s

most recent document was influenced also by the evolution of accounting protocols and developments at

the international level.

The OIC aim was to improve the principle structure of the nation’s accounting practices and make it

“easier to read” and facilitate future updates and improvements. To this end, the national accounting

standards have been revised according to a uniform approach characterized by distinctions among

scope, key definitions, classifications, initial recognition, evaluation and subsequent recognition, and

information contained in the notes to the Financial Statements.

The new doctrine took effect for all financial statements closed from December 31, 2014. The financial

statements herein have been prepared according to these modifications.

The application of the new accounting standards was carried out in accordance with the provisions of

the OIC 29 accounting standards that address changes to policy.

More information on the company’s financial situation has been provided in the Cash Flow Statement

notes, which show the causes of fluctuations, positive or negative, in the availability of cash throughout

the year. The Cash Flow Statement, prepared in comparative form, and the company, despite its


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controlling stakes in other companies, do not prepare consolidated financial statements using the waiver

provisions of article 27, paragraphs 1 and 2, because the quantitative limits in those provisions have

been exceeded for two consecutive years.

Company Activity

The company was incorporated on March 8, 2013, registered with the special section of innovative

start-ups since October 9, 2013.

The company’s main activity concentrates on the development of hardware-software solutions, capable

of massive web storage and publishing. The company objective is to attract a large part of the market

involved in creating and sharing multimedia content online through the design and creation of its

high-tech web and mobile applications.

Significant events during the year

In order to strengthen its prudent approach to financial reporting, the company decided not to capitalize

its advertising and marketing costs, in spite of the fact that doing so falls within national accounting

practices.

Consequently, the financial year-end report of December 31, 2014 shows a loss of €1.1 million (largely

due incurred sales and marketing costs), stockholders’ equity totaling €1.4 million with a negative net

financial position of €400,000 and the recording of €1.5 million in intangible assets related to the R&D.

In reference to the financial situation, the company finalized two capital increases in 2014, which

resulted in a total collection of € 2.488 million and an estimated additional €100,000 collected through

the issue of convertible bonds with the option of issuer to ask the redemption through company shares. In

particular, the capital increase approved by the shareholders on March 20, 2014 (from €10,740 to

€120,000) and the capital increase approved on April 7, 2014 (from €120,000 to €126,120) with

additional paid in capital of €1.223 million were fully subscribed.

On December 5, 2014, the shareholders approved a new capital increase of € 2.2 million to finance:


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(i) the commercial development of the company internationally in the coming months and,

(ii) the realization of increasing investments in R&D aimed at developing the proprietary

technology platform and product.

As of December 31, 2014, the company has two Italian bank loan agreements in place:

1) Medium-term financing with Cassa di Risparmio di San Miniato for €369,000 to finance

current expenditures over investment materials. The loan is repayable in semi-annual

installments starting from December 31, 2014 (first installment on the interest only) and

expiring on December 31, 2019. The loan is guaranteed by Artigiancredito Toscano for

€295.000.

2) Medium-term financing with Cassa di Risparmio di Firenze for €1 million to finance current

expenditures, guaranteed for up to 60% by Fiditoscana (with counter from Medio Credito

Centrale). The loan is repayable in quarterly installments starting from January 29, 2016 with a

maturity of October 29, 2019.

Also in 2014, the management team identified and perfected its applications for participation in

European regional calls specifically geared to small and medium-sized enterprises with innovative ideas

characterized by high levels of research and development. These calls support a company’s transition

from idea to realization, and international marketing efforts.

Significant events after the reporting period

In January 2015, the Board of Directors partially resolved the €2.2 million capital increase made on

December 5, 2014 by issuing a 1st round capital increase totaling €400,113.

The increase was made to finance

(I) the commercial development of the company internationally in the coming months and,

(II) the realization of increasing investments in R & D aimed at developing constant proprietary

technology platform and product.


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In February 2015, the company entered into medium-term financing with Cassa di Risparmio di San

Miniato, which granted the company €600,000 on February 4, 2015 for its current expenditures

(guaranteed by Artigiancredito Toscano for 60%), maturing on June 30, 2020.

In reference to applications for funds from the European Commission and the Region of Tuscany, who

have called on high-tech companies:

1) Project HORIZON 2020 - EMS INSTRUMENT: Despite not admitted to the first phase of

the call, whose finalists were announced March 2015, the company is considering participating

in the "phase 2" in light of significant product developments that have occurred in recent

months. The presented costs will be from €1,700,000 to €2,000,000 with the goal of completing

the application process by June 2015.

2) "SMART START &": In February 2015, the company applied for access to the benefits of

subsidized financing (bando "SMART START &") promoted by the Ministry of Economic

Development through Invitalia. If accepted, the company will be able to borrow between

€100,000-€1.5 million at zero interest rate for a maximum of eight years. Eligible projects

involve innovative, Italian start-ups who present a business plan characterized by innovative

technological initiatives.

Business Outlook and Going Concern Base

The company will continue to focus on developing its product and therefore revenues are not expected in

2015. In line with the company’s business strategy, world trends show a continuous increase in the use of

mobile video. The strategic objective of the company is to grow rapidly in order to achieve a strong

market position and increase opportunities to enhance the project through strategic partnerships or

specialized public market trading. The company expects to value its current development activities and

achieve a user base of several million by 2017/2018.


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At the end of a positive evolution of the current start-up phase, and the enhancement of the project (i.e.-

the recoverability of assets and the reimbursement of loans), the company intends to continue to pursue

the funds raising in accordance with effective strategies already successfully implemented throughout

2014 in order to reach a favorable commercial launch of the product in the international markets and the

continuous technical improvements through constant investment in the project’s development.

In view of the foregoing, the financial statements as of December 31, 2014 have been prepared on a

going concern basis in view of the positive development of the start-up phase as well as the continuing

ability to raise the financial resources in the time and manner described above. In particular, the company

has defined several strategic actions that will ensure the successful development of the project and

ongoing financial support to business development tentatively illustrated in the following guidelines:

Ongoing relationships with the banks as described in the "Significant events after the reporting period"

section above. In February 2015, the company entered into medium-term financing with Cassa di

Risparmio di San Miniato of €600,000 to be used to finance current company expenditures (guaranteed

by Artigiancredito Tuscany at 60%).

Capital increases in the form of successive funding rounds (€ 1.8 million) related to the capital increase

of € 2.2 million to finance:

(I) the commercial development of the company internationally in the coming months and,

(II) the realization of increasing investments in R & D aimed at developing constant proprietary

technology of the platform and product.

Participation in public calls dedicated to high-tech companies and promoted by the European

Commission, the Tuscany Region and the Ministry of Economic Development, respectively.


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General Criteria

The assessment of balance sheet items have been valued based on general criteria of prudence and

accruals on a going concern basis, taking into account the economic function of assets and liabilities.

The application of the principle of prudence involved the valuation of individual items of assets or

liabilities, to avoid offsetting losses that should be recognized and not recognized in income as

unrealized. In particular, the gains were included only if realized by the end of the year, taking into

account the risks and losses for the year, even if known after the year’s closure.

The application of the principle of competence has meant that the effect of transactions has been

recognized and allocated to the year in which such operations are relevant and not the one in which

receipts and payments were made.

For the purpose of comparability of financial statements over time, the accounting policies have not

changed from the previous year. During the year there were no exceptional circumstances that required

the use of the derogation to the evaluation criteria, in art. 2423, paragraph 4, of the Civil Code, as

incompatible with the true and fair representation of the financial position and financial position and

results of operations. There were also carried out in the exercise of asset revaluations under special laws.

The preparation of financial statements requires management to make estimates that affect the reported

amounts of assets and liabilities and the related disclosures. The actual results may differ from these

estimates. The estimates are reviewed periodically and the effects of changes, if not caused by incorrect

estimates, are recognized in the income statement where necessary and appropriate. These changes are

made both to the current year and successive years, if relevant.

Evaluation Criteria

The criteria used in the evaluation of the financial statement items described below, are consistent with

the provisions of art. 2426 of the Civil Code.


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Intangible assets

Intangible assets are recorded with the consent of the Board of Auditors where required and reflect

acquisition and production costs, and net of depreciation. Purchase costs also account for ancillary

expenses. The production costs include all costs directly attributable and other costs, reasonably

allocated, from the manufacturing period up to the time an asset is utilized.

Deferred charges, which include development costs, are recognized when they are found to be beneficial

in the future. There is a correlation between relative benefits for the company in the future and

reasonable estimates of the certainty of their recovery.

Start-up costs result from the capitalization of costs related to the start-up and development activities.

Assets under contruction are represented by internal and external costs incurred for intangible assets of

which full ownership has not yet been acquired (patents, trademarks, etc.) or for projects not yet

completed (research and development costs). Incurred costs are represented - for example - in labor,

materials and certain consulting costs.

Assets in progress values are recorded historical costs until rights have been acquired or the project

completed. At that time, the values are reclassified to the respective items of competence of intangible

assets.

Assets in progress are not depreciated. The amortization process begins when these values are

reclassified to the respective items of competence of intangible assets.

Tangible assets

Tangible assets are recorded according to acquisition and production costs, including all costs and

expenses directly attributable, incidental, or indirect costs related to internal production and

manufacturing up until the time in which property is used, indicating explicitly amortization and

write-downs.

The cost of limited use fixed assets is depreciated each year based on the depreciation rates determined

in relation to remaining useful life.

All assets, including those temporarily unused, depreciated.

The amortization commences when the assets are available and ready for use.


Pag.9

The rates are subject to results from technical amortization schedules, confirmed by business realities

and reduced by 50% for acquisitions during the year, the latter conditions are set by the OIC 16 par.53.

Repayment plans, in accordance with the OIC 16 par. 66, are reviewed for changes in residual use.

Plant and equipment: 20%

Electronic office equipment: 20%

Impairment of Tangible and Intangible assets

The OIC 9 regulates write-downs for impairment of tangible and intangible assets. At the time of each

financial report, the company assesses indicators that an immobilization may have suffered an

impairment loss. If this indicator were to exist, the company estimates the recoverable amount of the

asset and performs an impairment test to determine if the asset value is lower than the corresponding

carrying amount. In the absence of indicators of potential impairment loss the recoverable amount will

not be determined. If there is an indication that an asset may have suffered an impairment loss, its useful

life, depreciation method or residual value may be revised and corrected, regardless of whether the loss is

actually detected.

If the recoverable amount is higher of the current value and fair value (fair value), and the net of selling

costs is less than the corresponding net book value a depreciation of fixed assets will be made.

Use value is determined based on the present value of the future cash flow expectations related to the use

of immobilization and resulting from the most recent plans approved by the board of directors.

Cash flows related to future years are determined by projections. Future cash flows are estimated by

referring to the current conditions of the assets, and therefore do not include cash inflows or outflows

that are expected to arise from future restructurings in which the company has not yet committed, or the

improvement or optimization yield of immobilization.

The discount rate used in calculating the present value is the pre-tax rate reflected in current market

assessments of the time value of money and the specific risks of the asset for which the estimates of

future cash flows have not already been adjusted.


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Financial Fixed Assets

The investments, debt securities and treasury shares intended to remain permanently result from the

willingness of management and the effective ability of the company to classify them for an extended

period of time as financial assets. Otherwise, they are recorded as current assets.

Investments are initially recognized at the cost of acquisition or establishment, including all costs.

Transaction costs consist of costs directly attributable to the operation, such as, banking and financial

intermediation costs, fees, expenses and taxes.

The value of the investments rise according to capital increases shareholder payments or waivers.

No-charge capital increases do not increase the value of investments.

Impairment losses to investments seen at the reporting date are considered permanent and their carrying

value is reduced to the recoverable amount, which is determined based on future benefits expected to

flow to the company.

When the company is obliged to cover losses incurred by subsidiaries it may need a provision in the

liabilities in order to cope, share expertise or cover the capital shortfall of the same. If in subsequent

years there are reasons for a write-down, the value of the investment is reinstated up to, at most, the

original cost.

The equity investments were valued with participation costs specifically incurred. In the presence of

impairment losses, as defined and determined by OIC 21, par. 29-41, costs were adjusted in accordance

with article 2426, paragraph 3 of the Civil Code.

Receivables

Budgeted amounts represent rights to exact amounts of cash from customers or other third parties and are

stated at estimated realizable value.

Tax receivables

The item 'Tax receivables' includes amounts determined by (some related to receivables) rights that are

realizable through reimbursement or compensation.


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Cash

Bank deposit balances, money and cash balances at the year’s end determine cash value. Bank deposits

and checks are recorded at their estimated realizable value, cash from money and revenue stamps are

recorded at face value while foreign exchange currencies are valued at the exchange rate present at the

balance sheet date.

Prepayments and Accrued Accruals/Deferrals

Prepayments and accrued accruals and deferrals are recorded based on the accrual basis and contain

costs/revenues for the year and payable in subsequent years, and cost/revenues incurred before the end of

the year, but related to future years.

Therefore only the portion of costs and revenues related to two or more years -- the amount of which

varies over time -- is recognized.

At the end of the year it was verified that the conditions leading to initial recognition were met,

including, where appropriate, necessary adjustments based on both temporal and recoverable conditions.

Regarding prepaid, the evaluation of future economic benefit related to deferred operating costs, where

such a benefit was lower than the prepaid share, determined a value adjustment.

Provisions for risks and charges

Provisions for risks and charges are liabilities of a specific nature, certain or probable, including date of

occurrence or indeterminate amount. In particular, the provisions for liabilities are liabilities of a specific

nature with probable existence whose values are estimated, while funds for charges are liabilities of

certainty estimated by the amount or date of occurrence, and related to obligations already assumed at

the date of the financial statement (to be recorded in future years).

Provisions for risks and charges are recognized in the income statement items by the operation or

prevailing criterion of classification by type of costs.

The amount of provisions is measured by the best estimate of costs, including legal fees, for each balance

sheet date and is not subject to discounting. When a range of variability determines the measurement of

provisions, values are represented by the best feasible estimate falling between the upper and lower


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limits of the range of variability.

The subsequent use of funds is made directly and only for expenditures and liabilities for which the

funds were originally made. Any negative differences or surplus compared to actual costs are recognized

in the income statement in accordance with the original provisions.

Provision for Severance Indemnities

The indemnities (TFR) benefit entitles employees in all cases of termination of employment, pursuant to

art. 2120 of the Civil Code and the regulatory changes introduced into law on December 27, 2006, n.

296. TFR is the total of benefits accrued, considering all forms of ongoing remuneration, net value of

paid and partially paid advances under collective agreements or individual or corporate agreements in

which a refund has been requested. The liability for severance pay is equal to what would have been paid

to employees in the event that the employment relationship was terminated at the time of the reporting

date. The amounts of severance pay related to labor relations that have ceased before the reporting date

and for which payment is made within one year are classified as debt.

Debts

Debts are shown as liabilities according to their nominal value and considered representative of their

settlement value. The liabilities arising from acquisitions of goods are recorded at the time the risks,

costs and benefits are transferred; those related to services are recognized when the service is rendered;

financial or other debts are recorded at the time an obligation towards a third party arises. Trade payables

are based on conditions referred to in OIC 19 par. 39-49, operating on the spin-off of implicit interest

expenses included in the purchase cost of goods or services. Tax liabilities, welcome tax liabilities both

certain and determined, and substitute deductions not yet paid at the reporting date, are recorded in net of

advances, withholding and credits.

Currency Values

Assets and liabilities in foreign currency -- except for fixed assets -- are based on the exchange rate at the

time the balance sheet is prepared, and recorded as gains or losses in the income statement. The net profit


Pag.13

derivative from the exchange rate is registered and the part not absorbed by the year’s loss is put into a

non-distributable reserve until it’s realized. In the event of change impairment, tangible assets, intangible

assets and financial assets (measured at cost in foreign currencies) are recorded at the lower end of the

exchange rate at the time of purchase and the date of the financial statements.

Exchange rate as of 31st december 2014:

31.12.2014

EUR/USD 1,2141

EUR/LEU 4,4828

Revenues and Costs

Revenues and income, costs and charges are recorded net of returns, rebates, discounts and premiums in

accordance with the principle of competence and prudence.

Income Tax

Current tax is calculated on the basis of a realistic estimate of taxable income, determined in accordance

with the tax law, and by applying the tax rates in effect at the balance sheet date.

Its tax liability is recognized in the balance sheet at face value, net of advances paid, withholding taxes

and tax credits offset and not required to refund; if the advances paid, withholding and credits exceed

taxes owed is recognized the related tax credit.

Income tax liabilities and assets are calculated on the cumulative amount of all temporary differences

between the carrying amounts of assets and liabilities determined by the assessment criteria statements

and their value for tax purposes.

Income tax liabilities and assets are recognized in the period in which temporary differences arise and are

calculated by applying the tax rates in effect for the year in which the temporary differences will reverse,

if the rates are already set the date of the balance sheet otherwise are calculated at the rates prevailing at

the date of the balance sheet.

Deferred taxes related to taxable temporary differences related to investments in subsidiaries and


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operations that led to the formation of reserves in tax suspension are not recognized only if it satisfies the

specific conditions prescribed by the standard of reference.

Deferred tax relating to transactions that directly affect net assets are initially recognized in the income

statement but accounted for under the provisions for risks and charges via reduction of the corresponding

equity item.

The deferred tax assets are recognized in accordance with the principle of prudence, only when there is

reasonable certainty of their future recovery. Reasonable certainty is proven when:

- There is a projection of the fiscal results of the company (tax planning) for a reasonable period of

time, which shows the existence, in the years in which the temporary differences will reverse, of

taxable income not lower that the differences that will be eliminated; and / or

- In the years where the expected reversal of the deductible temporary difference, there are sufficient

taxable temporary differences of which are expected to reverse.

The deferred tax assets and deferred tax liabilities are offset only if the compensation is legally

permitted. At 31 December 2014, given the current start-up, it was not considered enroll deferred tax

assets.

Memorandum accounts

The memorandum accounts include guarantees, commitments and third party assets held by the

Company and the assets of the Company with third parties. Shall not be representation among the

memorandum accounts of those events that have already been recognized in the balance sheet, income

statement and / or in the notes, such as the assets of the Company with third parties. The guarantees are

shown at a value equal to that of the guarantee given or, if not determined, the best estimate of the risk

taken in the light of the existing situation. The commitments are recognized at a value equal to the

nominal value while any non-quantifiable commitments are described in the notes. Third party assets

held by the Company are recorded at face value, the current market value or the value derived from

existing documentation depending on the type of property. The appropriateness of the amounts recorded


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in the memorandum accounts is revalued at the end of each financial year.

Information on the balance sheet – Assets

Amount due from stockholders

The Amount due from stockholders for payments due at the year end amounted to € 0 ( €

0nel previous year ) , of which € 0 recalled.

Intangibles Assets

Initial Value Increases Decreases Impairment

losses Amortizatio

n Final Value

Startup costs 896 0 0 0 0 896

Under construction and advances

836.487 665.056 0 0 1.501.542

Software 0 1.868 0 0 -374 1.494

Total 837.383 666.924 0 0 -374 1.503.933

An increase in intangible assets of €669,924 is due to costs incurred for research and development

activities carried out mainly by staff in Italy directly from Cynny SpA ( € 278,239 ) and in Romania by

the subsidiary Cynny Social Cloud Ltd ( € 258,347 ) . The services rendered by the Social Cloud Cynny

Srl were capitalized after having separated the portion not directly attributable to research and

development software.

Assets under construction include the expenses incurred in 2013 for the purchase by a member of the

technology and the social cloud platform and related costs of research and development . These costs are

fully settled in 2014. As at 31 December 2014, the development project is still ongoing and it is expected

that the enhancement occurs at the end of the start- up ( 2017/2018 )

Tangibles Assets

Initial Value Increases Decreases Impairment

losses Depraciation Final Value

Plants and machinery 0 381.150 0 -115.970 -26.518 238.661

Industrial and commercial equipment

8.080 9.504 0 0 -2.656 14.928

Other tangibles < € 516,46 0 1.017 0 0 -1.017 0

Totali 8.080 391.671 0 -115.970 -30.191 253.589

The increase in tangible assets to €245,510 is due to the capitalization of a new machinery and office


Pag.16

equipment totaling €391,671, partially offset by an impairment charge of €115,970 which resulted from

damage to machinery during transport.

List of subsidiaries

Shown below are data relating to investments in subsidiaries, pursuant to article 2427, paragraph 5 of the

Civil Code:

- Cynny Inc. based in the United States, Atherton (CA) 560 Middlefield Rd., Capital $100, equal to

€82.36; Equity $113,681 equal to €93,634; 2014 $321,375 operating loss amounted to €262,056. Share

participation 99%, the value of the assets are €120,664.

- Cynny Social Cloud based in Romania, Iasi Str. Viticultori 24, Capital Lei 200 €44.61; She equity 167

935, amounting to € 37,462; She profit amounted to €27 491 123 237. 90% participation, share book

value €40.

Investments involving unlimited liability

The company has not made investments requiring unlimited liability

List of associates

The company also holds investments in associates that are not significant, listed below in accordance

with article 2427, paragraph 5 of the Civil Code.

- Ambedded Technology Co. LTD , based in Taiwan, Taipei City, 18 Siyuan St., Zhongzheng Dist.

Participation of 2% valued at €4,918

- ACT Credit Consortium of Small and Medium Enterprise Soc. Coop. - Via della Romagna Toscana, 6,

50142 Florence, Italy, Shareholder Participation valued at €5,000.


Pag.17

Financial fixed assets – Value

Initial Value Increases Decreases

Impairment losses

change Final Value

Cynny Inc 22.036 330.693 0 -239.489 7.351 120.664

Cynny Social Cloud 73 0 0 0 -33 40

Total Subsidiaries 22.109 330.693 0 -239.489 7.318 120.704

Ambedded Technology 4.918 4.918

ACT Consorzio Fidi 5.000 5.000

Total Associates 0 9.918 0 0 0 9.918

Total Financial Fixed Assets 22.109 340.611 0 -239.489 7.318 130.622

Financial fixed assets whit a carrying amount higher than fair value There are not financial assets, which carry a significantly higher value than fair value. In particular,

participation in the American subsidiary, Cynny Inc, was written down by €239,489 to account for the

operating loss incurred in 2014, which was mainly due to the substantial costs of marketing and business

incurred by the subsidiary and not capitalized under relevant accounting standards.

Current Assests Current Assests – Receivebles

The current receivables amounted to €100,587 (€4,908 in the previous year). The composition is

represented as follows:

Nominal value

Provision for

doubtful

accounts

Provision for

default interest Net Value

Long term Tax receivebles 100.587 0 0 100.587

Total 100.587 0 0 100.587

Receivebles – By maturity

The table below shows the data related to the breakdown of loans by maturity, pursuant to art.

2427, paragraph 6 of the Civil Code:


Pag.18

Current

Receivebles

from customers

Current

Receivebles

from

subsidiaries

Current

Receivebles

from associates

Current

Receivebles

from Parents

Initial Value 0 0 0 0

Changes into the period 0 0 0 0

Final Value 0 0 0 0

Receivebles after 5 years 0 0 0 0

Current tax

receivebles

Deferred tax

assets

Other current

receivebles

Total current

Receivebles

Initial Value 4.908 0 0 4.908

Changes in the period 95.679 0 0 95.679

Final Value 100.587 0 0 100.587

Receivebles after 5 years 0 0 0 0

Current receivables - Breakdown by region

The table below shows the data related to the breakdown of receivables included in the current assets by

geographical area, pursuant to art. 2427, paragraph 6 of the Civil Code:

Total 1 2

Current receivables - Breakdown by

region

Geographical Area Italy France

Total current Receivebles 100.587 78.991 21.596

Current receivables - Transactions with end relegation

Not shown in the accounts receivables section are current assets resulting from transactions involving the

obligation of the buyer to end relegation.

Current assets - Cash and cash equivalents

Cash and cash equivalents included in the current assets section amounted to €1,072,515 (€462,218 in

the previous year). The composition and movements of the individual items are represented as follows :

Deposit

accounts Cheques Cash on hand

Total current

Receivebles

Initial Value 461.657 0 561 462.218

Changes in the period 610.856 0 -559 610.297

Final Value 1.072.513 0 2 1.072.515


Pag.19

Prepayments and accrued income

Prepayments and accrued income amounted to €503 (€ 0 in the previous year). The composition and

movements of the individual items are represented as follows:

:

Securities

issuance

discounts

Accrued Income Other prepaid

expenses

Total prepaid

and accrued

income

Changes in the period 0 0 503 503

Final Value 0 0 503 503

Other assets

Amounts due

from

stockholders

Long-term

receivebles Inventory

Total current

Receivebles

Initial Value 0 22.036 0 4.908

Changes in the period 0 -22.036 0 95.679

Final Value 0 0 0 100.587

Current financial

assets

Cash and

equivalent

Prepayments

and accrued

income

Initial Value 0 462.218 0

Changes in the period 0 610.297 503

Final Value 0 1.072.515 503

Receivebles after 5 years

Capitalized Borrowing Costs

None

Information on the balance sheet – Liabilities and equity

Equity

The net assets existing at year’s end amounted to €1,401,048 (€558,726 in the previous year).

The tables below shows changes absorbed during the financial year according to individual items of

equity including a detailed 'Other Reserves' item.


Pag.20

Initial

Value Dividens Other Increases Decreases Reclassif.

Net profits

(losses) Final Value

Capital Stock 10.000 0 0 116.210 0 0 126.210

Additional paid-in capital 0 0 0 2.383.060 0 0 2.383.060

Other reserves

Payment on share capital 586.845 0 0 0 586.845 0 0

Other -1 0 0 0 0 0 -1

Total – Other reserves 586.844 0 0 0 586.845 0 -1

Profits (losses) brought forward 0 0 -38.118 0 0 0 -38.118

Profits (losses) -38.118 0 38.118 -1.070.103 -1.070.103

Total Equity 558.726 0 0 2.499.270 586.845 0 -1.070.103 1.401.048

Description Amount

1 Rounding -1

Total -1

To better understand changes to net assets, the table below highlights changes to equity items in the

preceding year:

Initial Value Dividens Other Increases

Capital Stock 0 0 0 0

Other reserves

Additional paid-in capital 0 0 0 0

Other 0 0 0 0

Total – Other reserves 0 0 0 0

Profits (losses) 0 0 0

Total Equity 0 0 0 0

Decreases Reclassification Net profits

(losses) Final Value

Capital Stock 0 10.000 10.000

Other reserves

Additional paid-in capital 0 586.845 586.845

Other 0 -1 -1

Total – Other reserves 0 586.844 586.844

Profits (losses) -38.118 -38.118

Total Equity 0 596.844 -38.118 558.726

Prospectus of the availability and use of equity items

The information required by Article 2427, paragraph 7 bis of the Italian Civil Code with regard to the

specification of equity items and their origin, the possibility of use and distribution, and use in previous


Pag.21

years, was derived from the consolidated table below:

Amount Origin/Nature Possible uses Capital

available

Summary of

uses to cover

losses in the

last three

years

Summary of

uses for other

reasons in the

last three

years

Capital Stock 126.210 Payments 0 0

Additional paid-in capital 2.383.060 Payments

Cap. increase,

Losses cover,

Distributions to

shareholders

2.383.060 0 0

Other reserves

Other -1 Roundings 0 0 0

Total – Other reserves -1 0 0 0

Profits (losses) brought forward -38.118 0 0 0

Total 2.471.151 2.383.060 0 0

Capital distributable outstanding

2.383.060

Description Amount Origin/Natu

re

Possible

uses

Capital

available

Summary

of uses to

cover

losses in

the last

three years

Summary

of uses for

other

reasons in

the last

three years

1 Roundings -1 Roundings 0 0 0

Total -1

Provisions for risks and charges

Not included in the budget provisions for risks and charges recorded in liabilities.

TFR (Severance indemnities)

Severance indemnities are recognized as a liability totaling €16,628 (€4,950 in the previous year). The

composition and movements of individual items are represented as follows:

TFR (Severance

Indemnities)

Initial value 4.950

Changes in the period

Provision in the period 14.873

Uses in the period 3.195

Total changes 11.678

Final Value 16.628


Pag.22

Debts

Debts are recognized in liabilities totaling €1,622,801 (€ 771,022 in the previous year). The composition

of each item is represented as follows:

Initial value Final Value Changes

Convertible bonds 0 99.990 99.990

Shareholders financing 91.118 0 -91.118

Long-term borrowings (banks) 0 1.371.427 1.371.427

Other financing -1.511 0 1.511

Trade payables 651.378 74.787 -576.591

Tax payables 4.381 19.681 15.300

Payables to social security and

welfare institutions 8.813 23.767 14.954

Other payables 16.843 33.149 16.306

Total 771.022 1.622.801 851.779

Debts – By maturity

Below shows the data regarding the division of debts by maturity, pursuant to art. 2427, paragraph 6 of

the Civil Code:

Initial value Changes in the

period Final value

Long-Term

(more than 5

years)

Convertible bonds 0 99.990 99.990 0

Shareholders financing 91.118 -91.118 0 0

Long-term borrowings (banks) 0 1.371.427 1.371.427 1.369.000

Other financing -1.511 1.511 0 0

Trade payables 651.378 -576.591 74.787 0

Tax payables 4.381 15.300 19.681 0

Payables to social security and

welfare institutions 8.813 14.954 23.767 0

Other payables 16.843 16.306 33.149 0

Total 771.022 851.779 1.622.801 1.369.000

Debts - Breakdown by region

Below shows the data regarding the division of payables by geographical area, pursuant to art. 2427,

paragraph 6 of the Civil Code:


Pag.23

Total 1 2 3

Debts - Breakdown by region

Geogaphical Area Italy EU Extra EU

Debts 1.622.801 1.610.764 2.449 9.588

Debts secured by collateral on corporate assets

There are no debts involving collateral on corporate assets.

Amount

Debts involving collateral

Debts not involving collateral 1.622.801

Total 1.622.801

Debts secured by collateral assests are not included in the financial statements.

Debts - Transactions with relegation to end

There are not liabilities arising from transactions involving the obligation of the buyer to end regulation.

Shareholders financing

There is not financing by company shareholders.

Accrued expenses and deferred income

Accrued liabilities are recorded as liabilities totaling €21,271 (€0 in the previous year). The composition

and movements of individual items are represented as follows:

Accrued

liabilities

Securities

issuance

premiums

Other deferred

income

Total accrued

expenses and

deferred income

Changes in the period 21.271 0 0 21.271

Final value 21.271 0 0 21.271

Other liabilities

Debts Accrued

expenses and


Pag.24

deferred income

Initial value 771.022 0

Changes in the period 851.779 21.271

Final Vvalue 1.622.801 21.271

Long-term liabilities (more than 5

years) 1.369.000

Information on the Profit and Loss

Internally generated Fixed assets

Final value Previous year

Internally generated Fixed assets 278.239 136.502

Total 278.239 136.502

Internally generated Fixed assets were compared with the values actually recognized in the year 2013

even if formally classified last year under A instead of 5 A) 4.

Income from Subsidiaries

Subsidiaries income is not included in the financial statements.

Gains and losses on foreign currency translation

Exchange rate variations are not significant.

Current and deferred income taxes There were no year-end taxes, nor were conditions for the recognition of deferred taxes present.

Other information

Remuneration to the statutory auditor or the audit firm

Below contains information relating to the fees to the statutory auditor or the audit firm pursuant to

article 2427, point 16 bis of the Civil Code:

Value

Annual audit 7.800

Total fee for annual audit 7.800


Pag.25

Securities issued by the company

The information required by Article 2427, paragraph 18 of the Civil Code in relation to bonus shares and

convertible bonds can be inferred from the following table

Shares Convertible

bonds Other securities

Number 0 495 0

Financial Instruments

The company has not issued any financial instruments.

Information on companies or entities engaged in management and coordination (article 2497 of the Civil Code)

The company is not subject to direction or coordination by outside companies or entities.

Owned shares and holding company shares/units

The company does not hold treasury shares, shares in parent companies or shares through trust companies

or nominees.

Complementing the 'Other information' section of the bank notes we specify the following:

Impairment of financial assets

Final value Previous year

Impairment of financial fixed assets 239.489 0

Total 239.489 0

Cash Flow Statement

Cash flows from operating activities are presented according to the 'indirect method:


Pag.26

2014 2013

A-

INITIAL CASH / (NET FINANCIAL POSITION) 462.218 0

B-

CASH FLOW FROM OPERATING ACTIVITIES

Profits (losses) (1.070.103) (38.118)

Amortization (intangibles) 374 0

Depreciation (tangibles) 30.192 0

(Gains) or losses on disposals of tangibles/intangibles assets 0 0

Internally generated Fixed assets 278.239 0

(write-ups) or write-downs of tangibles/intangibles assets 0 0

(write-ups) or write-downs of financial fixed assets 239.489 0

Write-down of current receivables 0 0

Accruals for provisions 0 0

Net changes of severance indemnities 11.678 4.950

Changes in working capital

Inventory: (increases) / decreases 0 0

Trade receivebles: (increases) / decreases 0 0

Other assets: (increases) / decreases (96.182) (4.908)

Trade payables: (increases) / decreases 74.787 0

Other liabilities: (increases) / decreases 67.831 30.037

Total (463.695) (8.039)

C-

CASH FLOW FROM FIXED INVESTMENTS

(Investments) in fixed asset:

Intangibles (1.596.540) (186.005)

Tangibles (275.701) (8.080)

Financial assets (370.038) (73)

Total (2.242.279) (194.158)

Proceeds from assets sale 0 0

Total (2.242.279) (194.158)

D-

CASH FLOW FROM FINANCIAL OPERATIONS

Changes in long-term financial activities: (disbursments) / reimbursments 0 0

Changes in short-term financial activities:: (disbursments) / reimbursments 22.036 (22.036)

Changes in long-term financial liabilities: (disbursments) / reimbursments 1.369.000 0

Changes in short-term financial liabilities: (disbursments) / reimbursments 10.383 89.607

Increases/ (reimbursments) of equity 1.912.425 596.844

Total 3.313.844 664.415

E-

(DIVIDENS) 0 0

F- CASH FLOW OF THE PERIOD (B+C+D+E) 607.870 462.218

G-

FINAL CASH / (NET FINANCIAL POSITION) 1.070.088 462.218

Transactions with managers, directors, auditors and shareholders

Transactions with managers, directors, auditors and shareholders of the company or its subsidiaries,

affiliates, parent companies and companies controlled by the latter, were recorded at market value


Pag.27

Transactions with related parties

Transactions with related parties are carried out in compliance with applicable laws and are conducted at

market prices. We note that there has been no implementation, nor was there outstanding at year’s-end,

atypical or unusual transactions, meaning those foreign to ordinary management of the company, that

could significantly affect economic, equity or financial companies.

The definition of "related party" refers to that contained in the International Accounting Standard no. 24.

The following table shows transactions with related parties made in 2014:

Related party relationships Cynny Social

Cloud Cynny INC

Ambedded Technology

Tangible assets (Rack Server) 0 0 220.315

Intangible assets (personnel for R&D activities) 258.347 0 0

Royalties 0 0 1.440

Personnel for non R&D activities 189.670 0 0

Agreements not disclosed in the Balance Sheet

There are no agreements not disclosed in the balance sheet.

Information on the obligation to prepare consolidated statements

The company has taken advantage of the exemption from the requirement to prepare consolidated

financial statements in accordance with article 27 of Legislative Decree no. 127/1991, not given the

necessary corporate size in the first paragraph of that article.

Allocation of results

We are asking for approval of the year-end financial statement dated 31/12/2014 and want to carry

forward a loss of €1,070,103.37 to the new financial year.

CYNNY S.P.A. Head office, address FIRENZE - VIA DELLE ... · PDF fileNotes to the Financial...

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