‘, area ersze | es) [0] [aa 2lalss. (ewer | TTT Tt Tit THT | olelile] eyslohsF. BL peltiitel_v [plalsiijel lelifely Ms. Marie Fel Ducat-Dalafu Sito Tre en er FIEEIES aleis) || fof7] [3]a wa Tobe ie ye es Co EERE F i: stamps | earns «Pleas ite ck fr sein pres() Reves Tacannone & Co. ZEEE FIRM PRINCIPLES, WISE SOLUTIONS, uae ttt sp INDEPENDENT AUDITOR'S REPORT Trsaferag ‘The Stockholders andthe Board of Dicectors Rappler, ne. Unt 2501, Antl Gobel Bulding 3 Julia Vargas, Ortigas Center Pasig city 1605, ores no ram) Sache Report on the Financial Statements We have audited the accompanying financial statements of Rapper, inc, which comprise the statements of financal position s¢ 2t December 31, 2013 and 2012, and the statements of comprehensive income, statements of changes in equity and statements of cashflows for the years ‘then ended, and a summary of significant accounting pocies and ether explanatory information. ‘Menagement’s Responsibly forthe Financial Storements ‘Management s responsible forthe preparation and far presentation ofthese financial statements in accordance with Philippine Financial Reporting Standard for Small and Medium-sized Entities, and for uch internal cantal 3 management determines is necessary to enable the preparation of financial statements that ae free fram material misstazement, whether due to fraud 0° errr. ‘Auditor's Responsiity (Our responsibility sto express an opinion on these financial statements based on our audits, We conducted our audits in accordance with Philippine Standards on Auditing. Those standards require that we comply with ethical requirements and alan and perform the audit to obtain reasonable aesurance about whether the financial statements ae fee from material misstatement. ‘an aust involves performing arocedures to obtain audit evidence about the amounts and isclosures in the financial statements. The procedures selected depend on the aucitor's judgment, including the assessment ofthe risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an ‘pinion on the effectiveness ofthe entity's Internal contrel. An audit also incudes evaluating the ‘appropriateness of accounting polices used and the reasonableness of accounting estimates made bby management, es well x evaluating the overall presentation ofthe financial statements We believe thatthe audit evidence we have obtained is sufficient and appropriate to provide a bass, for our audit opision,teTg, ZO REYES TACANDONG & Co, pinion In our inion, the financial statements present fly in all materia respects, the financial position ‘of Rapaler, Inc. a8 ot December 31, 2013 and 2012, and it finanal performance and its cash lows for the years then ended in accordance with Philpine Financial Reporting Standard for Small and Medium sited Entities, Report on the Supplementary Information Required under Revenue Regulations Nos. 15-2010 and 19-2011 ofthe Bureau of internal Revenue (ur aueits were conducted for the purpose of forming an opinion on the basic financial statements _ taken 352 whole. The supplementary Information on taxes and icenses and the Schedue of taxable income and deduetible expenses in Note 27 to the nani statements are presented for purposes of filing wth the Bureau of internal Revenue ands nt a required part ofthe basic financial statements, Such information isthe responsibilty af the management of Rapper, Inc. The information hes been subjected to the auing procedures applied in our aust of the basi inancil statements 3nd, in cur inion, i fay stated in all mater espects in relation to the bask financial statements taken as 2 whole. REYES TACANDONG & Co. Grad. Tacan Parner [A Acadeson Ho. Yall Cacember3, 2035 StCAeueision le 126.881 Group ard ol verte25, 2016, inno 4232802 Toure onary 2204 waka cy Moreh 27,2088 Makati city, Metro ManiaRAPPLER, INC. ‘STATEMENTS OF COMPREHENSIVE INCOME Years Ended December 31 Note 2013 201 SERVICE REVENUE 2 757,350,758 622,825,954 cOSTOF Seavices a (08,196,854) (43,974,332), GROSS L055, (40,686,100) (19,148,358) OPERATING EXPENSES 4 (29,181,685) (04,761,348) INTEREST INCOME 5 1987 46.38 FOREIGN EXCHANGE GAIN (LOSS) 9,000 sr) LOSS BEFORE INCOME TAX 69,799,908 33,868,336, PROVISION FOR (BENEFIT FROM) INCOME TAX 15 4,692,028 (10,173,102) NET Loss 7iaeiss7 23,691,192 OTHER COMPREHENSIVE INCOME 2 Si TOTAL COMPREHENSIVE LOSS. 71,491,937 623,691,192 “ee econpanyng NET Trance ETTRAPPLER, INC. STATEMENTS OF CHANGES IN EQUITY Years Ended December 31 or 2012 Shares Amount Shares Amount ‘CAPITAL STOCK. Authorized 62 par value 3,000,000 _¥3,000,000__ 3,000,090 _#3,000,000 Issued Balance a beginning of year 4,125,000 1,125,000 403,125. p403,225, Additonal issuance 102299 ‘tazz99 721873 721,875 Balance at end of year 3,325,000, ADDITIONAL PAID. CAPITAL Balance a beginning of year 49,625,000, 24,812,500, Additional isuance 79,856,776 24)812,500, Balance at end of year 329,481,776 35,625,000 bericir Balance at beginning of year (30,189,918) (6,498,725) Net oss (71,491,937) (23,691,192) Belance stend ofyear 201,681,855) (20,189,018) 429,067,220 920,560,082 Seeeicamsaning test Foon SateenRAPPLER, INC. ‘STATEMENTS OF CASH FLOWS Years Ended December 22 Tote 2013 2012 ‘CASH FLOWS FROM OPERATING ACTIVITIES Loss before income tax (69,795,908) 3,64,34) Adjusiments fr: Deprecistion and amortaation 8 6.637.287 Inuerest income 5 (as,877) Unrealized foreign exchange iss (sin) (9,000), ‘Gperatng loss belore working capital changes (av0ssa)(30805,607) Decrease tinerease) in “Trade and other cecevables (2741768) (22,969,577) Other curent aise (4056332) (1.538.526) (Other noneurrent assets 356,088 (356.988) Inerease in trade and other payables 10.453,289 _3.925,710, [Net cash used for operations Be Interest received (Netcash used i operating eter (949.494) 152403.249) ‘CASH FLOWS FROM INVESTING ACTIVITIES ‘Acquisitions of property ang equipment 3 (gaz7.766) (7,595,862) ‘Acquistions of intangible seers 9 (2.731355) (768212) Proceeds fom disposal of property and equipment 17348 29,249 [Net cash used in investing activites (Gosee.a7)——Tasi6.625) ‘CASH FLOWS FROM FINANCING ACTIVITIES ‘epost for future stock subscription 3625095 34737.407 ‘Additional issuance of capital stock 112,299 Tana7s ‘Adtional pad neapta 45219369 __24812.500 (Caen provided by nancingseiiise 133512583 60.271, 782 [EFFECT OF EXCHANGE RATE CHANGES (ON CASH AND CASH EQUIVALENTS 3,000 767) [NET INCREASE [DECREASE) IW CASH ANO CASH EQUIVALENTS. aszse21 (148.359) ‘CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR. wos1096e2 10.4590 ‘GASH AND CASH EQUIVALENTS AT END OF YEAR pu.840563 710,210,642 INONCASH FINANCIAL INFORMATION Application cf deposit for future stock subscription to additional paid in capital a 34,737,407 ee197 2168 RAPPLER, INC. NOTES TO FINANCIAL STATEMENTS ‘Corporate information apple, nc. (the “Company") w2s incorporated in the Philipines and registered with the Securities and Exchange Commission (SEC} on July 25, 2011. Is primary purpose isto develon and sell news, information, and social network services through various delivery formats. The scope of its services includes communications, advertising, corporate socal responsiblity, puble Felations, events, brand affinity and other related services and packages. The Company's registered adcress is Unit 2503, Antel Global ulidng, 3 ula Vargas, Ortigas Center, Pasig City 1668. ‘The financial statements of the Company were approved and authorized for issue by the Board cof Directors en March 27,2014 ‘ais of Preparation and Statement of Compliance: ‘The financial statements of the Company have been prepared on a hstoreal cost basis and are presented in Philippine Peso, the Company's functional currency. All values are in absolute amounts unless otherwise indicated ‘Moreover, the fitncial statements of the Company have been prepared in compliance with Philppine Financial Reporting Standard for Small and Medium-sized Entities [PFRS for SMES}. “Surmary af Significant Accounting and Reporting Policies ‘The significant accounting and reporting policies thet have been used in the preparation of the financial statemenis are summarized below. These policies have been consistently applied to all, the years presented, unless otherwise state. nancial Instrument ‘The Company recognizes 3 financial asset and a financial lability only when the Company becomes 2 arty tothe contractual provisions ofthe instruments, ‘when a finan asset or financial Haat s recognized intily, the Company measures It atthe transaction price and subsequently messures it at amortized cost using the effective interest method, Cash and Cash Equivalents. Cash and cash equivalents are stated at face amount. Cash in banks ‘earminterest a te prevaling bank deposit rates. Cash Includes cash on hand and in banks. Caso ‘equivalents are short-term, highly liquid investments that are ready convertible to known amounts of cash with orignal maturities of three months or less from dates of placement and hich are subject to an insignificant risk ofchangesin value