Treasurers Report and Accounts

Internet Society of New Zealand Incorporated

To be presented to the AGM 20 November 1998

Treasurer's Comment: The most striking feature of this balance sheet is the apparent reversal in fortune. Last year the Society had to absorb a significant loss while starting up the Domain Name registration business. The assets and liabilities associated with the DNS were transferred to a company for ISOCNZ members' protection but the shortfall at that stage was left on ISOCNZ's books and shown as a loan of $65,000 from Domainz, although a netting item disguised the fact that the actual position was worse than this at $96,000.

At the time of separating the businesses, and agreement was signed to deliver services, but no sale and purchase agreement was signed. We have now signed such an agreement and, as part of it, Domainz have agreed to pay ISOCNZ this amount in return for the goodwill, essentially the right to run the operation.

This may appear as an accounting trick. However it does pass the test of reflecting a reasonable reality. It does not seem reasonable to me that members should bear risk from providing a public service. This transaction removes that risk.

Apart from that, the relatively large amount of cash at hand at least partly reflects the fact that council was trying to pay off that loan before it became clear that we could do what we have done. The employment of the Executive Director and other initiatives we are starting will cause next year's balance sheet to look rather different.

With the hiring of an Executive Director and the removal of the loan from Domainz I expect the finances of the Society to move towards making losses at least in the short term. The capital base built up over the last couple of years allows us to move ahead and focus on some of our non-DNS objectives.

Colin Jackson

Treasurer

AUDITED ACCOUNTS

THE INTERNET SOCIETY OF NEW ZEALAND INC
SCHEDULE OF CONTENTS FOR THE YEAR ENDED 30 SEPTEMBER 1998

Statement of Financial Performance - Society
Statement of Financial Performance - Domain Name Services
Statement of Movement in Equity
Statement of Financial Position
Notes to the Financial Statements
Fixed Asset and Depreciation Schedule

THE INTERNET SOCIETY OF NEW ZEALAND INC
STATEMENT OF FINANCIAL PERFORMANCE - SOCIETY FOR THE YEAR ENDED 30 SEPTEMBER 1998

The accompanying notes form part of these financial statements

THE INTERNET SOCIETY OF NEW ZEALAND INC
STATEMENT OF FINANCIAL PERFORMANCE - DOMAIN NAME SERVICES
FOR THE YEAR ENDED 30 SEPTEMBER 1998

The accompanying notes form part of these financial statements

THE INTERNET SOCIETY OF NEW ZEALAND INC
STATEMENT OF MOVEMENT IN EQUITY FOR THE YEAR ENDED 30 SEPTEMBER 1998

The accompanying notes form part of these financial statements

THE INTERNET SOCIETY OF NEW ZEALAND INC
STATEMENT OF FINANCIAL POSITION AS AT 30 SEPTEMBER 1998

The accompanying notes form part of these financial statements

THE INTERNET SOCIETY OF NEW ZEALAND INC
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 SEPTEMBER 1998

1. STATEMENT OF GENERAL ACCOUNTING POLICIES

REPORTING ENTITY

The Internet Society of New Zealand Incorporated is an incorporated society andis registered under the Incorporated Societies Act 1908.

These financial statements are general purpose financial statements and havebeen prepared in accordance with generally accepted accounting practice.

MEASUREMENT BASE

The accounting principles recognised as appropriate for the measurement andreporting of earnings and financial position on a historical cost basis arefollowed in these financial statements.

SPECIFIC ACCOUNTING POLICIES

Accounts Receivable
Accounts Receivable are valued at expected realisable value.

Fixed Assets and Depreciation
Fixed Assets are recorded at cost less accumulated depreciation. Depreciation isprovided at the rates allowed by the Inland Revenue Department.

Investment
Investment is recorded at cost.

Goods and Service Tax
These statements are prepared on a G.S.T exclusive basis.

Taxation
The Society, being a charitable organisation, is only taxed on income frombeyond the circle of membership.

Differential Reporting
These financial statements qualify for differential reporting as they areprepared for a society which is not publicly accountable and is not large underdefined criteria. All appropriate exemptions have been applied.

CHANGES IN ACCOUNTING POLICIES
There have been no changes in accounting policies. All policies have been applied on bases consistent with those used in previous years.

THE INTERNET SOCIETY OF NEW ZEALAND INC
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 SEPTEMBER 1998

2. NET LOSS FROM DOMAIN NAME SERVICES

The net loss from Domain Name Services is for the 6 months period ending 31March 1997. The operations of Domain Name Services were transferred to a newcompany, The NZ Internet Registry Ltd, on 1 April 1997.

3. LOAN

The loan payable to The New Zealand Internet Registry was created following theseparation of the Domain Names Service. During the current year the Society hasentered into a sale & purchase agreement with Domainz, which has removed theloan and resulted in a Realisation of Goodwill.

4. FIXED ASSETS

5. RELATED PARTY TRANSACTION

The Society has received $120,000 in Management Fees during the period inaccordance with the Management Services Agreement between the Society andDomainz.

END OF AUDITED ACCOUNTS

* Interest on $50,000 investment to provide one/two annual scholarships

** One/Two annual scholarships

*** ThinkQuest International

© 1998 The Internet Society of New Zealand