Exhibit 99.2
Foremost Fabricators, LLC |
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Condensed balance sheets (Unaudited) |
2 |
Condensed statements of income (Unaudited) |
3 |
Condensed statements of cash flows (Unaudited) |
4 |
Notes to condensed financial statements (Unaudited) |
5-8 |
Foremost Fabricators, LLC
(A Limited Liability Company)
Condensed Balance Sheets
March 31, 2014 (Unaudited) and December 31, 2013
March 31, |
December 31, |
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2014 |
2013 |
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ASSETS |
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Current Assets |
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Cash |
$ | 20,621 | $ | 14,878 | ||||
Trade receivables |
3,869,059 | 857,312 | ||||||
Inventories |
11,904,022 | 13,983,524 | ||||||
Prepaid expenses |
42,508 | 15,353 | ||||||
Total current assets |
15,836,210 | 14,871,067 | ||||||
Leasehold Improvements and Equipment, at depreciated cost |
4,433,116 | 4,213,070 | ||||||
Other Assets |
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Deposits |
59,020 | 43,120 | ||||||
$ | 20,328,346 | $ | 19,127,257 | |||||
LIABILITIES AND MEMBERS' EQUITY |
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Current Liabilities |
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Notes payable, bank |
$ | 4,994,000 | $ | 5,350,000 | ||||
Current maturities of long-term debt |
250,000 | 250,000 | ||||||
Accounts payable |
2,682,235 | 2,621,704 | ||||||
Accrued expenses |
996,030 | 666,309 | ||||||
Total current liabilities |
8,922,265 | 8,888,013 | ||||||
Members' Equity |
11,406,081 | 10,239,244 | ||||||
$ | 20,328,346 | $ | 19,127,257 |
See Notes to Condensed Financial Statements.
Foremost Fabricators, LLC
(A Limited Liability Company)
Condensed Statements of Income (Unaudited)
Three Months Ended March 31, 2014 and 2013
March 31, |
March 31, |
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2014 |
2013 |
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Revenues: |
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Product sales |
$ | 18,809,591 | $ | 18,818,211 | ||||
Other income |
30,002 | 11,595 | ||||||
Total revenue |
18,839,593 | 18,829,806 | ||||||
Cost of goods sold |
15,983,115 | 16,620,437 | ||||||
Gross profit |
2,856,478 | 2,209,369 | ||||||
Operating expenses: |
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Selling and delivery |
293,729 | 350,318 | ||||||
General and administrative |
862,217 | 748,828 | ||||||
1,155,946 | 1,099,146 | |||||||
Operating income |
1,700,532 | 1,110,223 | ||||||
Nonoperating expense: |
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Interest expense |
(58,695 | ) | (53,018 | ) | ||||
Net income |
$ | 1,641,837 | $ | 1,057,205 |
See Notes to Condensed Financial Statements.
Foremost Fabricators, LLC
(A Limited Liability Company)
Condensed Statements of Cash Flows (Unaudited)
Three Months Ended March 31, 2014 and 2013
March 31, |
March 31, |
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2014 |
2013 |
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Cash Flows From Operating Activities |
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Net income |
$ | 1,641,837 | $ | 1,057,205 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation |
113,310 | 86,400 | ||||||
Change in assets and liabilities: |
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(Increase) decrease in: |
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Trade receivables |
(3,011,747 | ) | (2,308,338 | ) | ||||
Inventories |
2,079,502 | 2,337,303 | ||||||
Prepaid expenses |
(27,155 | ) | 51,287 | |||||
Other assets |
(15,900 | ) | 3,200 | |||||
Increase (decrease) in: |
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Accounts payable |
60,531 | (541,100 | ) | |||||
Accrued expenses |
329,721 | 340,236 | ||||||
Net cash provided by operating activities |
1,170,099 | 1,026,193 | ||||||
Cash Flows From Investing Activities |
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Purchase of leasehold improvements and equipment |
(333,356 | ) | (239,459 | ) | ||||
Net cash (used in) investing activities |
(333,356 | ) | (239,459 | ) | ||||
Cash Flows From Financing Activities |
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Net (payments) on line of credit, bank |
(356,000 | ) | (291,000 | ) | ||||
Distributions |
(475,000 | ) | (471,982 | ) | ||||
Net cash (used in) financing activities |
(831,000 | ) | (762,982 | ) | ||||
Increase in cash |
5,743 | 23,752 | ||||||
Cash, beginning |
14,878 | 21,900 | ||||||
Cash, ending |
$ | 20,621 | $ | 45,652 |
See Notes to Condensed Financial Statements.
Foremost Fabricators, LLC
Notes To Condensed Financial Statements
Note 1. Nature of Business, Subsequent Event and Significant Accounting Policies
Nature of business and subsequent event:
The Company is engaged in the fabrication and sale of aluminum sheet products and the sale of fiberglass sheet materials to the recreational vehicle industry. The Company sells its products to customers throughout the United States, generally on terms of 30 days.
On June 27, 2014, the Company sold substantially all of its assets to an unrelated party.
Significant accounting policies:
Use of estimates:
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
The accompanying unaudited Condensed Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States of America for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. These condensed financial statements should be read in conjunction with the audited financial statements and notes for the year ended December 31, 2013. In our opinion, these Condensed Financial Statements reflect all adjustments, consisting of normal, recurring accruals, necessary to present fairly our Condensed Financial Statements for the interim periods presented herein. The consolidated results of operations for the three months ended March 31, 2014 and 2013, are not necessarily indicative of the results to be expected for the full year.
Long-lived assets:
In accordance with ASC 360, “Accounting for the Impairment or Disposal of Long-Lived Assets”, the Company reviews its long-lived assets periodically to determine potential impairment by comparing the carrying value of the long-lived assets with the estimated future net undiscounted cash flows expected to result from the use of the assets, including cash flows from disposition. Should the sum of the expected future net cash flows be less than the carrying value, the Company would recognize an impairment loss at that date. An impairment loss would be measured by comparing the amount by which the carrying value exceeds the fair value of the long-lived assets. The Company concluded that there was no impairment at March 31, 2014 or 2013.
Revenue recognition:
The Company generally manufactures product based on specific orders from customers. Revenue is recognized normally upon shipment and issuance of an invoice to the customer. The expense associated with the cost of deliveries to customers for the three months ended March 31, 2014 and 2013 is approximately $225,000 and $295,000, respectively, and is included in selling and delivery expenses.
Subsequent events:
The Company has evaluated subsequent events to determine potential recognition and/or disclosure through September 11, 2014, the date the condensed financial statements were available to be issued.
Foremost Fabricators, LLC
Notes To Condensed Financial Statements
Note 2. Inventories
Inventories at March 31, 2014 and December 31, 2013 consist of the following:
March 31, |
December 31, |
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2014 |
2013 |
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Raw materials |
$ | 11,516,530 | $ | 13,186,843 | ||||
Finished goods |
353,770 | 771,443 | ||||||
Scrap |
33,722 | 25,238 | ||||||
$ | 11,904,022 | $ | 13,983,524 |
Note 3. Leasehold Improvements and Equipment
The cost of leasehold improvements and equipment and the related accumulated depreciation at March 31, 2014 and December 31, 2013 are as follows:
March 31, |
December 31, |
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2014 |
2013 |
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Leasehold improvements |
$ | 680,991 | $ | 670,160 | ||||
Machinery and equipment |
5,261,665 | 4,939,140 | ||||||
Furniture and fixtures |
229,805 | 229,805 | ||||||
Vehicles |
50,140 | 50,140 | ||||||
6,222,601 | 5,889,245 | |||||||
Less accumulated depreciation |
1,789,485 | 1,676,175 | ||||||
$ | 4,433,116 | $ | 4,213,070 |
Note 4. Income Taxes
The Company, with the consent of its members, is taxed in accordance with the partnership sections of the Internal Revenue Code and a similar section of the state tax laws which provide that, in lieu of corporation income taxes, the members account for their proportionate shares of the Company's items of income, deduction, losses, and credits. Therefore, these statements do not include any provision for income taxes; however, the Company intends to pay distributions in amounts to cover the member’s income tax liabilities related to the taxable income generated by the Company.
Foremost Fabricators, LLC
Notes To Condensed Financial Statements
Note 5. Major Customers
Net sales to customers comprising 10% or more of total net sales for the three months ended March 31, 2014 and 2013, and the related trade receivable balances at March 31, 2014 and December 31, 2013, are as follows:
March 31, |
March 31, |
March 31, |
December 31, |
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2014 |
2014 |
2013 |
2013 |
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Net |
Trade Receiv- |
Net |
Trade Receiv- |
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Sales |
able Balance |
Sales |
able Balance |
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Customer A |
$ | 9,007,000 | $ | 1,447,000 | $ | 9,329,000 | $ | 160,000 | ||||||||
Customer B |
6,890,000 | 1,409,000 | 6,974,000 | 268,000 | ||||||||||||
$ | 15,897,000 | $ | 2,856,000 | $ | 16,303,000 | $ | 428,000 |
Note 6. Lease Agreements
The Company leases its operating facilities from an unrelated party under agreements which require monthly rentals of approximately $47,000 plus the payment of property taxes, insurance and normal maintenance. These agreements expire on various dates through December 2017 and provide for automatic annual renewals.
The Company also leases vehicles and equipment from unrelated parties under several agreements which require monthly rentals totaling approximately $12,000. The agreements expire between 2014 and 2019.
The net rental expense included in the statements of income for the three months ended March 31, 2014 and 2013 is approximately $200,000 and $181,000, respectively.
Future commitments under these agreements are as follows:
Buildings |
Vehicles |
Equipment |
Total |
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Year ending December 31, |
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2014 |
$ | 405,000 | $ | 25,000 | $ | 80,000 | $ | 510,000 | ||||||||
2015 |
205,000 | 20,000 | 96,000 | 321,000 | ||||||||||||
2016 |
118,000 | - | 88,000 | 206,000 | ||||||||||||
2017 |
118,000 | - | 88,000 | 206,000 | ||||||||||||
2018 |
- | 79,000 | 79,000 | |||||||||||||
Thereafter |
- | - | 42,000 | 42,000 | ||||||||||||
$ | 846,000 | $ | 45,000 | $ | 473,000 | $ | 1,364,000 |
Foremost Fabricators, LLC
Notes To Condensed Financial Statements
Note 7. Cash Flow Information
Supplemental information relative to the statements of cash flows for the three months ended March 31, 2014 and 2013 is as follows:
March 31, 2014 |
March 31, 2013 |
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Supplemental disclosures of cash flow information: |
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Cash payments for interest |
$ | 60,361 | $ | 100,009 |
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