Exhibit 99.3

RALPH L. WADSWORTH CONSTRUCTION COMPANY, INC.

 

COMPARATIVE BALANCE SHEETS

 

 

The accompanying notes are an integral part of these financial statements.

RALPH L. WADSWORTH CONSTRUCTION COMPANY, INC.

 

COMPARATIVE STATEMENT OF INCOME

 

 

The accompanying notes are an integral part of these financial statements.

 

RALPH L. WADSWORTH CONSTRUCTION COMPANY, INC.

 

COMPARATIVE STATEMENT OF RETAINED EARNINGS

 

 

The accompanying notes are an integral part of these financial statements.

RALPH L. WADSWORTH CONSTRUCTION COMPANY, INC.

 

COMPARATIVE STATEMENT OF CASH FLOWS

 

 

The accompanying notes are an integral part of these financial statements.

RALPH L. WADSWORTH CONSTRUCTION COMPANY, INC.

 

COMPARATIVE STATEMENT OF COMPREHENSIVE INCOME

 

 

The accompanying notes are an integral part of these financial statements.

RALPH L. WADSWORTH CONSTRUCTION COMPANY, INC.

 

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2009

 

 

Company’s Activities and Operating Cycles

 

The Company constructs large commercial and industrial projects. The work is performed under fixed contracts and fixed price contracts modified by incentive and penalty provisions. Contract length varies from 3 to 30 months.

 

Cash and Cash Equivalents

 

Cash and cash equivalents include cash on hand, cash in banks and all highly liquid investments with a maturity of three months or less at the time of purchase.

 

Marketable Securities — Available For Sale

 

All marketable securities are stated at market value. By policy, the Company invests primarily in high-grade marketable securities. All marketable securities are defined as available for sale. The Company used the first in, first out (FIFO) method of determining cost for realized gains or losses. The total amount of $18,026,710 and $13,672,808 is presented as a current asset. The fair market value of assets is determined by outside valuation. Unrealized holding gains (loss) on securities of $187,008 and $(278,032) is shown as a separate line item of stockholders’ equity as of September 30, 2009 and December 31, 2008.

 

Fixed Assets and Depreciation

 

Fixed assets are carried at cost. Maintenance repairs and minor renewals are charged against earnings when incurred. Additions and major renewals are capitalized.

 

The cost and accumulated depreciation of assets sold or retired are removed from the respective accounts and any gain or loss is reflected in earnings.

 

The company uses straight line depreciation with the following useful lives:

 

 

 

Depreciation expense for the nine months period ended September 30, 2009 and 2008 was as follows:

 

 

The Company has a depreciation allocation program to allocate depreciation to various jobs based on equipment usage applied on an equipment usage rate. For the nine month period ended September 30, 2009 and 2008 the Company applied $1,587,446 and $1,075,885 in depreciation to jobs in progress.

 

RALPH L. WADSWORTH CONSTRUCTION COMPANY, INC.

 

NOTES TO FINANCIAL STATEMENTS — (Continued)

 

Managements Use of Estimates

 

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at 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.

 

Warranty Costs

 

Historically, the Company has accrued a provision for estimated warranty costs for projects that specify a warranty provision in the contract. The warranty provision is based on the total estimated warranty costs specified in certain project contracts, multiplied by a warranty experience probability rate determined by the Company’s warranty claim history. The company has elected not to accrue any warranty costs for the nine month period ended September 30, 2009 because, in management’s opinion, the probability of any warranty costs, as related to specific contracts, has been sufficiently reduced as to not require an accrual.

 

Income Taxes

 

The Company has elected to be taxed under the provisions of Subchapter S of the Internal Revenue Code. The Company will not incur federal or state income taxes, instead it’s earnings and losses will be included in the stockholders’ personal income tax returns and will be taxed based on the stockholders’ personal tax strategies.

 

Inventory

 

The Company has inventories of construction materials. All inventories are carried at lower of cost or market and consists of the following:

 

 

Construction Contracts

 

The Company has elected to report income from its long term construction contracts by the percentage of completion method for financial statement presentation. In management’s opinion this method fairly presents the Company’s results of operations and changes in financial position.

 

Earnings on long-term construction contracts are recognized on the percentage-of-completion method in the ratio that costs incurred bear to total estimated costs. Earnings and costs on contracts are subject to revision throughout the terms of the contracts, and any required adjustments are made in the period in which revisions become known. Provisions are made for the full amounts of anticipated losses in the period in which they are first determinable. Claims for additional contract revenues are recognized to the extent of costs incurred if it is probable that the claim will result in additional revenue and the amount can be reliably estimated. Profit on such claims is not recognized until the claims have been allowed. Changes in job performance, job conditions, and estimated profitability may result in revisions to costs and income, which are recognized in the period in which the revisions are determined. Changes in estimated job profitability resulting from job performance, job conditions, contract penalty provisions, claims, change orders, and settlements, are accounted for as changes in estimates in the current period.

 

RALPH L. WADSWORTH CONSTRUCTION COMPANY, INC.

 

NOTES TO FINANCIAL STATEMENTS — (Continued)

 

Balances billed but not paid pursuant to retainage provisions under construction contracts generally become due upon completion of the contracts and acceptance by the owners. Construction contracts are normally completed within one or two years.

 

Costs and estimated earnings in excess of billings on uncompleted contracts comprise principally revenues recognized on contracts for which billings have not been presented to the contract owners at the balance sheet date. Such revenues are expected to be billed and collected generally within one year.

 

Billings in excess of costs and estimated earnings on uncompleted contracts comprise principally revenues for which billings have been presented to contract owners for which a proportionate amount of costs have yet to be expended. Such costs are anticipated to be expended and excess billings earned within one year.

 

The Company has three cost plus percentage of costs contracts, with a related party — See Note C. Under a cost plus percentage of costs arrangement, the Company receives a fee based on the direct costs expended on certain contracts.

 

Unincorporated Joint Venture Interest

 

The Company, as a 25% member/owner in an unincorporated limited liability company joint venture on the I-15 NOW Design Build project, has included it’s share of the following financial information in the financial statements for the nine months period ended September 30, 2009 and 2008.

 

 

Compensated Absences

 

Employees of the Company are entitled to paid vacations and sick leave depending on job classification, length of service and other factors. The Company has recognized $287,885 and $216,705 as a liability for vacation and sick pay that is due and payable on the Company books as of September 30, 2009 and December 31, 2008 and is included in accrued wages.

 

Profit Sharing/Pension Plan

 

The Company has established a 401(K) profit sharing plan and a 401(k) Roth plan for employees of the corporation. The Board of Directors has elected to match contributions in the amount of $267,266 and $251,831 for the nine months period ended September 30, 2009 and 2008.

 

The Company has a Money Purchase Pension Plan, which is job cost coded to various jobs. Earned pension costs for the nine months period ended September 30, 2009 and 2008 was $81,116 and $31,983.

 

Impairment of Long-Lived Assets

 

In the event that facts and circumstances indicate that property and equipment or other assets may be impaired, an evaluation recoverability would be performed. If an evaluation required, the estimated future undiscounted cash flows associated with the asset are compared to the asset’s carrying amount to determine if a write-down to fair value is necessary.

 

RALPH L. WADSWORTH CONSTRUCTION COMPANY, INC.

 

NOTES TO FINANCIAL STATEMENTS — (Continued)

 

 

Long-Term Liabilities

 

The following summarizes the Company’s long-term debt at September 30, 2009 and December 31, 2008.

 

 

RALPH L. WADSWORTH CONSTRUCTION COMPANY, INC.

 

NOTES TO FINANCIAL STATEMENTS — (Continued)

 

 

The Company’s long-term maturities for the next five years as of September 30 are:

 

 

RALPH L. WADSWORTH CONSTRUCTION COMPANY, INC.

 

NOTES TO FINANCIAL STATEMENTS — (Continued)

 

 

The Company rents an office building from a related party. The building is located at 166 East 14000 South, Draper, Utah. The rent for this location is $23,975 per month. The rate will increase at 3% per year. The Company rents a shop on Dannon Way from a related party and pays $12,000 per month.

 

The future lease payments as of September 30, 2009 are as follows:

 

 

The Company entered into a service agreement with Wadsworth Development Group LLC, a Utah LLC, whose members are all related parties. The LLC is in the business of developing real property for retail, commercial, industrial and/or office uses. The Company has agreed to provide furnished office space, support staff and support equipment. All rates are based on fair market rates or actual costs. The term of the agreement was for one year beginning, January 1, 2005 with additional one year options. The option has been exercised for 2009.

 

The Company has several contracts totaling $4,342,116 and $3,308,950 with backlog at $188,498 and $1,641,142 with related parties as of September 30, 2009 and 2008. These are handled in an arms length contract at cost and are subject to normal construction draws. Related party contracts are as follows:

 

 

 

Costs, estimated earnings, and billings for the nine months period ended September 30, 2009 and 2008 are summarized as follows:

 

 

RALPH L. WADSWORTH CONSTRUCTION COMPANY, INC.

 

NOTES TO FINANCIAL STATEMENTS — (Continued)

 

Included in the accompanying balance sheet under the following captions:

 

 

 

The following schedule summarizes changes in backlog on contracts during the nine month period ended September 30, 2009 and 2008. Backlog represents the amount of revenue the Company expects to realize from work to be performed on uncompleted contracts in progress at year end and from contractual agreements on which work has not yet begun.

 

 

The Company entered into no additional contracts between October 1, 2009 and November 13, 2009.

 

 

Concentration of Credit Risk

 

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of temporary cash investments and trade accounts receivables. The Company places its temporary cash investments with financial institutions and limits the amount of credit exposure to any one financial institution. Concentrations of credit risk with respect to trade receivables are limited due to the large number of customers comprising the Company’s customer base and their dispersion across different industries and geographic areas. As of September 30, 2009, the Company had no significant concentration of risk.

 

Concentrations of Credit Risk Arising from Cash Deposits in Excess of Insured Limits

 

The Company maintains cash balances at several financial institutions located in Utah. Accounts at each institution are insured by the Federal Deposit Insurance Corporation up to $250,000 in 2009 and $100,000 in 2008. At September 30, 2009 and 2008, the Company has $10,252,567 and $19,949,735 uninsured cash balances.