Attached files
Exhibit 99.1
BROOKRIDGE FUNDING
LLC
FINANCIAL
STATEMENTS
DECEMBER 31,
2008
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TABLE OF CONTENTS
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Page(s)
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INDEPENDENT AUDITOR'S
REPORT
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i
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FINANCIAL STATEMENTS
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EXHIBIT A
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Balance
Sheet as of December 31, 2008
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ii
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EXHIBIT B
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Statement
of Income for the year ended December 31, 2008
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iii
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EXHIBIT C
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Statement
of Changes in Members' Capital for the year ended December 31,
2008
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iv
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EXHIBIT D
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Statement
of Cash Flows for the year ended December 31, 2008
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v
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EXHIBIT E
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Notes
to Financial Statements
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vi-vii
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INDEPENDENT AUDITOR'S REPORT ON SUPPLEMENTAL
INFORMATION
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viii
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Schedule
1
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Schedule
of Operating Expenses for the year ended December 31, 2008
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ix
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i
INDEPENDENT AUDITOR’S
REPORT
To the
Members
Brookridge
Funding LLC
Danbury,
Connecticut
We have
audited the accompanying balance sheet of Brookridge Funding LLC (a Delaware
Limited Liability Company), as of December 31, 2008 and the related statements
of income, changes in members’ capital and cash flows for the years then
ended. These financial statements are the responsibility of the
Company’s management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We
conducted our audit in accordance with auditing standards generally accepted in
the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe
our audit provides a reasonable basis for our opinion.
In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Brookridge Funding LLC as of
December 31, 2008, and the results of its operations and its cash flows for the
year then ended in conformity with accounting principles generally accepted in
the United States of America.
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/s/ Reynolds & Rowella, LLP | |
Ridgefield,
Connecticut
February
13, 2009
ii
EXHIBIT A
BROOKRIDGE FUNDING LLC
BALANCE SHEET
DECEMBER 31, 2008
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2008
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ASSETS
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CURRENT ASSETS
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Cash
and cash equivalents
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$ | 739,303 | ||
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Factored
accounts receivable and purchase orders funded, less reserve for doubtful
accounts of $54,604
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1,627,359 | |||
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Fees
receivable
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98,707 | |||
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TOTAL
CURRENT ASSETS
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2,465,369 | |||
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OTHER ASSETS
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Loan
receivable - related party
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619,205 | |||
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TOTAL
ASSETS
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$ | 3,084,574 | ||
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LIABILITIES AND MEMBERS'
CAPITAL
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CURRENT LIABILITIES
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Loan
payable
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$ | 2,353,081 | ||
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Factored
reserve payable
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139,017 | |||
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Accounts
payable
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2,813 | |||
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TOTAL
CURRENT LIABILITIES
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2,494,911 | |||
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MEMBERS' CAPITAL
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589,663 | |||
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TOTAL
LIABILITIES AND MEMBERS' CAPITAL
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$ | 3,084,574 | ||
See notes
to Financial Statements.
iii
EXHIBIT B
BROOKRIDGE FUNDING LLC
STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2008
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2008
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REVENUES
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Fee
income
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$ | 1,127,227 | ||
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Brookridge
Trade Finance management fee
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355,168 | |||
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Other
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7,400 | |||
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Interest
income
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11,902 | |||
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TOTAL
INCOME
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1,501,697 | |||
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Operating
expenses
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1,194,190 | |||
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NET
INCOME
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$ | 307,507 | ||
See notes
to Financial Statements.
iv
EXHIBIT C
BROOKRIDGE FUNDING LLC
STATEMENTS OF CHANGES IN MEMBERS'
CAPITAL
FOR THE YEAR ENDED DECEMBER 31,
2008
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2008
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MEMBERS' BEGINNING CAPITAL
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$ |
282,156
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Net
income
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307,507
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MEMBERS' ENDING CAPITAL
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$ |
589,663
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See notes to Financial Statements.
v
EXHIBIT D
BROOKRIDGE FUNDING LLC
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31,
2008
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2008
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CASH FLOWS FROM OPERATING
ACTIVITIES:
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Net
income
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$ | 307,507 | ||
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Adjustments
to reconcile net income to net cash flows
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provided
by operating activities:
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Changes
in assets and liabilities:
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Decrease
in assets -
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Other
assets
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2,000 | |||
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Fees
receivable
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1,081 | |||
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Decrease
in liabilities -
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Accrued
expenses
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(963 | ) | ||
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Factored
reserve payable
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(107,160 | ) | ||
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NET
CASH PROVIDED BY OPERATING ACTIVITIES
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202,465 | |||
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CASH FLOWS FROM INVESTING
ACTIVITIES:
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Factored
accounts receivable and purchase orders funded
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1,756,705 | |||
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Loan
receivable - related party
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(619,205 | ) | ||
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NET
CASH PROVIDED BY INVESTING ACTIVITIES
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1,137,500 | |||
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CASH FLOWS FROM FINANCING
ACTIVITIES:
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Payments
of long-term debt
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(796,919 | ) | ||
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NET
CASH USED IN FINANCING ACTIVITIES
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(796,919 | ) | ||
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NET
INCREASE IN CASH
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543,046 | |||
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CASH
AT BEGINNING OF THE YEAR
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196,257 | |||
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CASH
AT END OF THE YEAR
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$ | 739,303 | ||
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SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION
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Cash
paid for interest
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$ | 482,331 | ||
See notes to Financial Statements.
vi
EXHIBIT
E
BROOKRIDGE FUNDING
LLC
NOTES TO FINANCIAL
STATEMENTS
DECEMBER 31,
2008
NOTE 1 – NATURE OF BUSINESS
AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of
Business
Brookridge
Funding LLC (the "Company") was organized in the state of Delaware and began
operations on December 22, 2004 for the purpose of investing in secured
transactions. The Company provides commercial accounts receivable
factoring and purchase order funding services. The Company’s clients
are located throughout the United States.
Use of
Estimates
The
preparation of the 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, the 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.
Cash and Cash
Equivalents
The
Company considers highly liquid investments with a maturity of three months or
less to be cash equivalents. In the normal course of business, the
Company may maintain cash held at financial institutions in excess of the
insured limit of $100,000. The Company does not believe it is exposed
to any significant credit risk related to cash.
Revenue
Recognition
The
Company provides factoring of accounts receivable as well as purchase order
funding. The Company receives a fee for providing this
service. Revenue is recognized when the money is advanced to the
customer.
The
Company also receives a management fee which is recognized when
earned.
Allowance for Doubtful
Accounts
Factored
accounts receivables and purchase order fundings are carried at original amount
less an estimate of allowance for doubtful accounts based on a monthly review of
all outstanding amounts. Management determines the allowance for
doubtful accounts by identifying troubled accounts and by using historical
experience applied to an aging of accounts. Factored accounts
receivables and purchase order fundings are written off when deemed
uncollectible. Recoveries of receivables and purchase orders
previously written off are recorded as income when received.
vii
EXHIBIT
E
BROOKRIDGE FUNDING
LLC
NOTES TO FINANCIAL
STATEMENTS
DECEMBER 31,
2008
NOTE 1 – NATURE OF BUSINESS
AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Income
Taxes
The
Company is not a taxpaying entity for federal income tax purposes, and thus no
provision for income taxes has been recognized. Income of the Company
is taxed to partners in their respective returns.
Members’
Capital
The
Members’ Capital account consists of investments by the members.
NOTE 2 – RELATED PARTY
TRANSACTIONS
Loan
receivable – related party is a loan receivable from Fairfield Factors, LLC
(“Fairfield”). Both the Company and Fairfield have a common
owner. The loan is payable by December 31, 2010 with interest at 3%
and is unsecured.
The
Company has a management agreement with Brookridge Funding Corporation where the
Company pays a management fee monthly for services provided by Brookridge
Funding Corporation. The Corporation has the same common owners as the
Company.
NOTE 3 – LOAN
PAYABLE
During
2006, the Company entered into a $3,150,000 note at 16% interest. It
is collateralized by substantially all of the assets of the Company as well as
personal guarantees of the Partners. At December 31, 2008, the amount
outstanding was $2,353,081.
NOTE 4 – FEES
RECEIVABLE
The
Company receives a management fee from Brookridge Trade Finance for managing the
business it refers. The Company refers business to this entity and is
entitled to a fee equal to 1/12th of
1% of ending total assets of the entity at the end of each calendar
month. The Company is also entitled to a profit sharing fee of 50% of
the net profit in excess of a 15% hurdle rate, defined by the agreement, and in
excess of a high water mark, defined by the agreement, of the entity at the end
of each quarter.
viii
INDEPENDENT AUDITOR’S REPORT
ON SUPPLEMENTAL INFORMATION
To the
Members
Brookridge
Funding LLC
Danbury,
Connecticut
Our audit
was made for the purpose of forming an opinion on the basic financial statements
taken as a whole. The schedule of operating expenses is presented for
purposes of additional analysis and are not a required part of the basic
financial statements. Such information has been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, is fairly stated in all material respects in relation to the
financial statements taken as a whole.
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/s/ Reynolds & Rowella, LLP | |
Ridgefield,
Connecticut
February
13, 2009
ix
Schedule 1
BROOKRIDGE FUNDING LLC
SCHEDULE OF OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31,
2008
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Management
fees
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$ |
619,300
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Commissions
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48,475
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Professional
fees
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43,634
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Miscellaneous
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450
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Interest
expense
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482,331
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1,194,190
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See
auditor's report.
x
Schedule 1
BROOKRIDGE FUNDING LLC
SCHEDULE OF OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31,
2008
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Management
fees
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$ |
619,300
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Commissions
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48,475
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Professional
fees
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43,634
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Miscellaneous
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450
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Interest
expense
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482,331
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1,194,190
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See
auditor's report.
xi