Attached files
Exhibit
99.2
Brookridge
Funding, LLC
Financial
Statements
For the
Year Ended December 31, 2007
Brookridge
Funding, LLC
Table of
Contents
| Page(s) | ||||
|
Report
of Independent Auditors
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2 | |||
|
Balance
Sheet
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3 | |||
|
Statement
of Operations
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4 | |||
|
Statement
of Changes in Members’ Capital
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5 | |||
|
Statement
of Cash Flows
|
6 | |||
|
Notes
to Financial Statements
|
7 – 8 | |||
1
Report
of Independent Auditors
To the
Members
Brookridge
Funding, LLC
Danbury,
Connecticut
We have
audited the accompanying balance sheet of Brookridge Funding, LLC (the
“Company”) as of December 31, 2007, and the related statement of operations,
changes in members’ capital and cash flows for the year 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 that 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, 2007, 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/ Cherry Bekaert & Holland L.L.P. | |
Charlotte,
North Carolina
February
18, 2010
2
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Brookridge
Funding, LLC
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Balance
Sheet
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||||
|
December
31, 2007
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||||
|
2007
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||||
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Assets
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||||
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Current
assets
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||||
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Cash
and cash equivalents
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$ | 196,257 | ||
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Retained
interest in purchased accounts receivable, net
|
3,604,202 | |||
|
Fees
receivable
|
54,791 | |||
|
Brookridge
Trade Finance fees receivable
|
44,950 | |||
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Total
current assets
|
3,900,200 | |||
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Other
non-current assets
|
2,000 | |||
|
Total
assets
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$ | 3,902,200 | ||
|
Liabilities
and Members' Capital
|
||||
|
Current
liabilities
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||||
|
Loan
payable
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$ | 3,150,000 | ||
|
Accounts
payable
|
470,045 | |||
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Total
current liabilities
|
3,620,045 | |||
|
Members'
capital
|
282,155 | |||
|
Total
liabilities and members' capital
|
$ | 3,902,200 | ||
See notes to Financial Statements.
3
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Brookridge
Funding, LLC
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Statement
of Operations
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For
the Year Ended December 31, 2007
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2007
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||||
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Revenues
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||||
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Fee
income
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$ | 1,048,071 | ||
|
Brookridge
Trade Finance management fee
|
137,687 | |||
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Other
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(2,012 | ) | ||
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Interest
income
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20,857 | |||
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Total
income
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1,204,603 | |||
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Operating
expenses
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946,355 | |||
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Interest
expense
|
504,000 | |||
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Net
loss
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$ | (245,752 | ) | |
See notes to Financial Statements.
4
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Brookridge
Funding, LLC
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Statement
of Changes in Members' Capital
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For
the Year Ended December 31, 2007
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2007
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||||
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Members'
beginning capital
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$ | 527,907 | ||
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Net
loss
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(245,752 | ) | ||
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Members'
ending capital
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$ | 282,155 | ||
See notes to Financial Statements.
5
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Brookridge
Funding, LLC
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Statement
of Cash Flows
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For
the Year Ended December 31, 2007
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2007
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Cash
flows from operating activities:
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Net
loss
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$ | (245,752 | ) | |
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Adjustments
to reconcile net income to net cash flows provided by
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operating
activities:
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||||
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Changes
in assets and liabilities:
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||||
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Increase
in retained interest in purchased accounts receivable
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(33,566 | ) | ||
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Increase
in other assets
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(2,000 | ) | ||
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Decrease
in fees receivable
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141,617 | |||
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Increase
in accrued expenses
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3,483 | |||
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Net
cash used in operating activities
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(136,218 | ) | ||
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Net
decrease in cash
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(136,218 | ) | ||
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Cash
at beginning of the year
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332,475 | |||
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Cash
at end of the year
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$ | 196,257 | ||
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Supplemental
disclosure of cash flow information
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||||
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Cash
paid for interest
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$ | 504,000 | ||
See notes to Financial Statements.
6
Brookridge
Funding, LLC
Notes to
Financial Statements
December
31, 2007
Note
1 – Nature of business and summary of significant accounting
polities
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.
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.
7
Brookridge
Funding, LLC
Notes to
Financial Statements
December
31, 2007
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, 2007, the amount
outstanding was $3,150,000.
Note
4 -– Participation payable
The
Company is party to a participation agreement. As part of the agreement each
lender is responsible for advancing their contractually agreed upon portion of
the submitted receivables. The Company is the lead lender thus all servicing is
done by the Company. The participating lender will submit funds to the Company
for their portion of the advance amount on a weekly basis. As receivables are
collected, the Company will relieve the payable by submitting principal plus any
owed interest and fees to the participating lender. At December 31, 2007 the
Company had approximately $466,000 outstanding in participation payables, which
have been included in accounts payable.
Note
5 – 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
watermark, defined by the agreement, of the entity at the end of each
quarter.
Note
6 – Subsequent events
On
December 7, 2009, the Company entered into an agreement to sell primarily all of
its assets for approximately $2.4 million at closing, plus an earn-out payment
based on future operating income of up to $800,000.
The
Company has evaluated subsequent events through February 18, 2010, the date
which the financial statements were available to be issued.
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