Attached files
Exhibit 99.3
Brookridge
Funding, LLC
Unaudited
Financial Statements
For the
Nine-Month Periods
Ended
September 30, 2009 and 2008
Brookridge
Funding, LLC
Table of
Contents
|
Page(s)
|
|
Balance
Sheet – (unaudited)
|
2
|
|
Statements
of Operations – (unaudited)
|
3
|
|
Statement
of Changes in Members’ Capital –
(unaudited)
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4
|
|
Statements
of Cash Flows – (unaudited)
|
5
|
|
Notes
to Financial Statements
|
6 –
7
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1
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Brookridge
Funding, LLC
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||||
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Balance
Sheet
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||||
|
September
30, 2009
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||||
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||||
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2009
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||||
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Assets
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(unaudited)
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|||
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Current
assets
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||||
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Cash
and cash equivalents
|
$ | 360,225 | ||
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Retained
interest in purchased accounts receivable, net
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1,593,956 | |||
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Fees
receivable
|
49,174 | |||
|
Brookridge
Trade Finance fees receivable
|
35,626 | |||
|
Total
current assets
|
2,038,981 | |||
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Other
non-current assets
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||||
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Loan
receivable - related party
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619,205 | |||
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Loan
fees, net
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7,500 | |||
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Total
other non-current assets
|
626,705 | |||
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Total
assets
|
$ | 2,665,686 | ||
|
Liabilities
and Members' Capital
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||||
|
Current
liabilities
|
||||
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Accounts
payable
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2,110,531 | |||
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Total
current liabilities
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2,110,531 | |||
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Members'
capital
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555,155 | |||
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Total
liabilities and members' capital
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$ | 2,665,686 | ||
See notes to Financial Statements.
2
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Brookridge
Funding, LLC
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||||||||
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Statements
of Operations
|
||||||||
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For
the Nine-Month Periods Ended September 30, 2009 and 2008
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||||||||
|
2009
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2008
|
|||||||
|
(unaudited)
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(unaudited)
|
|||||||
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Revenues
|
||||||||
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Fee
income
|
$ | 490,914 | $ | 857,966 | ||||
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Brookridge
Trade Finance management fee
|
217,692 | 229,180 | ||||||
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Other
|
3,312 | 3,395 | ||||||
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Interest
income
|
5,087 | 9,191 | ||||||
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Total
income
|
717,005 | 1,099,732 | ||||||
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Operating
expenses
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383,621 | 668,123 | ||||||
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Interest
expense
|
367,891 | 203,584 | ||||||
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Net
(loss) income
|
$ | (34,507 | ) | $ | 228,025 | |||
See notes to Financial Statements.
3
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Brookridge
Funding, LLC
|
||||
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Statement
of Changes in Members' Capital
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||||
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For
the Nine-Month Period Ended September 30, 2009
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||||
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Members'
capital - December 31, 2008
|
$ | 589,662 | ||
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Net
loss (unaudited)
|
(34,507 | ) | ||
|
Members'
capital - September 30, 2009
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$ | 555,155 | ||
See notes to Financial Statements.
4
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Brookridge
Funding, LLC
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||||||||
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Statements
of Cash Flows
|
||||||||
|
For
the Nine-Month Periods Ended September 30, 2009 and 2008
|
||||||||
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2009
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2008
|
|||||||
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(unaudited)
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(unaudited)
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|||||||
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Cash
flows from operating activities:
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||||||||
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Net
(loss) income
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$ | (34,507 | ) | $ | 228,025 | |||
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Adjustments
to reconcile net income to net cash
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||||||||
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flows
provided by operating activities:
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||||||||
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Changes
in assets and liabilities:
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||||||||
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Decrease
(increase) in retained interest in purchased accounts
receivable
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2,004,333 | (146,298 | ) | |||||
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Decrease
in other assets
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- | 2,000 | ||||||
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Decrease
in fees receivable
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13,907 | 6,094 | ||||||
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(Decrease)
increase in accounts payable
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(2,230 | ) | 1,381 | |||||
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Net
cash provided by operating activities
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1,981,503 | 91,202 | ||||||
|
Cash
flows from financing activities:
|
||||||||
|
Payments
on loan
|
(2,353,081 | ) | (220,470 | ) | ||||
|
Loan
fees
|
(7,500 | ) | - | |||||
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Net
cash used in financing activities
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(2,360,581 | ) | (220,470 | ) | ||||
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Net
decrease in cash
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(379,078 | ) | (129,268 | ) | ||||
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Cash
at beginning of the year
|
739,303 | 196,257 | ||||||
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Cash
at end of the year
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$ | 360,225 | $ | 66,989 | ||||
|
Supplemental
disclosure of cash flow information
|
||||||||
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Cash
paid for interest
|
$ | 203,584 | $ | 367,891 | ||||
See notes to Financial Statements.
5
Brookridge
Funding, LLC
Notes to
Financial Statements
For the
Nine-Month Period Ended September 30, 2009
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. The Company places its cash and cash
equivalents on deposit with financial institutions in the United States of
America. In October and November 2008, the Federal Deposit Insurance Corporation
(“FDIC”) temporarily increased coverage to $250,000 for substantially all
depository accounts and temporarily provides unlimited coverage for certain
qualifying and participating non-interest bearing transaction accounts. The
increased coverage is schedule to expire on December 31, 2013, at which time it
is anticipated amounts insured by the FDIC will return to $100,000. During the
year, the Company from time to time had amounts on deposit in excess of the
insured limits.
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.
6
Brookridge
Funding, LLC
Notes to
Financial Statements
For the
Nine-Month Period Ended September 30, 2009
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 was
collateralized by substantially all of the assets of the Company as well as
personal guarantees of the Partners. The loan was paid in full during the
Nine-Month period ending September 30, 2009.
Note 4 – Participations
payable
The
Company is party to several participation agreements. As part of these
agreements 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
September 30, 2009 and 2008 the Company had approximately $1,168,000 and
$2,110,000 outstanding in participations payable respectively, 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.
7