FLORHAM CONSULTING CORP - FORM 8-K/A - EX-99.3 - February 16, 2011

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EX-99.13 - FLORHAM CONSULTING CORPv211591_ex99-13.htm
 
Independent Auditors’ Report

To the members of Culinary Tech Center, LLC
New York, New York

We have audited the accompanying balance sheet of Culinary Tech Center, LLC as of November 30, 2010, and the related statements of income, members’ equity, and cash flows for the eleven months 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 Culinary Tech Center, LLC as of November 30, 2010, and the results of its operations and its cash flows for the eleven months then ended in conformity with accounting principles generally accepted in the United States of America.
 
/s/ RAICH ENDE MALTER & CO. LLP
RAICH ENDE MALTER & CO. LLP
New York, New York
February 15, 2011

 
 
 

CULINARY TECH CENTER, LLC

Balance Sheet
November 30, 2010

ASSETS
      
Current Assets
      
Cash
   $ 914  
Accounts receivable, net of allowance for uncollectable accounts of $5,359
     1,066,545  
Prepaid expenses
     1,717  
      1,069,176  
         
Fixed Assets
        
Furniture, fixtures and equipment
     9,513  
Leasehold improvements
     500  
      10,013  
Accumulated depreciation and amortization
     (2,470 )
      7,543  
         
    $ 1,076,719  
         
LIABILITIES AND MEMBERS' EQUITY
        
Current Liabilities
        
Accounts payable
   $ 59,006  
Accrued expenses
     16,040  
Deferred revenue
     536,561  
      611,607  
         
Members' Equity
     465,112  
         
    $ 1,076,719  

See notes to financial statements

 
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CULINARY TECH CENTER, LLC

Statement of Income
Eleven months ended November 30, 2010

Revenues, net
   $ 1,823,760  
         
Operating Costs and Expenses
        
Student instructional costs
     377,250  
Recruitment costs
     64,418  
Occupancy costs
     145,626  
General and administrative expenses
     313,185  
Related party management fees
     460,926  
Depreciation and amortization
     1,642  
      1,363,047  
         
Net Income
   $ 460,713  

See notes to financial statements

 
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CULINARY TECH CENTER, LLC

Statement of Members' Equity
Eleven months ended November 30, 2010

Balance - December 31, 2009
   $ 47,414  
         
Member Distributions
     (43,015 )
         
Net income
     460,713  
         
Balance - November 30, 2010
   $ 465,112  

See notes to financial statements
 
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CULINARY TECH CENTER, LLC

Statement of Cash Flows
Eleven months ended November 30, 2010

Cash Flows Provided by Operating Activities
      
Net income
   $ 460,713  
Adjustments to reconcile net income to net cash provided by operating activities:
        
Amortization of other assets
     38  
Depreciation and amortization
     1,604  
Provision for bad debts
     2,587  
(Increase) in:
        
Accounts receivable
     (794,694 )
Prepaid expenses
     (271 )
Increase in:
        
Accounts payable
     20,577  
Accrued expenses
     7,033  
Deferred revenue
     340,315  
Net cash provided by operating activities
     37,902  
         
Cash Flows Provided By (Used In) Investing Activities
        
Return of security deposits
     3,523  
Purchase of leasehold improvements
     (500 )
Net cash provided by financing activities
     3,023  
         
Cash Flows (Used In) Financing Activities
        
Distributions to members
     (43,015 )
Net cash (used in) financing activities
     (43,015 )
         
Net Decrease In Cash
     (2,090 )
         
Cash - beginning of period
     3,004  
         
Cash - end of period
   $ 914  
         
Supplemental Disclosure of Cash Flow Information
        
Cash paid during the period for:
        
Interest
   $ -  
Taxes
   $ -  

See notes to financial statements

 
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CULINARY TECH CENTER, LLC

Notes to Financial Statements
November 30, 2010
 
 
 1 -  ORGANIZATION  AND NATURE OF BUSINESS

Culinary Tech Center, LLC (“Company”) was formed as a limited liability company in the state of New York on June 13, 2008 and has its corporate offices located in New York City, NY.  The Company owns and operates three state licensed vocational training schools. Each licensed vocational training school provides its vocational education and training programs to students primarily for two New York State agencies.

2 -   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This summary of significant accounting policies of the Company is presented to assist in understanding the Company’s financial statements.  The financial statements and notes are representations of the Company’s management who are responsible for their integrity and objectivity.  These accounting policies are in conformity with accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements.

a. Cash and Cash Equivalents - The Company considers all short-term investments, with an original maturity of three months or less, to be cash equivalents.  Accounts at banking institutions may at times exceed federally insured limits.  As of November 30, 2010, the Company had no balances over such limits.

b. Revenue Recognition - The Company derives its revenue substantially from tuition charged for courses. Deferred revenue is recorded for the undelivered portion of billed tuition.  Tuition billed to students is recognized as revenue ratably on a straight line basis over the schedule of classroom attendance.

c. Accounts Receivable – Accounts receivable are recorded net of an allowance for uncollectible amounts.  On a periodic basis, the Company evaluates its accounts receivable and establishes an allowance for doubtful accounts based on a history of past write-offs and collections as well as current conditions.  As of November 30, 2010, the Company recorded an allowance of $5,359.

d. Fixed Assets - Fixed assets are carried at cost.  Depreciation of furniture and equipment is calculated using the straight line method over the estimated useful lives of the related assets ranging from five to seven years. Leasehold improvements are amortized using the straight line method over the term of the lease or the estimated useful life, if shorter.  Expenditures for repairs and maintenance are charged to expense as incurred.

 
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e. Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) 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 may differ from those estimates.  Estimates are used in accounting for, among other things, useful lives for depreciation and amortization and future cash flows associated with impairment testing for long-lived assets.

f. Fair Value of Financial Instruments - The Company’s financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable and deferred revenue, which approximate fair value because of their short maturities.

g. Income Taxes - The Company is a limited liability company which is treated as a partnership for income tax purposes.  Accordingly, the Company’s members are responsible for income taxes on their proportionate share of the Company’s income.

ASC 740 “Income Taxes” (“ASC 740”) (formerly known as FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109”) requires management to determine whether a tax position of the Company is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position.  The tax benefit to be recognized is measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement which could result in the Company recording a tax liability that would reduce the Company’s net assets.

Beginning with the 2009 annual financial statements, the Company adopted ASC 740.  Based on its continued analysis, management has determined that the application of ASC 740 did not result in a material impact to the accompanying financial statements.  The Company is subject to examination by U.S. federal and state authorities for returns filed for the three most recent years.  As of November 30, 2010, the Company did not have any unrecognized tax benefits and does not expect this to change significantly over the next 12 months.

h. Advertising - The Company expenses advertising costs as incurred.  Advertising expense for the eleven month period ended November 30, 2010 was $1,236.

3 – RELATED PARTY TRANSACTIONS

The Company is charged management fees from a company that is operated and controlled by the same individuals who are members of the Company.  During the eleven month period ended November 30, 2010, management fees in the aggregate amount of $460,926 were charged to the Company.

 
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4 – COMMITMENTS AND CONTINGENCIES

During the period ended November 30, 2010, the Company conducted its operations from various locations in New York State under various written leases and verbal agreements. The Company was responsible for maintenance, insurance and other occupancy expenses.

The minimum annual payments under written lease obligations are $27,850 for the year ending December 31, 2011.

Rent expense for the eleven months ended November 30, 2010 was $143,837.

5 – SUBSEQUENT EVENTS

Subsequent events have been evaluated through February 15, 2011, the date the financial statements were available to be issued.

On December 1, 2010, the Company consummated a transaction effective November 30, 2010, whereby the Company became a wholly-owned subsidiary of Educational Training Institute, Inc., (“ETI”) which in turn is a wholly-owned subsidiary of Oak Tree Educational Partners, Inc. (“OTEP”).
 
 
 

FLORHAM CONSULTING CORP Reports