FLORHAM CONSULTING CORP - FORM 8-K/A - EX-99.6 - February 16, 2011

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Independent Auditor's Report

To the Board of Directors
Culinary Tech Center LLC
New York, NY

 
I have audited the accompanying balance sheet of Culinary Tech Center, LLC as of December 31, 2009, and the related statements of income, members' equity, and cash flows for the year then ended. These financial statements are the responsibility of management. My responsibility is to express an opinion on these financial statements based on my audit.

 
I conducted my audit in accordance with auditing standards generally accepted in the United States, and Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that I 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. I believe that my audit provides a reasonable basis for my opinion.

 
In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Culinary Tech Center, LLC as of December 31, 2009, 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.

 
In accordance with Government Auditing Standards, I have also issued my report dated June 2, 2010 on my consideration of Culinary Tech Center, LLC's internal control over financial reporting and on my tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements and other matters. The purpose of that report is to describe the scope of my testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of my audit.
 
/s/ Steven F. Landau, CPA
Steven F. Landau, CPA
June 2, 2010
 
 
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CULINARY TECH CENTER LLC
BALANCE SHEET
DECEMBER 31, 2009

 
ASSETS
      
       
Current Assets
      
Cash
   $ 3,004  
Student tuition receivable, net of allowance for uncollectables of $2,772
     274,438  
Prepaid expense
     939  
Total current assets
     278,381  
         
Property and Equipment, at cost, net of accumulated depreciation of $866
     8,647  
         
Other Assets
        
Organization costs, net of accumulated amortization of $65
     545  
Security deposits
     3,523  
         
Total assets
   $ 291,096  
         
LIABILITIES AND MEMBERS' EQUITY
        
         
Current Liabilities
        
Accounts payable
   $ 38,429  
Accrued expenses payable
     9,007  
Deferred tuition revenue
     196,246  
Total current liabilities
     243,682  
         
Members' Equity
     47,414  
         
Total liabilities and members' equity
   $ 291,096  

See accompanying notes to the financial statements.

 
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CULINARY TECH CENTER LLC
STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2009

 
Tuition and Student Fee Revenues
   $ 297,299  
         
Operating Costs and Expenses
        
Student instructional costs
     128,642  
Recruitment costs
     23,337  
Occupancy costs
     30,406  
General and administrative expenses
     27,304  
Total operating costs and expenses
     209,689  
         
Operating income before management fees
     87,610  
         
Related party management fees
     52,650  
         
Income before depreciation
     34,960  
         
Depreciation and amortization expense
     907  
         
Net income
   $ 34,053  

See accompanying notes to the financial statements.
 
 
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CULINARY TECH CENTER LLC
STATEMENT OF MEMBERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 2009

 
Balance - January 1, 2009
   $ 686  
         
Capital contributions, net
     12,675  
         
Net income for the year ended December 31, 2009
     34,053  
         
Balance - December 31, 2009
   $ 47,414  

See accompanying notes to the financial statements.
 
 
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CULINARY TECH CENTER LLC
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2009

Cash Flows from Operating Activities
      
Net income
   $ 34,053  
Noncash items included in net income:
        
Amortization of organization costs
     41  
Depreciation expense
     866  
      34,960  
         
Changes in operating assets and liabilities
        
Decrease (increase) in assets:
        
Student tuition receivable
     (274,438 )
Prepaid expense
     (939 )
Security deposits
     (3,523 )
Increase (decrease) in liabilities:
        
Accounts payable
     38,429  
Accrued expenses payable
     9,007  
Deferred tuition revenue
     196,246  
      (35,218 )
         
Net cash used in operating activities
     (258 )
         
Cash Flows from Investing Activities:
        
Purchase of furniture and equipment
     (9,513 )
         
Cash Flows from Financing Activities:
        
Capital contributions from members
     23,500  
Capital distributions to members
     (10,825 )
         
Net increase in cash
     2,904  
         
Cash - January 1, 2009
     100  
         
Cash - December 31, 2009
   $ 3,004  
         
Supplemental disclosure of cash flow information:
        
Cash paid during the year for interest
   $ 0  
Cash paid during the year for income taxes
   $ 0  

See accompanying notes to the financial statements.
 
 
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Culinary Tech Center LLC
Notes to Financial Statements
December 31, 2009

Note 1 - Summary of Significant Accounting Policies

 
Nature of Operations
Culinary Tech Center, LLC. (the "Company") was organized as a limited liability company (LLC) in the State of New York on June 13, 2008. The company owns and operates state licensed vocational training schools. The schools provide vocational education and training programs to students under funded contracts at various training sites located in New York State.

Revenue Recognition
The financial statements of the company are prepared on the accrual basis of accounting. Tuition billed to students is recognized as revenue, determined by the percentage of completion method.

Concentration of Credit Risk
At various times during the year, cash balances maintained in bank accounts may exceed FDIC insurable limits. In the normal course of business, the company extends unsecured credit to its students. Many students receive financial assistance from community based and government agencies. Collection of student accounts receivable is reasonably assured provided that the school and students continuously comply with various financial assistance regulations.

Estimates
The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

Accounts Receivable
Accounts Receivable are recorded net of an allowance for uncollectibles. The allowance is estimated from historical performance and managements' experience.

Fixed Assets and Depreciation
Property and equipment are recorded at cost. Depreciation is provided on the straight-line method over the estimated useful lives of the respective assets. Maintenance and repairs are charged to expense as incurred.

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

 
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Culinary Tech Center, LLC
Notes to Financial Statements
December 31, 2009

Note 2 - Property and Equipment
The major classifications of property and equipment, are summarized below:

 
   
Estimated
        
   
Useful Life
        
Computer equipment
  
5
     $ 6,541  
Furniture, fixtures and equipment
  
7
       2,972  
            9,513  
Accumulated depreciation
           (866 )
Net book value
         $ 8,647  

Note 3 - Lease Commitments
During 2009, the company occupied office space in White Plains NY, and instructional training facilities in Albany NY, Yonkers NY, and Queens NY. The occupied locations are subject to various written and verbal leases. Rent expense incurred during 2009 was $29,573. In addition, the company is responsible for maintenance, insurance and other occupancy expenses. The minimum remaining rent payments under written lease agreements are as follows:

 
 
Year
      
  
2010
   $ 67,770  

 
Note 4 - Related Party Transactions
During 2009, Culinary Tech Center LLC paid $52,650 in administrative fees to a management company which is owned by the members of Culinary Tech Center LLC.

Note 5 - Advertising
The company expenses advertising as incurred. Advertising expense for the year ended December 31, 2009 was $20,970.

Note 6 - Significant Subsequent Event
In May 2010 the members of Culinary Tech Center LLC signed a letter of intent to sell a majority interest in the company. The sale is contingent on approval from the NY State Education Department. The current management and other personnel of the company are expected to operate the schools after the change of ownership occurs.

 
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FLORHAM CONSULTING CORP Reports