Attached files
file | filename |
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8-K - FORM 8-K - Swisher Hygiene Inc. | g27950e8vk.htm |
EX-10.7 - EX-10.7 - Swisher Hygiene Inc. | g27950exv10w7.htm |
EX-99.3 - EX-99.3 - Swisher Hygiene Inc. | g27950exv99w3.htm |
EX-23.1 - EX-23.1 - Swisher Hygiene Inc. | g27950exv23w1.htm |
EX-10.3 - EX-10.3 - Swisher Hygiene Inc. | g27950exv10w3.htm |
EX-99.4 - EX-99.4 - Swisher Hygiene Inc. | g27950exv99w4.htm |
EX-99.1 - EX-99.1 - Swisher Hygiene Inc. | g27950exv99w1.htm |
EX-10.1 - EX-10.1 - Swisher Hygiene Inc. | g27950exv10w1.htm |
EX-23.3 - EX-23.3 - Swisher Hygiene Inc. | g27950exv23w3.htm |
EX-10.4 - EX-10.4 - Swisher Hygiene Inc. | g27950exv10w4.htm |
EX-10.2 - EX-10.2 - Swisher Hygiene Inc. | g27950exv10w2.htm |
EX-99.2 - EX-99.2 - Swisher Hygiene Inc. | g27950exv99w2.htm |
EX-10.6 - EX-10.6 - Swisher Hygiene Inc. | g27950exv10w6.htm |
EX-99.5 - EX-99.5 - Swisher Hygiene Inc. | g27950exv99w5.htm |
EX-23.2 - EX-23.2 - Swisher Hygiene Inc. | g27950exv23w2.htm |
EX-10.5 - EX-10.5 - Swisher Hygiene Inc. | g27950exv10w5.htm |
Exhibit 99.6
Combined Financial Statements As of December 31, 2010 | ||||
F-1 | ||||
FINANCIAL STATEMENTS
|
||||
F-2 | ||||
F-3 | ||||
F-4 | ||||
F-5 | ||||
F-6 |
Board of Directors
Central Carting Disposal, Inc. and
CCI Hauling, Inc.
Dade City, FL
INDEPENDENT
AUDITORS REPORT
We have audited the accompanying combined balance sheet of
Central Carting Disposal, Inc. and CCI Hauling, Inc. as of
December 31, 2010, and the related combined statement of
operations, stockholders equity and cash flows for the
year then ended. These financial statements are the
responsibility of the Companys 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 combined financial statements referred to
above present fairly, in all material respects, the financial
position of Central Carting Disposal, Inc. and CCI Hauling, Inc.
as of December 31, 2010, and the results of their
operations and cash flows for the year then ended, in conformity
with accounting principles generally accepted in the United
States of America.
Charlotte, North Carolina
June 27, 2011
F-1
ASSETS
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||||
Current assets
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||||
Cash and cash equivalents
|
$ | 730,649 | ||
Accounts receivable, net of allowance Note 2
|
250,730 | |||
Prepaid expenses and other current assets
|
58,424 | |||
Total current assets
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$ | 1,039,803 | ||
Property and equipment, net Note 3
|
1,880,020 | |||
Other assets
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||||
Intangible assets Note 4
|
111,595 | |||
$ | 3,031,418 | |||
LIABILITIES AND STOCKHOLDERS EQUITY | ||||
Current liabilities
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||||
Accounts payable
|
$ | 145,431 | ||
Deferred revenue Note 2
|
350,487 | |||
Long-term debt, current portion Note 5
|
370,808 | |||
Total current liabilities
|
$ | 866,726 | ||
Long-term debt, less current portion Note 5
|
350,136 | |||
Commitments and contingencies
|
| |||
Stockholders equity
|
||||
Common stock of Central Carting Disposal, Inc., $1 par
value, authorized 10,000 shares, 10,000 shares issued
and outstanding at December 31, 2010
|
10,000 | |||
Common stock of CCI Hauling, Inc., $.10 par value,
authorized 1,000 shares, 1,000 shares issued and
outstanding at December 31, 2010
|
100 | |||
Additional paid-in capital
|
191,200 | |||
Retained earnings
|
1,613,256 | |||
1,814,556 | ||||
$ | 3,031,418 | |||
See Notes to Combined Financial Statements
F-2
CENTRAL
CARTING DISPOSAL, INC. AND
CCI HAULING, INC.
COMBINED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2010
CCI HAULING, INC.
COMBINED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2010
Revenue
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||||
Services
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$ | 6,150,479 | ||
Costs and Expenses
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||||
Cost of sales
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$ | 1,433,762 | ||
Selling, general and administrative
|
2,450,480 | |||
Depreciation and amortization
|
523,440 | |||
Total costs and expenses
|
4,407,682 | |||
Income from Operations
|
1,742,797 | |||
Other Income (Expense)
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||||
Interest expense
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(81,256 | ) | ||
Total other income (expense)
|
(81,256 | ) | ||
Net Income
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$ | 1,661,541 | ||
See Notes to Combined Financial Statements
F-3
CENTRAL
CARTING DISPOSAL, INC. AND
CCI HAULING, INC.
COMBINED STATEMENT OF STOCKHOLDERS EQUITY
YEAR ENDED DECEMBER 31, 2010
CCI HAULING, INC.
COMBINED STATEMENT OF STOCKHOLDERS EQUITY
YEAR ENDED DECEMBER 31, 2010
Additional |
||||||||||||||||||||
Common Stock |
Paid-in |
Retained |
||||||||||||||||||
Shares | Amount | Capital | Earnings | Total | ||||||||||||||||
Balance as of December 31, 2009
|
11,000 | $ | 10,100 | $ | 191,200 | $ | 1,405,829 | $ | 1,607,129 | |||||||||||
Distributions
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(1,454,114 | ) | (1,454,114 | ) | ||||||||||||||||
Net income
|
1,661,541 | 1,661,541 | ||||||||||||||||||
Balance as of December 31, 2010
|
11,000 | $ | 10,100 | $ | 191,200 | $ | 1,613,256 | $ | 1,814,556 | |||||||||||
See Notes to Combined Financial Statements
F-4
CENTRAL
CARTING DISPOSAL, INC. AND
CCI HAULING, INC.
COMBINED STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 2010
CCI HAULING, INC.
COMBINED STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 2010
Cash provided by operating activities
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||||
Net income
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$ | 1,661,541 | ||
Adjustments to reconcile net income to net cash provided by
operating activities:
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||||
Depreciation and amortization
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523,490 | |||
Provision for doubtful accounts
|
80,000 | |||
Changes in working capital components:
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||||
Accounts receivable
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(79,822 | ) | ||
Prepaid expenses and other assets
|
5,264 | |||
Accounts payable and accrued expenses
|
328,239 | |||
Cash provided by operating activities
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$ | 2,518,712 | ||
Cash used in investing activities
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||||
Purchases of property and equipment
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(363,540 | ) | ||
Cash used in investing activities
|
(363,540 | ) | ||
Cash used in financing activities
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||||
Distributions to stockholders
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(1,454,114 | ) | ||
Proceeds from long-term debt
|
94,879 | |||
Payments on long-term debt
|
(427,094 | ) | ||
Cash used in financing activities
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(1,786,329 | ) | ||
Net change in cash and cash equivalents
|
368,843 | |||
Cash and cash equivalents at beginning of year
|
361,806 | |||
Cash and cash equivalents at end of year
|
$ | 730,649 | ||
See Notes to Combined Financial Statements
F-5
CENTRAL
CARTING DISPOSAL, INC. AND
CCI HAULING, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
CCI HAULING, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
NOTE 1 | BUSINESS DESCRIPTION |
Nature of
Business
Central Carting Disposal, Inc. (CCD), founded in 1996 and
headquartered in Dade City, Florida, provides refuse collection
and disposal services to its commercial and residential
customers located in the Florida counties of Pasco, Citrus,
Sumter, Hillsborough and Hernando.
CCI Hauling, Inc. (CCI), founded in 2002 and headquartered in
Dade City, Florida, provides roll-off refuse collection and
disposal services to commercial customers located in the Florida
counties of Pasco, Citrus, Sumter, Hillsborough and Hernando.
Principles
of Combination and Consolidation
CCD and CCI (collectively the Company) have common
ownership and management. The financial statements of these two
companies have been combined in accordance with Financial
Accounting Standards Board (FASB) Accounting
Standards Codification (ASC) Topic 810
Consolidation. All inter-company transactions are
eliminated in these combined financial statements.
NOTE 2 | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Use of
Estimates
The preparation of 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, liabilities, revenue
and expenses and disclosure of contingent assets and liabilities
at the date of the financial statements. Actual results could
differ from those estimates and such differences could affect
the results of operations reported in future periods.
Cash and
Cash Equivalents
The Company considers all cash accounts and all highly liquid
short-term investments purchased with an original maturity of
three months or less to be cash or cash equivalents. As of
December 31, 2010, the Company did not have any investments
with maturities greater than three months.
Accounts
Receivable
Accounts receivable consist of amounts due from customers for
services. Accounts receivable are reported net of an allowance
for doubtful accounts. The allowance is managements best
estimate of uncollectible amounts and is based on a number of
factors, including overall credit quality, age of outstanding
balances, historical write-off experience and specific account
analysis that projects the ultimate collectability of the
outstanding balances. As of December 31, 2010, the
allowance was $80,000.
Property
and Equipment
Property and equipment is stated at cost, less accumulated
depreciation and amortization. Depreciation and amortization is
provided using the straight-line method over the estimated
useful lives of individual assets or classes of assets as
follows:
Office Equipment and Furniture
|
5 - 7 years | |||
Containers
|
10 years | |||
Leasehold Improvements
|
10 years | |||
Vehicles
|
5 - 7 years |
F-6
CENTRAL
CARTING DISPOSAL, INC. AND
CCI HAULING, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)
CCI HAULING, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)
When an asset is sold or otherwise disposed, the related cost
and accumulated depreciation or amortization are removed from
the respective accounts and the gain or loss is recognized.
Maintenance and repairs are charged to expense when incurred.
Intangible
Assets
The Company accounts for intangible assets under FASB ASC Topic
350, Intangibles-Goodwill and Other under which
intangible assets are recorded at cost. Those assets with a
determinable estimated useful life are amortized on a
straight-line basis over their estimated lives. Intangible
assets with an indefinite life are not subject to amortization.
These assets are evaluated at least annually for impairment in
accordance with FASB ASC
350-30-35-1,
Subsequent Measurement.
Long-lived
Assets
In accordance with FASB ASC
360-10-35
Impairment of Disposal of Long-lived Assets, losses
related to the impairment of long-lived assets are recognized
when the carrying amount is not recoverable and exceeds its fair
value. When facts and circumstances indicate that the carrying
values of long-lived assets may be impaired, management of the
Company evaluates recoverability by comparing the carrying value
of the assets to projected future cash flows, in addition to
other qualitative and quantitative analyses.
Revenue
Recognition
Revenue is recognized when the collection and disposal services
are performed. Deferred revenue consists of amounts collected
from customers as of December 31, 2010 for services to be
performed in the future.
Income
Taxes
Effective January 1, 1997, CCDs stockholders and on
October 23, 2002, CCIs stockholders elected that the
corporations be taxed under the provisions of Subchapter S of
the Internal Revenue Code. Under this provision, the
stockholders are taxed on their proportionate share of the
Companys taxable income. As a Subchapter
S corporation, the Company bears no liability or expense
for income taxes.
FASB ASC
740-10,
Income Taxes, clarifies the accounting for income
taxes, by prescribing a minimum recognition threshold a tax
position is required to meet before being recognized in the
balance sheet. It also provides guidance on derecognition,
measurement and classification of amounts related to uncertain
tax positions, accounting for and disclosure of interest and
penalties, accounting in interim period disclosures and
transition relating to the adoption of new accounting standards.
Under FASB ASC
740-10, the
recognition for uncertain tax positions should be based on a
more likely than not threshold that the tax position will be
sustained upon audit. The tax position is measured as the
largest amount of benefit that has a greater than fifty percent
probability of being realized upon settlement. Management has
determined that adoption of this topic has had no effect on the
Companys balance sheet.
Fair
Value of Financial Instruments
At December 31, 2010, the Company did not have any
outstanding financial derivative instruments. The carrying
amounts of cash and the current portion of accounts receivable
approximate fair value due to the short maturity of these
instruments. The non-current notes receivable are presented at
fair value due to rates generally being at current market rates.
The fair value of the Companys long-term debt, estimated
based on the current borrowing rates available to the Company
for bank loans with similar terms and maturities, approximates
the carrying value of these liabilities.
F-7
CENTRAL
CARTING DISPOSAL, INC. AND
CCI HAULING, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)
CCI HAULING, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)
Segment
Information
FASB ASC 280, Segment Reporting, establishes
standards for reporting information regarding operating segments
in annual financial statements. Operating segments are
identified as components of an enterprise for which separate
discrete financial information is available for evaluation by
the chief operating decision-maker, or decision-making group in
making decisions on how to allocate resources and assess
performance.
The Company manages, allocates resources and reports in one
business segment. The Companys chief operating
decision-maker, as defined under FASB ASC 280, is the
Companys chief executive officer. Based on the information
reviewed by its chief executive officer, the Company operates in
one business segment.
NOTE 3 | PROPERTY AND EQUIPMENT |
Property and equipment as of December 31, 2010 consist of
the following:
Office equipment and furniture
|
$ | 58,121 | ||
Containers
|
1,043,898 | |||
Leasehold improvements
|
88,290 | |||
Vehicles
|
3,427,134 | |||
4,617,443 | ||||
Less: accumulated depreciation
|
(2,737,423 | ) | ||
$ | 1,880,020 | |||
Depreciation expense for the year ended December 31, 2010
is $490,340.
NOTE 4 | INTANGIBLE ASSETS |
Intangible assets as of December 31, 2010 consist of the
following:
Customer lists
|
$ | 98,050 | ||
Non-compete agreements
|
67,450 | |||
165,500 | ||||
Less: accumulated amortization
|
(53,905 | ) | ||
$ | 111,595 | |||
Amortization expense for the year ended December 31, 2010
is $33,100.
At December 31, 2010, projected aggregate annual
amortization expense is as follows:
2011
|
$ | 33,100 | ||
2012
|
33,100 | |||
2013
|
30,350 | |||
2014
|
15,045 | |||
Thereafter
|
| |||
$ | 111,595 | |||
F-8
CENTRAL
CARTING DISPOSAL, INC. AND
CCI HAULING, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)
CCI HAULING, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)
NOTE 5 | LONG-TERM DEBT |
Long-term debt as of December 31, 2010 consists of the
following:
Note payable on a company vehicle dated October 2006, due in
monthly installments of $4,186, including interest of 10.24%,
maturing September 2011, collateralized by vehicle costing
$197,502
|
$ | 32,238 | ||
Note payable on company vehicles dated December 2009, due in
monthly installments of $6,762 including interest of 9.55%,
maturing October 2011, collateralized by vehicles costing
$326,680
|
64,752 | |||
Note payable on a company vehicle dated June 2007, due in
monthly installments of $3,699 including interest of 8.46%,
maturing April 2012, collateralized by vehicle costing $184,131
|
52,477 | |||
Note payable on company vehicles dated March 2008, due in
monthly installments of $4,070 including interest of 8.50%,
maturing December 2013, collateralized by vehicles costing
$203,764
|
89,541 | |||
Note payable on company vehicles dated September 2008, due in
monthly installments of $4,030 including interest of 5.18%,
maturing September 2013, collateralized by vehicles costing
$212,629
|
123,706 | |||
Note payable on a company vehicle dated April 2009, due in
monthly installments of $4,979, including interest of 9.73%,
maturing February 2014, collateralized by vehicle costing
$240,506
|
166,379 | |||
Note payable on a company vehicle dated July 2009, due in
monthly installments of $3,146, including interest of 10.34%,
maturing May 2014, collateralized by vehicle costing $150,000
|
106,396 | |||
Note payable to a former shareholder dated October 2002, due in
monthly installments of $2,125 including interest of 5.00%,
maturing October 2012, unsecured
|
42,643 | |||
Note payable for insurance financing agreement dated July 2010,
due in monthly installments of $10,868, including interest of
7.35%, maturing April 2011, unsecured
|
42,812 | |||
720,944 | ||||
Current portion
|
(370,808 | ) | ||
Long-term portion
|
$ | 350,136 | ||
As of December 31, 2010, principal payments due on
long-term debt are as follows:
2011
|
$ | 370,808 | ||
2012
|
199,295 | |||
2013
|
125,664 | |||
2014
|
25,177 | |||
Thereafter
|
| |||
$ | 720,944 | |||
The Company was making monthly payments of $2,125 to a former
shareholder of the Company. This note is payable as a result of
the purchase of Company stock from this shareholder in 2002. The
balance on this note was paid off subsequent to year end.
F-9
CENTRAL
CARTING DISPOSAL, INC. AND
CCI HAULING, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)
CCI HAULING, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)
NOTE 6 | RELATED PARTY TRANSACTIONS |
The Company leases its headquarters from the stockholder on a
month-to-month basis. During the year ended December 31,
2010, the Company paid this related party $53,028 as rent for
the use of this facility.
NOTE 7 | SUPPLEMENTAL FINANCIAL INFORMATION |
Supplemental
Disclosure of Cash Flow Information
Supplemental cash flow information with respect to the year
ended December 31, 2010 is as follows:
Cash paid for:
|
||||
Interest
|
$ | 81,256 | ||
Advertising
The company expenses advertising costs as incurred. Advertising
expenses for the year ended December 31, 2010 was
approximately $11,800.
Environmental
Liability
The Company is subject to liability for any environmental
damage, including personal injury and property damage arising
from off-site environmental contamination caused by pollutants
or hazardous substances if the Company arranges to transport,
treat or dispose of those materials. Any substantial liability
incurred by the Company arising from environmental damage could
have a material adverse effect on the Companys business,
financial condition and results of operations. The Company is
not presently aware of any situations that it expects would have
a material adverse impact on its results of operations or
financial condition.
NOTE 8 | SUBSEQUENT EVENTS |
The Company evaluated all events and transactions through
June 27, 2011, the date these financial statements were
issued. During this period, there were no material recognizable
or non-recognizable subsequent events except for the following:
On June 6, 2011, the Company entered into an agreement
under which it sold certain assets and liabilities of the
Company to Choice Environmental Services, Inc., a wholly-owned
subsidiary of Swisher Hygiene, Inc. Assets sold included
substantially all supplies, accounts receivable, property and
equipment, rights under contracts, customer lists, and other
intangible assets.
F-10