EXHIBIT 99

 

 

 

 

FLEXO UNIVERSAL, S. DE R.L. DE C.V.

 

INDEPENDENT AUDITOR’S REPORT

AS OF DECEMBER 31 2015 AND 2014

 

 

 

 

Santa Rita Nº1110 Col. Chapalita Oriente, Zapopan Jalisco, México C.P. 45040

Teléfonos: +3647-2715, 3647-2732, 36472752 Facsímile: +3647-2728 E-mail vghlbgdl@vinet.com.mx

HLB Vargas Graf y Cía., S.C. is a member of HLB International. A world-wide organization of accounting firms and business advisers

 

 

FLEXO UNIVERSAL, S. DE R.L. DE C.V.

 

 

INDEX

 

1.-

Independent Auditors’ Report.

 

2.-

Balance Sheet.

 

3.-

Statement of (Loss) Income.

 

4.-

Statements of Changes in Stockholders’ Equity.

 

5.-

Statement of Cash Flow.

 

6.-

Notes to the financial statements.

 

Vargas Graf y Cía., S.C.

Contadores Públicos y Consultores

 

 

Report of Independent Registered Public Accounting Firm

 

 

To the Stockholders and Board of Directors of

Flexo Universal, S. de R.L de C.V.

 

We have audited the accompanying balance sheets of Flexo Universal, S. de R.L. de C.V. as of December 31 2015 and 2014, and the related statement of operations, stockholders' equity and cash flows for the years 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 audits.

 

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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 consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions.

 

We draw attention to Note 2 of the financial statements, which describes the basis of accounting. The financial statements are prepared according to Financial Reporting Standards Applicable Mexico (FRS), which is a basis of accounting other than accounting principles generally accepted in the United States of America. Our opinions are not modified with respect to this matter.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Flexo Universal, S. de R.L. de C.V., as of December 31 2015 and 2014 and the results of their operations and their cash flows for the years then ended, in conformity with the basis of accounting described above.

 

HLB Vargas Graf y Cía., S.C

Zapopan, Jalisco, México C. Cp, 45040

 

 

C.P.C. Antonio Vargas Aceves

Certified Public Accountant

Partner

March 29, 2016

 

Santa Rita Nº1110 Col. Chapalita Oriente, Zapopan Jalisco, México C.P. 45040

Teléfonos: +3647-2715, 3647-2732, 36472752 Facsímile: +3647-2728 E-mail vghlbgdl@vinet.com.mx

HLB Vargas Graf y Cía., S.C. is a member of HLB International. A world-wide organization of accounting firms and business advisers

 

 

FLEXO UNIVERSAL, S. DE R.L. DE C.V.

BALANCE SHEET AS OF DECEMBER 31, 2015 AND 2014

( In Mexican pesos )

(Notes 1 & 2)

 

		2015				2014
CURRENT ASSETS:
Cash and cash equivalents		$	2,372,760			$	1,831,998
Accounts receivables			46,825,627				40,413,382
Other accounts receivables (Note 3)			3,447,873				3,840,861
Related parties  (Note 4)			33,310,804				15,942,740
Inventories  (Note 5)			58,107,580				49,368,070
Total current assets			144,064,644				111,397,051
NON CURRENT ASSETS:
Machinery and equipment (Note 6)			6,574,956				7,771,767
Warranty deposits			2,924,296				1,287,837
Other assets			1,535,926				766,543
Deferred income tax (Note 13)			767,395				594,582
Total non current assets			11,802,573				10,420,729
TOTAL ASSETS		$	155,867,217			$	121,817,780
CURRENT LIABILITIES
Accounts payable to suppliers, accrued expenses and other accounts payable (Note 7)		$	36,828,608			$	18,016,793
ISR payable			633,329				3,342,273
PTU reserve			62,641				448,098
Current portion of long term liabilities to related parties (Note 8)			12,044,282				9,449,593
Total current liabilities			49,568,860				31,256,757
LONG TERM LIABILITIES
Long term liabilities to related parties  (Note 8)			1,119,781				2,807,062
Total long term liabilities			1,119,781				2,807,062
TOTAL LIABILITIES			50,688,641				34,063,819
STOCKHOLDERS' EQUITY
Capital stock  (Note 10)			47,410,945				47,410,945
Legal Reserve			2,199,375				1,393,404
Accumulated results			38,143,641				22,830,186
Period's net (loss) profit			17,424,615				16,119,426
TOTAL STOCKHOLDERS' EQUITY			105,178,576				87,753,961
Contingencies (Note 12)			-				-
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY		$	155,867,217			$	121,817,780

 

The enclosed notes are an integral part of these financial statements

 

 

FLEXO UNIVERSAL, S. DE R.L. DE C.V.

STATEMENT OF OPERATIONS FOR THE YEARS ENDED

 DECEMBER 31,  2015 AND 2014

( In Mexican pesos )

 

		2015				2014
Net sales		$	176,427,298			$	169,425,816
Cost of products sold			(131,777,839	)			(126,903,053	)
GROSS PROFIT			44,649,459				42,522,763
Operating expenses
Administration and sales expenses			(21,015,704	)			(17,381,574	)
Other income, (expenses)  - net			217,772				(1,062,665	)
			(20,797,932	)			(18,444,239	)
OPERATION NET PROFIT			23,851,527				24,078,523
INTEGRAL FINANCING RESULTS
Exchange rate fluctuations - net			1,416,549				861,038
interest - net			(1,318,662	)			(1,107,052	)
			97,887				(246,014	)
PROFIT BEFORE INCOME TAXES AND EPS			23,949,414				23,832,509
Employees' profit sharing			-				(361,222	)
Income tax			(6,697,612	)			(6,356,134	)
Deferred income tax			172,813				(995,726	)
			(6,524,799	)			(7,713,083	)
NET  PROFIT		$	17,424,615			$	16,119,426

 

The accompanying notes are an integral part of these financial statements

 

 

FLEXO UNIVERSAL, S. DE R.L. DE C.V.

 

STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY

FOR THE YEARS ENDED DECEMBER 31,  2015 AND 2014

( In Mexican pesos )

 

		2015				2014
CAPITAL STOCK
Initial period balance		$	47,410,945			$	44,934,998
Capital stock increase (Note 10)			-				2,475,947
Initial and final period balance			47,410,945				47,410,945
LEGAL RESERVE
Initial period balance			1,393,404				670,811
Transfer from accumulated results (Note 11)			805,971				722,593
Final period balance			2,199,375				1,393,404
ACCUMULATED RESULTS
Initial period balance			22,830,186				11,596,368
Transfer from net  profit (loss)			16,119,426				14,451,872
Transfer of 5% over profit period 2012, to legal reserve			(805,971	)			(722,593	)
Dividends			-				(2,495,461	)
Final period balance			38,143,641				22,830,186
NET PROFIT (LOSS)
Initial period balance			16,119,426				14,451,872
Transfer to accumulated results			(16,119,426	)			(14,451,872	)
Net  profit			17,424,615				16,119,426
Final period balance			17,424,615				16,119,426
TOTAL		$	105,178,576			$	87,753,961

 

The accompanying notes are an integral part of these financial statements

 

 

FLEXO UNIVERSAL, S. DE R.L. DE C.V.

 

CASH FLOW STATEMENT

FOR THE YEARS ENDED DECEMBER 31,  2015 AND 2014

 

( In Mexican pesos )

 

		2015				2014
OPERATING ACTIVITIES:
Net profit		$	17,424,615			$	16,119,426
Items related with investment activities
Depreciation			1,727,706				2,191,987
Items related with financing activities
Interest			1,318,662				1,107,052
			20,470,983				19,418,465
Trade debtors and other receivables (increase) decrease			(6,019,257	)			(18,982,817	)
Inventories increase			(8,739,510	)			(6,834,407	)
Other assets (increase) decrease			(2,578,655	)			1,951,564
Assets, Liabilities to related parties increase (decrease)			(14,773,375	)			1,986,564
Suppliers and other liabilities (decrease)  increase			18,426,358				35,182
Taxes paid			(2,708,944	)			(452,736	)
Net cash flow from financial activities			4,077,600				(2,878,185	)
INVESTING ACTIVITIES:
Machinery and equipment acquisition (net)			(530,895	)			(1,926,224	)
			(530,895	)			(1,926,224	)
FINANCING ACTIVITIES:
Long term liabilities to related parties			(1,687,281	)			97,614
Paid interest			(1,318,662	)			(1,107,052	)
Dividends			-				(2,495,461	)
Social Capital (Decrease) increase			-				2,475,947
			(3,005,943	)			(1,028,952	)
INCREASE IN CASH AND CASH EQUIVALENTS		$	540,762			$	(5,833,361	)
Cash and cash equivalents at beginning of year		$	1,831,998			$	7,665,359
Cash and cash equivalents at end of year		$	2,372,760			$	1,831,998

 

The accompanying notes are an integral part of these financial statements

 

 

NOTES TO FINANCIAL STATEMENTS

FLEXO UNIVERSAL, S. DE R.L. DE C.V.

As of December 31^st, 2015 and 2014

In Mexican pesos.

 

NOTE 1 – COMPANY DESCRIPTION:

 

Flexo Universal S. de R.L. de C.V., (FLEXO) was constituted in 2002. It is a subsidiary of CTI Industries Corporation, a North American company that owns 99.8260% of its capital stock.

 

Its main activity is the production of latex and mylar balloons. This operation is performed under the shelter of its parent company that finances its operations.

 

On August 28, 2015, by unanimous vote of shareholders, Flexo Universal was transformed to a Limited Liability Company with Variable Capital (S de RL de CV).

 

NOTE 2 – MAIN ACCOUNTING POLICIES

 

a.     Basis for presentation

 

The significant accounting policies adopted by the company are in accordance with the Financial Reporting Standards in Mexico (FRS) and Interpretations to the Financial Reporting Standards (IFRS).

 

Those Standards (FRS), may differ from accounting principles generally accepted in the United States of America (US GAAP). However, under an analysis of similarities, convergences and important differences between the two standards with respect to the operations recorded that generate the financial information of the Company, we can conclude that there are no differences that could lead to material adjustments and alter that information.

 

b.    Estimates and assumptions

 

The preparation of financial statements in accordance with Mexican financial reporting standards requires the company's management to make certain estimates and provisions that may affect the value of some assets and liabilities at the date of the balance sheet, as well as the value and measurement of revenues, costs and expenses during the reported period. Even if the final result of these estimates and provisions may differ from the calculations, management believes that those were appropriately used under these circumstances.

 

c.     Monetary unit

 

Per Mexican laws, Financial Statements are prepared in Mexican pesos ($).

 

d.    Cash and equivalents

 

Mainly represented by deposits in bank accounts.

 

e.     Accounts receivable and estimation for allowance for doubtful accounts

 

Represents collection originated from inventory sales. Accounts in foreign currency are valued at the year-end exchange rate.

 

Estimates for doubtful collection accounts represent the inherent probable loss of all receivables due to the behaviour of historic tendencies of the accounts receivable. Since 2009, the company has issued a provision to absorb the uncollectible accounts.

 

 

f.     Inventories

 

Inventories of finished goods, production in process, and raw materials are recorded at their historic acquisition and production cost using the absorbing cost system. The acquisition cost includes all associated expenses to get the inventories ready to be sold. Inventories are valued with the average cost method, net from the estimates which do not exceed their realization value.

  

g.    Machinery and equipment

 

Fixed Assets acquired from the fusion were recorded at the historic cost of the absorbed company, adding the difference from the valuation determined by an independent appraiser on June 17^th, 1996. Fixed assets acquisitions after the fusion are recorded at their acquisition costs.

 

Acquisition costs include all associated expenses to get the fixed assets ready to be used.

 

Depreciation is computed by the straight-line method, beginning the year in which assets are used, and according to the following rates:

 

		Rates %
Leasehold improvements			10.00
Molds			20.00
Computer equipment			30.00
Machinery and office equipment			10.00
Tools and medical equipment			35.00
Transport equipment			25.00
Forklift			25.00

 

h.     Long lived assets evaluation

 

Impairment of long term assets – As of January 1st, 2004, The C-15 Bulletin “Impairment in the value of long lasting assets and its disposal” became effective. This bulletin requires that companies evaluate the effect of impairment in long lasting assets in use. In the opinion of the Company’s management, there are no traces of impairment that could have an effect on the results, in accordance with the Bulletin.

 

i.      Income tax

 

The current income tax is determined according to current tax legislation. The deferred income tax is recorded in accordance with the asset and liability method, which compares its accounting and tax values. Deferred tax are recognized (assets and liabilities) for future tax consequences attributable to temporary differences between the values reflected in the financial statements of existing assets and liabilities and their respective tax bases, and for tax loss carry forwards and tax credits not used. The assets and liabilities of deferred tax are calculated using the rates established in the law that will be applied to taxable income in years when it is estimated that the temporary differences will reverse. The effect of changes in tax rates on deferred taxes is recognized in the results of the period in which those changes are approved. The deferred tax asset is recorded only when there is a high probability of recovery. As of January 1st, 2008 this FRS was modified. The main changes are:

 

·

Caused and deferred Employee Profit Sharing (PTU).- This is now considered an ordinary expense based on the benefits to employees, which is why it is now classified in the Statement of Operations under other income and expenses.

 

·

Cumulative Effect of Income Tax -- The previous bulletin stated that this component will be presented separately in equity, however, it has now been reclassified to cumulative results.

 

 

j.      Liabilities

 

The Company applies the dispositions of FRS C-9 “Liabilities, provisions, contingent assets and liabilities and commitments”. Bulletin C-9 establishes the valuation, presentation and disclosure, general rules of liabilities provisions, contingent assets and liabilities.

 

k.     Labor liabilities

 

As of February 2014, the Company’s management decided to outsource payroll services through the figure "Outsourcing".

 

l.      Recognition of revenue

 

Revenue is recognized in the period in which the risks and benefits of inventory are transferred to customers who acquire them, which generally occurs when these inventories are delivered and the corresponding invoice is prepared.

 

m.   Foreign currency operations

 

Foreign currency operations are accounted at the exchange rate of the day of their occurrence. Assets and liabilities in foreign currency are registered in Mexican pesos at the exchange rate published by the Central Bank (Banco de Mexico) at the date of the financial statements. Exchange rate differences in assets and liabilities in foreign currency are registered in the year’s result.

 

n.     Leasing

 

Operating leases are classified as the operations where the use or possession of the leased assets is granted without assuming the risks or benefits of such assets. The rent is applied to the results in the period of the lease. Variable rent is applied to the results as it is accrued.

 

o.    Income statement

 

The income statement is classified by its operating activities. This classification allows evaluation of the result of its operations, identification of the cost of goods sold, and administrative and sales expenses.

 

p.    Integral Financial Result (RIF)

 

The RIF includes net accrued interests, exchange rate profit (loss), monetary position gain (loss) and derivate financial instruments profit (loss).

 

Exchange rate profit (loss), originated by transactions in foreign currency, is the result of exchange rates’ fluctuations at the date of the operation registry, the date of realization or the period-end valuation.

 

NOTE 3 – OTHER ACCOUNTS RECEIVABLE

 

As of December 31^st, 2015 and 2014, the other accounts receivable are integrated as follows:

 

		2015				2014
Sundry debtors		$	191,398			$	824,545
Other Collective taxes			1,196,775				1,067,472
Creditable VAT			2,059,700				1,948,844
		$	3,447,873			$	3,840,861

 

 

NOTE 4 – RELATED PARTIES

 

A summary of operations with related parties as of December 31^st, 2015 and 2014 is presented as follows:

 

		2015				2014
Goods Sold:
CTI Industries Corporation		$	25,972,718			$	21,292,943
CTI Balloons Limited			5,156,854				215,274
CTI Europe BMBH			-586,533				3,432,194
Inventory Purchases:
CTI Industries Corporation		$	4,526,086			$	7,694,886
Services
CTI Balloons Limited		$	137,847			$	184,937
Interest paid
CTI Industries Corporation		$	228,486			$	189,792
CtTI Balloons Limited			52,816				40,827

 

Accounts receivable and (payable) to related parties are:

 

		Receivable- (Payable)
		Net balances
		2015				2014
CTI Industries Corporation		$	25,824,968			$	11,750,928
Pablo Gortazar de Oyarzabal			452,902				779,992
Calidad Empresarial Mexicana			-				(13,040	)
CTI Balloons Limited			4,071,163				-
CTI Europe GMBH			1,842,405				2,217,320
Venture Leasing, S. de R.L. de C.V.			1,119,365				1,207,540
		$	33,310,803			$	15,942,740

 

NOTE 5 – INVENTORIES

 

Inventories are comprised of the following:

 

		2015				2014
Finished goods		$	47,576,686			$	38,494,667
Packing material			2,957,997				2,519,357
Production in process			3,409,355				3,455,053
Raw materials			4,163,542				4,898,993
		$	58,107,580			$	49,368,070

 

 

NOTE 6 – MACHINERY AND EQUIPMENT

 

This item is analysed as follows:

 

		2015				2014
Machinery		$	26,145,344			$	25,982,728
Leasehold improvements			3,003,934				3,003,934
Molds			5,556,380				5,426,380
Computer equipment and softwere			872,382				827,519
Transport equipment			297,273				297,273
Furniture and office equipment			474,485				276,723
			36,349,798				35,814,557
Depreciations and amortizations			(29,774,842	)			(28,042,790	)
Total Machinery and equipment		$	6,574,956			$	7,771,767

 

The annual rates and depreciation and amortization methods are stated in note 2g. The charge to results amounted $1,727,706 and $2,191,987 for the periods ended on December 31^st, 2015 and 2014 respectively.

 

Leasehold agreement

The company celebrated a leasehold agreement with Cuauhtémoc Inmobiliaria S.A. de C.V., for the building and facilities where it is located, both plant and administrative offices. This agreement establishes that the term of the leasehold is of a mandatory 5 years and 5 years voluntary to the sub-lessor. The new agreement takes place since August 1^st 2011 and ends on July 13, 2016.

 

The charge to results amounted $5,041,228 and $4,994,680.for the years ended on December 31^st, 2015 and 2014 respectively.

 

NOTE 7 – OTHER ACCOUNTS PAYABLE

 

Some items presented in the Balance Sheet are analysed as follows, as of December 31^st.

 

		2015				2014
Accounts payable to suppliers, accrued expenses
and other accounts payable:
Suppliers		$	32,736,137			$	15,200,710
Salaries payable			126,384				-81,864
Sundry creditors			3,714,739				2,759,411
Rated reserves			239,480				123,206
Taxes payable			11,868				15,330
		$	36,828,608			$	18,016,793

 

 

NOTE 8 – LONG TERM LIABILITIES TO RELATED PARTIES

 

		2015				2014
CTI  Industries
Term promissory note
Flexo Universal, S. de R.L.. de C.V.,  hereby further promises to pay interest to the order of CTI Industries Corporation on the unpaid principal balance hereof at the Interest Rate (as hereinafter defined).  Such interest shall be paid in like money at said office or place from the date hereof, commencing March 31, 2014 and on the first day of each calendar quarter thereafter until the indebtedness evidenced by this Note is paid in full.  Interest payable upon and after an Event of Default or termination or non renewal of the Loan Agreement shall be payable upon demand. For purposes hereof, the term "Interest Rate" shall mean a rate of two and one-half  percent (2.5%) per annum ; provided, that, at Payee's option, the Interest Rate shall mean a rate of eight percent (8.0%) per annum  upon and after an Event of Default ; the term “Event of Default shall mean the failure of Flexo Universal, S.A. de C.V., to make any payment of principal or interest when due hereunder. This Note is issued to document amounts due from Flexo Universal, S. de R.L. de C.V., to CTI Industries Corporation as of December 31, 2013, including $68,669 in principal amount due and $502,545 in accrued interest on indebtedness previously due from Flexo Universal, S de R.L. de C.V., to CTI Industries Corporation.
			10,400,174				8,627,141
Current portion of long term liabilities			(10,400,174	)			(8,627,141	)
Loans current account 2014
Undocumented loans current account totaling $ 55.817 US dollars, without interest and agreed term			967,856				822,452
Current portion of long term liabilities			(967,856	)			(822,452	)
Loans current account 2015
Undocumented loans current account totaling $ 39,000. US dollars, without interest and agreed term			676,252
Current portion of long term liabilities			(676,252	)
Loan made by CTI BALLONS to finance the company's operation amounted $69,478 US dollars payable in 3 years with an interest annual rate of LIBOR +.25 points			-				1,023,744
interest payable			-				530,209
Pablo Gortazar
Loan made by PABLO GORTAZAR to liquidate CTF INTERNATIONAL's financing amounted $980,704 Mexican Pesos.			980,704				980,704
Loan made by PABLO GORTAZAR to liquidate CREDIT UNION's fiancincing amounted $776,070 Mexican pesos,  with an interest annual rate LIBOR +.25 points			139,077				272,405
			13,164,063				12,256,655
Total long term liabilities to related parties			(12,044,282	)			(9,449,593	)
Total current portion of long term liabilities		$	1,119,781			$	2,807,062

 

 

NOTE 9 – POSITION AND TRANSACTION IN FOREING CURRENCY

 

As of December 31^st, 2015 and 2014, the company had rights and (obligations) in foreign currency as follows:

 

		US Dollars
		2015				2014
Assets		$	2,478,954			$	1,845,213
Liabilities			(2,055,786	)			(1,620,173	)
Excess of assets over (liabilities), assets in
foreign currency		$	423,168			$	225,040

 

Assets were translated and adjusted using the exchange rate $ 17.3398 and $ 14.7348 pesos per US dollar, as of December 31^st, 2015 and 2014 respectively. As of March 10, 2016, the exchange rate is $17.7523 pesos per dollar.

 

NOTE 10 – CONTRIBUTED CAPITAL

 

The company’s capital stock is as follows, as of December 31^st, 2015 and 2014:

 

		2015				2014
Fixed capital stock		$	50,000			$	50,000
Variable capital stock			47,360,945				47,360,945
Total capital stock		$	47,410,945			$	47,410,945

 

The company’s capital stock is variable, with a fixed minimum of $50,000, without the possibility of retirement. The variable part has no limit.

 

Until August 31, 2015, the share capital was represented by common, nominative shares since the transformation of society in a Limited Liability Company with Variable Capital (1 September 2015). The capital is represented by Social Parties integrated and valued as follows:

 

Social Parties
Class I						Class II
Number of parts		Value				Number of parts		Value
1		$	49,999			1		$	47,278,870
1			1			1			61,154
						1			20,921
2		$	50,000			3		$	47,360,945

 

On April 3, 2014, the shareholders of the company unanimously approved an increase of variable share capital in the amount of $ 150,000. US dollars or its equivalent in pesos, $ 2'475,947, by issuing 2'475,947 Series B common shares with nominal value of $ 1.00 each

 

On March 26, 2014, the shareholders of the company unanimously approved a dividend payment from the income tax earnings (CUFIN) totalling $ 190,347.77. US dollars or its equivalent in pesos, $ 2'495,459.20

 

 

NOTE 11 – EARNED (LOSS) SURPLUS:

 

Legal reserve

 

According to the General Law of Mercantile Societies, 5% of the fiscal year’s net profits should be kept to form the legal reserve until it reaches 20% of the capital stock. The legal reserve may be capitalized, but not distributed, unless the society is dissolved, and must be replenished when it decreases for any reason.

 

NOTE 12 – CONTINGENCIES:

 

a.

Federal contributions are subject to certain reviews by the fiscal authorities, during a five year period.

  

NOTE 13- INCOME TAX (IT), CORPORATE FLAT TAX RATE (IETU) AND EMPLOYEES PROFIT SHARING (PTU):

 

Cost (benefit) of the tax applied to result is integrated as follows:

 

		2015				2014
ISR payable		$	6,697,612			$	6,356,134
Deferred ISR		-	172,813				995,726
Net		$	6,524,799			$	7,351,860

 

a.

IT

 

The main differences between the accounting profit and the tax result are:

 

		2015				2014
Net (Loss) profit		$	17,424,615			$	16,119,426
Plus (minus)
Excess of accounting depreciation net over the fiscal depreciation		-	1,340,351			-	1,483,107
Excess of accounting deductions net over the fiscal deductions			6,621,999				8,116,711
Fiscal (loss) profit			22,706,263				22,753,030
Minus employee profit sharing (PTU) paid in 2015 and 2014		-	380,890			-	1,565,918
Tax basis to IT			22,325,373				21,187,112
Rate			0.30				0.30
IT payable (ISR)		$	6,697,612			$	6,356,134

 

At December 31^st, 2015 and 2014, temporary differences and fiscal losses carry forward recognized by the company on the deferred IT calculations are:

 

		2015				2014
Year effect calculation:
Deferred expenses		$	292,384			$	(286,898	)
Suppliers			(2,850,368	)			(1,695,041	)
Base			(2,557,984	)			(1,981,939	)
Tax Rate			0.30				0.30
			(767,395	)			(594,582	)
Total (debit) credit			(767,395	)		$	(594,582	)
Recognized			(594,582	)			(1,590,308	)
Complement		$	(172,813	)			995,726

 

 

b.

PTU

 

As mentioned in note 2l., the Company had work obligations until January 31, 2014, the date in which the company subcontracted outsourcing services for personnel management. Therefore, the company determined and paid Employee profit sharing (PTU) only for the period of January 1 to January 31, 2014.

 

NOTE 14 - NEW ACCOUNTING PRONOUNCEMENTS.

 

The Mexican Council for Research and Development of Financial Reporting Standards (CINIF), an independent body in charge of the development of the Mexican Accounting Standards, has made public the submission of the following FRS (Financial Reporting Standards) listed below:

 

Standards and Interpretation of Standards 2016

 

D-3, Employee Benefits

Improvements to FRS 2016

Interpretation of FRS 21, Recognition of payments for employees’ disengagement

 

Standards on following years

 

C-2, Investment in financial instruments

C-16, Impairment of receivable financial instruments

D-1, Income from clients contracts

D-2, costs for clients contracts

 

These Standards will become effective on January 1st, 2018, allowing its advanced application in the terms established in each FRS.

 

It is important to note that the use of FRS increases the quality of the financial information contained in the financial statements, thus ensuring their greater acceptance, not only nationally, but also internationally.

 

NOTE 15 - APPROVAL OF THE ISSUANCE OF THE FINANCIAL STATEMENTS.

 

The financial statements were authorized for issue, by Pablo Gortazar de Oyarzabal, General Manager and Legal Representative, and subject to the approval of the general assembly of partners of the Company who may decide its modification in accordance with the provisions of the General Law of Commercial Societies.

 

The accompanying explanatory notes are an integral part of the financial statements.

 

Flexo Universal, S. de R.L. de C.V.
/s/ Pablo Gortazar de Oyarzabal
Lic. Pablo Gortazar de Oyarzabal
Legal Representative