Attached files
| file | filename |
|---|---|
| EX-99.3 - EXHIBIT 99.3 - LAWSON PRODUCTS INC/NEW/DE/ | exhibitboltproforma.htm |
| EX-99.1 - EXHIBIT 99.1 - LAWSON PRODUCTS INC/NEW/DE/ | boltsupplyfeb2017fs.htm |
| EX-23 - EXHIBIT 23 - LAWSON PRODUCTS INC/NEW/DE/ | mnpconsent.htm |
| 8-K/A - 8-K/A - LAWSON PRODUCTS INC/NEW/DE/ | boltproforma8ka.htm |
The Bolt Supply House Ltd.
Financial Statements
Six month period ended August 31, 2017
(Unaudited)
The Bolt Supply House Ltd.
Interim Balance Sheet
As at,
August 31 | February 29 | ||
2017 | 2017 | ||
(Unaudited) | (Audited) | ||
Assets | |||
Current | |||
Cash | 217,148 | 161,827 | |
Accounts receivable | 4,316,272 | 3,518,383 | |
Income taxes recoverable | - | 283,430 | |
Inventory (Note 3) | 8,152,879 | 7,231,182 | |
Prepaid expenses and deposits | 423,400 | 519,291 | |
13,109,699 | 11,714,113 | ||
Property and equipment (Note 4) | 1,962,536 | 1,968,776 | |
Total Assets | 15,072,235 | 13,682,889 | |
Liabilities | |||
Current | |||
Bank indebtedness (Note 5) | 2,945,733 | 3,523,390 | |
Accounts payable and accruals | 1,890,293 | 1,763,603 | |
Goods and services and sales taxes payable | 114,592 | 99,704 | |
Management bonus and consulting fees payable (Note 7) | 110,250 | 110,250 | |
Income tax payable | 298,499 | - | |
5,359,367 | 5,496,947 | ||
Commitments (Note 9) | |||
Subsequent events (Note 11) | |||
Shareholders' Equity | |||
Share capital (Note 8) | |||
Common shares | 20 | 20 | |
Preferred shares (redeemable at $17,200,000) | 2,293,377 | 2,293,377 | |
Retained earnings | 7,419,471 | 5,892,545 | |
9,712,868 | 8,185,942 | ||
Total Liabilities and Shareholders' Equity | 15,072,235 | 13,682,889 | |
Approved on behalf of the Board of Directors: | |||
/s/ Michael G. DeCata | /s/ Kurt Mario | |
The accompanying notes are an integral part of these interim financial statements |
The Bolt Supply House Ltd.
Interim Statement of Earnings and Retained Earnings
For the six month period ended
(Unaudited)
August 31 | August 31 | ||
2017 | 2016 | ||
Sales | 23,891,446 | 18,978,895 | |
Cost of sales | 13,873,832 | 9,934,374 | |
Gross margin | 10,017,614 | 9,044,521 | |
Selling costs (Schedule 1) | 2,087,945 | 1,831,223 | |
Operating expenses (Schedule 2) | 4,980,036 | 5,153,483 | |
Administrative expenses (Schedule 3) | 562,689 | 561,723 | |
7,630,670 | 7,546,429 | ||
Earnings from operations | 2,386,944 | 1,498,092 | |
Other expenses | |||
Foreign exchange gain | 40,594 | 20,433 | |
Gain (loss) on disposal of property and equipment | 8,750 | (284) | |
Management bonus and consulting fees (Note 7) | (408,000) | (408,000) | |
Earnings before income taxes | 2,028,288 | 1,110,241 | |
Provision for income taxes ‑ current (Note 6) | 501,362 | 233,872 | |
Net earnings | 1,526,926 | 876,369 | |
Retained earnings, beginning of period | 5,892,545 | 5,268,279 | |
Retained earnings, end of period | 7,419,471 | 6,144,648 | |
The accompanying notes are an integral part of these interim financial statements |
The Bolt Supply House Ltd.
Interim Statement of Cash Flows
For the six month period ended
(Unaudited)
August 31 | August 31 | ||
2017 | 2016 | ||
Cash provided by (used for) the following activities
Operating | |||
Cash received from customers | 23,012,812 | 18,451,288 | |
Cash paid to suppliers | (17,416,362) | (13,108,576) | |
Cash paid to employees | (4,423,380) | (4,510,999) | |
Income taxes received (paid) | 80,567 | (207,127) | |
Interest paid | (47,825) | (52,040) | |
Management bonus and consulting fees paid | (408,000) | (408,000) | |
Cash provided by operating activities | 797,812 | 164,546 | |
Financing | |||
Dividends paid | - | (500,000) | |
Repayment of operating loan, net of advances | (577,657) | - | |
Advances from operating loan, net or repayment | - | 463,105 | |
Cash used in financing activities | (577,657) | (36,895) | |
Investing | |||
Purchases of property and equipment | (214,998) | (263,091) | |
Proceeds on disposal of property and equipment | 9,570 | - | |
Cash used in investing activities | (205,428) | (263,091) | |
Net effect of translation on foreign currency cash | 40,594 | 20,433 | |
Increase (decrease) in cash | 55,321 | (115,007) | |
Cash, beginning of period | 161,827 | 216,157 | |
Cash, end of period | 217,148 | 101,150 | |
The accompanying notes are an integral part of these interim financial statements |
The Bolt Supply House Ltd.
Notes to the Interim Financial Statements
For the six month period ended August 31, 2017 and August 31, 2016
(Unaudited)
1. Incorporation and operations
The Bolt Supply House has been in business since 1948 as a wholesale and retail supplier of fasteners, power tools, safety equipment, shop supplies and accessories across western Canada. The current Company, The Bolt Supply House Ltd. (the "Company"), is the result of an amalgamation filed on August 23, 1996.
2. Significant accounting policies
The financial statements have been prepared in accordance with Canadian accounting standards for private enterprises, and include the following significant accounting policies.
Cash
Cash includes balances with banks, and bank indebtedness includes overdrawn cash accounts and demand operating loans.
Inventory
Inventory is valued at the lower of cost and net realizable value. Cost is determined by the weighted average method. Net realizable value is the estimated selling price in the ordinary course of business.
Property and equipment
Property and equipment are initially recorded at cost. Amortization is provided using the methods and rates intended to amortize the cost of assets over their estimated useful lives, as follows:
Method | Rate | |||
Buildings | declining balance | 5 | % | |
Computer hardware | declining balance | 30 | % | |
Computer software | straight‑line | 3 | years | |
Equipment and tools | declining balance | 30 | % | |
Furniture and fixtures | declining balance | 20 | % | |
Leasehold improvements | straight‑line | 5 | years | |
Paving | declining balance | 4 | % | |
Vehicle and trailers | declining balance | 30 | % | |
Upon the year the asset is put in use, amortization is taken at one‑half of the above rates.
Long‑lived assets held for use
Long‑lived assets held for use consist of property and equipment and are measured and amortized as described in the above accounting policy.
The Company performs impairment testing on long‑lived assets held for use whenever events or changes in circumstances indicate that the carrying amount of an asset, or group of assets, may not be recoverable. The carrying amount of a long‑lived asset is not recoverable if the carrying amount exceeds the sum of the undiscounted future cash flows from its use and disposal. If the carrying amount is not recoverable, impairment is then measured as the amount by which the asset's carrying amount exceeds its fair value. Any impairment is included in net earnings for the year.
Revenue recognition
The Company recognizes revenue at the time of sale in stores or upon shipment of the merchandise, when the sale is accepted by the customer and collection is reasonably assured.
The Bolt Supply House Ltd.
Notes to the Interim Financial Statements
For the six month period ended August 31, 2017 and August 31, 2016
(Unaudited)
2. Significant accounting policies (Continued from previous page)
Foreign currency translation
Transaction amounts denominated in foreign currencies are translated into their Canadian dollar equivalents at exchange rates prevailing at the transaction dates. Carrying values of monetary assets and liabilities reflect the exchange rates at the balance sheet date. Gains and losses on translation or settlement are included in the determination of net earnings for the current year.
Income taxes
The Company accounts for income taxes using the taxes payable method. Under this method, only current income tax assets and liabilities are recorded to the extent they are unpaid or recoverable. In addition, the benefit relating to a tax loss incurred in the current year and carried back to prior years is recognized as a current asset. Current income tax assets and liabilities are measured using substantively enacted tax rates and laws expected to apply when the tax liabilities or assets are to be either settled or realized.
Measurement uncertainty
The preparation of financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting year.
Accounts receivable are stated after evaluation as to their collectability and an appropriate allowance for doubtful accounts is provided where considered necessary. A provision is made for slow moving and obsolete inventory. Management has estimated the value of the inventory based upon their assessment of the realizable amount less selling costs. Amortization is based on the estimated useful lives of property and equipment.
These estimates and assumptions are reviewed periodically and, as adjustments become necessary they are reported in net earnings in the years in which they become known.
Financial instruments
The Company recognizes its financial instruments when the Company becomes party to the contractual provisions of the financial instrument. All financial instruments are initially recorded at their fair value, including financial assets and liabilities originated and issued in a related party transaction with management. Financial assets and liabilities originated and issued in all other related party transactions are initially measured at their carrying or exchange amount in accordance with CPA Handbook Section 3840, Related Party Transactions.
At initial recognition, the Company may irrevocably elect to subsequently measure any financial instrument at fair value. The Company has elected to measure cash at fair value subsequent to initial recognition, all other financial instruments are subsequently measured at their amortized cost.
Transaction costs and financing fees directly attributable to the origination, acquisition, issuance or assumption of financial instruments subsequently measured at fair value are immediately recognized in earnings. Conversely, transaction costs and financing fees are added to the carrying amount for those financial instruments subsequently measured at amortized cost or cost.
The Bolt Supply House Ltd.
Notes to the Interim Financial Statements
For the six month period ended August 31, 2017 and August 31, 2016
(Unaudited)
2. Significant accounting policies (Continued from previous page)
Financial asset impairment
The Company assesses impairment of all its financial assets measured at cost or amortized cost. The Company groups assets for impairment testing when available information is not sufficient to permit identification of each individually impaired financial asset in the group. Management considers whether there has been a breach in contract, such as a default or delinquency in interest or principal payment in determining whether objective evidence of impairment exists. When there is an indication of impairment, the Company determines whether it has resulted in a significant adverse change in the expected timing or amount of future cash flows during the year. If so, the Company reduces the carrying amount of any impaired financial assets to the highest of: the present value of cash flows expected to be generated by holding the assets; the amount that could be realized by selling the assets; and the amount expected to be realized by exercising any rights to collateral held against those assets. Any impairment, which is not considered temporary, is included in current year net earnings.
The Company reverses impairment losses on financial assets when there is a decrease in impairment and the decrease can be objectively related to an event occurring after the impairment loss was recognized. The amount of the reversal is recognized in net earnings in the year the reversal occurs. The adjusted carrying amount shall be no greater than the amount that would have been reported at the date the reversal had the impairment not been recognized previously.
Leases
A lease that transfers substantially all of the benefits and risks of ownership is classified as a capital lease. At the inception of a capital lease, an asset and a payment obligation is recorded at an amount equal to the lesser of the present value of the minimum lease payments and the property's fair market value. Assets under capital leases are amortized using the declining balance method, over their estimated useful lives. All other leases are accounted for as operating leases and rental payments are expensed as incurred
3. Inventory
Management has estimated the value of inventory based upon their assessment of the lower of cost and net realizable value less selling costs. Management has made an obsolescence provision of $40,000 (February 28, 2017 ‑ $40,000).
4. Property and equipment
August 31 | February 28 | |||
2017 | 2017 | |||
Accumulated | Net book | Net book | ||
Cost | amortization | value | value | |
Land | 177,320 | - | 177,320 | 177,320 | |
Buildings | 546,291 | 171,299 | 374,992 | 376,808 | |
Computer hardware | 2,712,054 | 2,338,608 | 373,446 | 384,302 | |
Computer software | 766,896 | 719,789 | 47,107 | 47,136 | |
Equipment and tools | 252,746 | 199,955 | 52,791 | 57,842 | |
Furniture and fixtures | 1,952,483 | 1,445,596 | 506,887 | 484,912 | |
Leasehold improvements | 1,127,223 | 760,866 | 366,357 | 366,032 | |
Paving | 6,400 | 3,572 | 2,828 | 2,884 | |
Vehicle and trailers | 107,631 | 46,823 | 60,808 | 71,540 | |
7,649,044 | 5,686,508 | 1,962,536 | 1,968,776 | ||
The Bolt Supply House Ltd.
Notes to the Interim Financial Statements
For the six month period ended August 31, 2017 and August 31, 2016
(Unaudited)
5. Bank indebtedness
The operating line of credit is authorized up to $$5,500,000 (February 28, 2017 ‑ $5,500,000), and bears interest at prime plus 0.25% (February 28, 2017 ‑ prime plus 0.25%). As at August 31, 2017, $2,945,733 (February 28, 2017 ‑ $3,523,390) was drawn on the operating line of credit. As at August 31, 2017, the prime interest rate was 2.95 % (February 28, 2017 ‑ 2.70%). The authorized maximum limit is 75% of accounts receivable aged to 60 days plus 50% of inventory.
The operating line of credit is secured by a general assignment of book debts, Section 427 security over inventory, general security agreement over all present and future acquired assets. The operating line of credit is subject to periodic review, at least annually.
The operating line of credit is subject to certain financial and non‑financial covenants with respect to working capital, debt service coverage, tangible net worth, acquisition of new financing and corporate reorganizations. As at August 31, 2017 the Company was in compliance with all financial and non‑financial covenants. It is management's view that the Company will remain in compliance for the twelve months subsequent to August 31, 2017.
6. Income taxes
The reconciliation of the Company's effective income tax expense is as follows:
August 31 | August 31 | |
2017 | 2016 | |
Expected tax expense at 27% (2016 ‑ 26.66%) | 547,639 | 295,990 | |
Increase (decrease) in income tax expense resulting from: | |||
Small business deduction | (79,825) | (65,800) | |
Impact of difference between amortization and CCA | 12,325 | - | |
Loss on disposal | (2,363) | - | |
Non‑deductible expenses and other | 23,586 | 3,682 | |
Actual tax expense | 501,362 | 233,872 | |
7. Related party transactions
During the six month period ended August 31, 2017, the Company completed certain transactions with related parties. These transactions were conducted in the normal course of business and are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties.
The Company recorded consulting fees expense in the amount of $108,000 (August 31, 2016 ‑ $108,000) to a corporate shareholder. As at August 31, 2017, $110,250 (February 28, 2017 ‑ $110,250) remained payable and is included in management bonus and consulting fees payable.
The Company recorded and paid management bonuses of $300,000 (August 31, 2016 ‑ $300,000) to an officer who is also an individual shareholder. As at August 31, 2017, $Nil (February 28, 2017 ‑ $Nil) remained payable.
The Bolt Supply House Ltd.
Notes to the Interim Financial Statements
For the six month period ended August 31, 2017 and August 31, 2016
(Unaudited)
8. Share capital
August 31 | February 28 | |||
2017 | 2017 | |||
Issued | ||||
Common shares | ||||
625 Class "A" common shares (2016 ‑ 625 Class "A" shares) | 6 | 6 | ||
625 Class "B" common shares (2016 ‑ 625 Class "B" shares) | 6 | 6 | ||
375 Class "D" common shares (2016 ‑ 375 Class "D" shares) | 4 | 4 | ||
375 Class "E" common shares (2016 ‑ 375 Class "E" shares) | 4 | 4 | ||
20 | 20 | |||
Preferred shares | ||||
11,199,865 Class C Series I preferred shares, redemption price $1 per share | 2 | 2 | ||
3,750,083 Class C Series II preferred shares, redemption price $1 per share | 43,323 | 43,323 | ||
2,250,052 Class C Series III preferred shares, redemption price $1 per share | 2,250,052 | 2,250,052 | ||
2,293,377 | 2,293,377 | |||
2,293,397 | 2,293,397 | |||
August 31 | February 28 | |||
2017 | 2017 | |||
Common shares | Number | Amount | Number | Amount | |
Opening balance | 2,000 | 20 | 2,000 | 20 | |
Closing balance | 2,000 | 20 | 2,000 | 20 | |
9. Commitments
The Company has entered into various lease agreements for premises with estimated minimum annual payments as follows:
2018 | 555,236 | ||
2019 | 963,143 | ||
2020 | 792,352 | ||
2021 | 668,504 | ||
2022 | 471,203 | ||
Thereafter | 217,354 | ||
4,404,260 | |||
The Bolt Supply House Ltd.
Notes to the Interim Financial Statements
For the six month period ended August 31, 2017 and August 31, 2016
(Unaudited)
10. Financial instruments
The Company, as part of its operations, carries a number of financial instruments. It is management's opinion that the Company is not exposed to significant interest rate, currency, credit, liquidity or other price risks arising from these financial instruments except as otherwise disclosed.
Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company enters into transactions to purchase inventory and other goods and services denominated in United States dollars for which the related expenses and accounts payable balances are subject to exchange rate fluctuations. The impact on the statement of earnings for the year had the U.S. dollar to Canadian dollar exchange changed by 10% would amount to $12,972 (February 28, 2017 ‑ $1,150). The following items are denominated in United States currency and presented in Canadian currency:
August 31 | February 28 | |
2017 | 2017 | |
CAD$ | CAD$ | |
Cash | 183,762 | 128,350 |
Accounts payable | 114,305 | 116,854 |
Interest rate risk
Interest rate risk is the risk that the value of a financial instrument might be adversely affected by a change in interest rates. Changes in market interest rates may have an effect on the cash flows associated with some financial assets and liabilities, known as cash flow risk, and on the fair value of other financial assets or liabilities, known as price risk.
The Company is exposed to interest rate risk primarily through its operating line of credit as described in Note 5. A 1% change in interest rates could increase or decrease interest expense by approximately $32,346 (February 28, 2017 ‑ $35,234) on an annual basis.
Credit concentration
Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of trade accounts receivable. Company sales are concentrated in the industrial sector; however, credit exposure is limited due to the Company's large customer base.
The Bolt Supply House Ltd.
Notes to the Interim Financial Statements
For the six months periods ended August 31, 2017 and August 31, 2016
(Unaudited)
11. | Subsequent events |
On October 3, 2017, Lawson Products Inc. (Ontario) acquired all the issued and outstanding shares of the Company for cash consideration of $40,000,000. The purchase price shall be increased or decreased, as applicable, dollar for dollar by the amount by which the net working capital is greater than or less than the target working capital.
12. | Reconciliation of the Financial Statements to United States Generally Accepted Accounting Principles |
These financial statements have been prepared in accordance with Canadian ASPE which, in most respects conforms to generally accepted accounting principles in U.S. GAAP. Any difference in accounting principles as they have been applied to the accompanying financial statements are not material except as described below. All items required for disclosure under U.S. GAAP are not noted.
The application of U.S. GAAP would have the following effect on the balance sheet as reported:
August 31, 2017 | February 28, 2017 | ||||||||
Canadian | U.S. | Canadian | U.S. | ||||||
ASPE | GAAP | ASPE | GAAP | ||||||
Assets | |||||||||
Current | |||||||||
Cash | 217,148 | 217,148 | 161,827 | 161,827 | |||||
Accounts receivable | 4,316,272 | 4,316,272 | 3,518,383 | 3,518,383 | |||||
Income taxes recoverable | - | - | 283,430 | 283,430 | |||||
Inventory | 8,152,879 | 8,152,879 | 7,231,182 | 7,231,182 | |||||
Prepaid expenses and deposits | 423,400 | 423,400 | 519,291 | 519,291 | |||||
13,109,699 | 13,109,699 | 11,714,113 | 11,714,113 | ||||||
Property and equipment | 1,962,536 | 1,962,536 | 1,968,776 | 1,968,776 | |||||
Total Assets | 15,072,235 | 15,072,235 | 13,682,889 | 13,682,889 | |||||
Liabilities | |||||||||
Current | |||||||||
Bank indebtedness | 2,945,733 | 2,945,733 | 3,523,390 | 3,523,390 | |||||
Accounts payable and accruals | 1,890,293 | 1,890,293 | 1,763,603 | 1,763,603 | |||||
Goods and services and sales taxes payable | 114,592 | 114,592 | 99,704 | 99,704 | |||||
Management bonus and consulting fees payable | 110,250 | 110,250 | 110,250 | 110,250 | |||||
Income tax payable | 298,499 | 298,499 | - | - | |||||
Deferred tax liability (Note a) | - | 107,679 | - | 144,622 | |||||
Deferred rent liability (Note b) | - | 220,847 | - | 129,672 | |||||
5,359,367 | 5,687,893 | 5,496,947 | 5,771,241 | ||||||
Shareholders' Equity | |||||||||
Share capital | |||||||||
Common shares | 20 | 20 | 20 | 20 | |||||
Preferred shares (redeemable at $17,200,000) | 2,293,377 | 2,293,377 | 2,293,377 | 2,293,377 | |||||
Retained earnings | 7,419,471 | 7,090,945 | 5,892,545 | 5,618,251 | |||||
9,712,868 | 9,384,342 | 8,185,942 | 7,911,648 | ||||||
Total Liabilities and Shareholders' Equity | 15,072,235 | 15,072,235 | 13,682,889 | 13,682,889 | |||||
The application of U.S. GAAP would have the following effect on the statement of earnings and retained earnings as reported:
The Bolt Supply House Ltd.
Notes to the Interim Financial Statements
For the six months periods ended August 31, 2017 and August 31, 2016
(Unaudited)
August 31, 2017 | August 31, 2016 | |||||
Canadian | U.S. | Canadian | U.S. | |||
ASPE | GAAP | ASPE | GAAP | |||
Sales | 23,891,446 | 23,891,446 | 18,978,895 | 18,978,895 | ||
Cost of sales | 13,873,832 | 13,873,832 | 9,934,374 | 9,934,374 | ||
Gross margin | 10,017,614 | 10,017,614 | 9,044,521 | 9,044,521 | ||
Selling costs | 2,087,945 | 2,087,945 | 1,831,223 | 1,831,223 | ||
Operating expenses (Note b) | 4,980,036 | 5,071,210 | 5,153,483 | 5,166,690 | ||
Administrative expenses | 562,689 | 562,689 | 561,723 | 561,723 | ||
7,630,670 | 7,721,844 | 7,546,429 | 7,559,636 | |||
Earnings from operations | 2,386,944 | 2,295,770 | 1,498,092 | 1,484,885 | ||
Other expenses | ||||||
Foreign exchange gain | 40,594 | 40,594 | 20,433 | 20,433 | ||
Gain (loss) on disposal of property and equipment | 8,750 | 8,750 | (284) | (284) | ||
Management bonus and consulting fees | (408,000) | (408,000) | (408,000) | (408,000) | ||
Earnings before income taxes | 2,028,288 | 1,937,114 | 1,110,241 | 1,097,034 | ||
Provision for income taxes ‑ current | 501,362 | 501,362 | 233,872 | 233,872 | ||
Provision for income taxes ‑ deferred (Note a) | - | (36,942) | - | (7,248) | ||
Net earnings | 1,526,926 | 1,472,694 | 876,369 | 870,410 | ||
Retained earnings, beginning of period | 5,892,545 | 5,892,545 | 5,268,279 | 5,268,279 | ||
Dividends | - | - | (500,000) | (500,000) | ||
Deferred taxes adjustment (Note a) | - | (144,622) | - | (164,944) | ||
Deferred rent liability adjustment (Note b) | - | (129,672) | - | (82,085) | ||
Retained earnings, end of period | 7,419,471 | 7,090,945 | 5,644,648 | 5,391,660 | ||
(a) | Under Canadian accounting standards for private enterprises, section 3465 Income taxes,, the Company had selected to account for income taxes using the taxes payable method (current taxes). U.S. GAAP ASC 740, Income taxes, requires that financial statements should reflect the current and deferred tax consequences of all events that have been recognized in the financial statements or tax returns. Deferred tax assets or liabilities reflect temporary differences between amounts of assets and liabilities for financial and tax reporting. Such amounts are adjusted, as appropriate, to reflect changes in enacted tax rates expected to be in effect when the temporary differences reverse. A valuation allowance is established to offset any deferred tax assets if, based upon the available evidence, it is more likely than not (i.e. greater than 50% likely) that some or all of the deferred tax assets will not be realized. This resulted in an deferred income tax recovery of $36,942 (2016 - $7,248) and a reduction to opening retaining earnings of $144,622 (2016 - $ 164,944). The deferred tax liability is attributed to temporary differences with property and equipment and deferred rent liability. |
The Bolt Supply House Ltd.
Notes to the Interim Financial Statements
For the six months periods ended August 31, 2017 and August 31, 2016
(Unaudited)
12. Reconciliation of the Financial Statements to United States Generally Accepted Accounting Principles
(Continued from previous page)
(b) | Under Canadian accounting standards for private enterprises, section 3065 Leases, the Company had selected to account for operating leases based on rental payments. U.S. GAAP ACS 840, Leases, requires that scheduled rent increases shall be recognized by the lessee on a straight-live basis over the lease term. This resulted in an additional rent expense of $91,174 (2016 - $13,207) and an reduction to opening retained earnings of $129,672 (2016 - $82,085). |
The Bolt Supply House Ltd.
Schedule 1 ‑ Selling costs
For the six month period ended August 31, 2017 and August 31, 2016
(Unaudited)
August 31 | August 31 | ||
2017 | 2016 | ||
Selling costs | |||
Commissions | 1,768,661 | 1,650,586 | |
Freight | 152,946 | 83,354 | |
Automotive | 34,101 | 48,342 | |
Advertising and promotion | 51,698 | 26,865 | |
Customer rebates and allowances | 61,496 | 10,178 | |
Meals and entertainment | 5,357 | 5,072 | |
Other items | 13,686 | 6,826 | |
2,087,945 | 1,831,223 | ||
The Bolt Supply House Ltd.
Schedule 2 ‑ Operating expenses
For the six month period ended August 31, 2017 and August 31, 2016
(Unaudited)
August 31 | August 31 | ||
2017 | 2016 | ||
Operating expenses | |||
Personnel | 3,112,809 | 3,207,431 | |
Occupancy | 1,138,803 | 1,148,172 | |
Communications | 342,233 | 300,203 | |
Other operating expenses | 166,571 | 204,835 | |
Travel | 102,897 | 87,350 | |
Training and education | 50,742 | 129,458 | |
Office | 65,981 | 76,034 | |
4,980,036 | 5,153,483 | ||
The Bolt Supply House Ltd.
Schedule 3 ‑ Administrative expenses
For the six month period ended August 31, 2017 and August 31, 2016
(Unaudited)
August 31 | August 31 | ||
2017 | 2016 | ||
Administrative expenses | |||
Amortization | 220,418 | 227,854 | |
Bank charges | 128,861 | 122,514 | |
Other items | 84,839 | 68,262 | |
Interest on bank indebtedness | 47,826 | 52,040 | |
Bad debt expense | 80,745 | 91,053 | |
562,689 | 561,723 | ||