Attached files
file | filename |
---|---|
EX-99.5 - EX-99.5 - KLX Energy Services Holdings, Inc. | a18-36987_1ex99d5.htm |
EX-99.3 - EX-99.3 - KLX Energy Services Holdings, Inc. | a18-36987_1ex99d3.htm |
EX-99.2 - EX-99.2 - KLX Energy Services Holdings, Inc. | a18-36987_1ex99d2.htm |
EX-99.1 - EX-99.1 - KLX Energy Services Holdings, Inc. | a18-36987_1ex99d1.htm |
EX-23.2 - EX-23.2 - KLX Energy Services Holdings, Inc. | a18-36987_1ex23d2.htm |
EX-23.1 - EX-23.1 - KLX Energy Services Holdings, Inc. | a18-36987_1ex23d1.htm |
EX-10.1 - EX-10.1 - KLX Energy Services Holdings, Inc. | a18-36987_1ex10d1.htm |
EX-2.1 - EX-2.1 - KLX Energy Services Holdings, Inc. | a18-36987_1ex2d1.htm |
8-K - 8-K - KLX Energy Services Holdings, Inc. | a18-36987_18k.htm |
Motley Services, LLC
Financial Statements
As of June 30, 2018 and
the Six Months Ended June 30, 2018 and 2017
Motley Services, LLC
Contents
Financial Statements |
|
|
|
Balance Sheet |
3 |
|
|
Statements of Income and Changes in Members Equity |
4 |
|
|
Statements of Cash Flows |
5 |
|
|
Notes to Financial Statements |
6-17 |
Motley Services, LLC
Balance Sheet
June 30, 2018 (Unaudited) |
|
|
| |
|
|
|
| |
ASSETS |
|
|
| |
Current Assets |
|
|
| |
Cash and cash equivalents |
|
$ |
1,577,403 |
|
Trade accounts receivable |
|
23,321,262 |
| |
Prepaid expenses |
|
1,674,569 |
| |
|
|
|
| |
Total current assets |
|
26,573,234 |
| |
|
|
|
| |
Fixed Assets at Cost, Net |
|
61,442,084 |
| |
|
|
|
| |
Total assets |
|
$ |
88,015,318 |
|
|
|
|
| |
LIABILITIES AND MEMBERS EQUITY |
|
|
| |
Current Liabilities |
|
|
| |
Accounts payable |
|
$ |
5,131,052 |
|
Accrued liabilities |
|
2,796,076 |
| |
Current portion of long-term debt |
|
3,730,864 |
| |
Current portion of capital leases |
|
4,050,209 |
| |
|
|
|
| |
Total current liabilities |
|
15,708,201 |
| |
|
|
|
| |
LongTerm Liabilities |
|
|
| |
Long-term debt, net of current portion |
|
20,154,163 |
| |
Capital leases, net of current portion |
|
10,643,490 |
| |
|
|
|
| |
Total long-term liabilities |
|
30,797,653 |
| |
|
|
|
| |
Total liabilities |
|
46,505,854 |
| |
|
|
|
| |
Members Equity |
|
41,509,464 |
| |
|
|
|
| |
Total liabilities and members equity |
|
$ |
88,015,318 |
|
See accompanying notes to financial statements.
Motley Services, LLC
Statements of Income and Changes in Members Equity
Six Months Ended June 30, |
|
2018 |
|
2017 |
| |
|
|
|
|
|
| |
Revenues |
|
$ |
58,577,389 |
|
22,141,891 |
|
Cost of Services |
|
(37,413,080 |
) |
(16,811,635 |
) | |
|
|
|
|
|
| |
Gross profit |
|
21,164,309 |
|
5,330,256 |
| |
|
|
|
|
|
| |
Operating Expenses |
|
|
|
|
| |
Selling, general and administrative expenses |
|
3,175,844 |
|
1,830,100 |
| |
Depreciation |
|
3,259,608 |
|
1,247,858 |
| |
|
|
|
|
|
| |
Operating expense |
|
6,435,452 |
|
3,077,958 |
| |
|
|
|
|
|
| |
Operating income |
|
14,728,857 |
|
2,252,298 |
| |
|
|
|
|
|
| |
Other Income (Expense) |
|
|
|
|
| |
Loss on disposal of fixed assets |
|
(29,779 |
) |
|
| |
Interest expense |
|
(1,699,793 |
) |
(601,234 |
) | |
Other |
|
12,952 |
|
(826 |
) | |
Other expense, net |
|
(1,716,620 |
) |
(602,060 |
) | |
|
|
|
|
|
| |
NET INCOME |
|
13,012,237 |
|
1,650,238 |
| |
|
|
|
|
|
| |
Members Equity: |
|
|
|
|
| |
Balance beginning of period |
|
28,497,227 |
|
12,299,964 |
| |
Acquisitions of equipment financed by member contributions |
|
|
|
5,894,227 |
| |
|
|
|
|
|
| |
Balance, end of period |
|
$ |
41,509,464 |
|
19,844,429 |
|
See accompanying notes to financial statements.
Motley Services, LLC
Statements of Cash Flows
Six Months Ended June 30, |
|
2018 |
|
2017 |
| |
|
|
|
|
|
| |
Cash flows from operating activities: |
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|
|
|
| |
Net income |
|
$ |
13,012,237 |
|
1,650,238 |
|
Adjustments to reconcile net income to net cash provided by (used in) operating activities: |
|
|
|
|
| |
Depreciation |
|
3,259,608 |
|
1,247,858 |
| |
Amortization of debt issuance costs |
|
114,983 |
|
5,155 |
| |
Loss on disposal of assets |
|
29,779 |
|
|
| |
Change in operating assets: |
|
|
|
|
| |
Accounts receivable, trade |
|
(8,452,402 |
) |
(7,283,279 |
) | |
Prepaid expenses and other current assets |
|
286,939 |
|
(684,685 |
) | |
Other assets |
|
|
|
119,246 |
| |
Change in operating liabilities: |
|
|
|
|
| |
Accounts payable |
|
(2,060,404 |
) |
1,972,807 |
| |
Accrued liabilities |
|
1,150,466 |
|
846,020 |
| |
Net cash provided by (used in) operating activities |
|
7,341,206 |
|
(2,126,640 |
) | |
Cash flows from investing activities: |
|
|
|
|
| |
Purchase of property and equipment |
|
(12,951,219 |
) |
(1,473,045 |
) | |
Proceeds from sale of assets |
|
60,000 |
|
|
| |
Net cash used in investing activities |
|
(12,891,219 |
) |
(1,473,045 |
) | |
Cash flows from financing activities: |
|
|
|
|
| |
Repayments of long-term debt |
|
(1,502,222 |
) |
(408,039 |
) | |
Net borrowings on line of credit |
|
7,581,832 |
|
|
| |
Net proceeds from factoring |
|
1,520,558 |
|
4,269,403 |
| |
Capital lease payments |
|
(1,412,713 |
) |
(172,502 |
) | |
Net cash provided by financing activities |
|
6,187,455 |
|
3,688,862 |
| |
Net increase in cash and cash equivalents |
|
637,442 |
|
89,177 |
| |
|
|
|
|
|
| |
Cash and cash equivalents, beginning of year |
|
939,961 |
|
311,036 |
| |
|
|
|
|
|
| |
Cash and cash equivalents, end of year |
|
$ |
1,577,403 |
|
400,213 |
|
|
|
|
|
|
| |
Cash paid during the year for: |
|
|
|
|
| |
Interest |
|
$ |
1,584,810 |
|
596,079 |
|
Non-cash investing and financing transactions: |
|
|
|
|
| |
Acquisitions of buildings and equipment through long-term debt |
|
$ |
648,428 |
|
1,552,317 |
|
Acquisitions of equipment through capital leases |
|
10,937,000 |
|
3,525,920 |
| |
Repayments of factoring notes through long-term debt |
|
7,915,544 |
|
|
| |
Acquisitions of equipment financed by member contributions |
|
|
|
5,894,227 |
|
See accompanying notes to financial statements.
Motley Services, LLC
Notes to Financial Statements
1. |
Organization and History |
|
Organization
Motley Services, LLC, (the Company), a Texas limited liability company, was initially organized as a corporation on May 28, 2010 in the state of Texas and was converted to a limited liability company on October 7, 2016. The Company is governed by a Limited Liability Company Agreement, amended on October 14, 2016.
The Company is primarily engaged in providing cased hole wireline services, coiled tubing, wireline, pumping through tubing and nitrogen services for oil and gas wells. The Companys operations are concentrated in the Permian Basin region of Texas and New Mexico.
Interim Financial Statement Information
The accompanying financial statements as of June 30, 2018 and for the six months ended June 30, 2018 and 2017 have not been audited by the Companys independent auditors. In the opinion of Company management, the unaudited financial statements reflect all adjustments necessary to present fairly the Companys financial statements as of June 30, 2018 and for the six months ended June 30, 2018 and 2017. All such adjustments are of a normal, recurring nature. In preparing the unaudited financial statements, management of the Company has made certain estimates and assumptions that affect reported amounts in the financial statements and disclosures of contingencies. Actual results may differ from those estimates. The results for interim periods are not necessarily indicative of annual results. |
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2. |
Significant Accounting Policies |
|
A summary of the significant accounting policies consistently applied in the preparation of the accompanying financial statements fallows.
Cash and Cash Equivalents
The Company considers all short-term investments with maturities of three months or less to be cash equivalents.
There were no short-term investments other than cash as of June 30, 2018.
The Companys cash balances may at times exceed federally insured amounts. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk.
Accounts Receivable
The Companys allowance for doubtful accounts is based on managements evaluations of the collectability of each account receivable based on the customers payment history and general economic conditions. At June 30, 2018, the Company had no allowance for doubtful accounts. |
Motley Services, LLC
Notes to Financial Statements
2. |
Significant Accounting Policies (Continued) |
|
Prepaid Expenses
Prepaid expenses consist primarily of operating supplies used on jobs, prepaid benefits and other current prepaid expenses.
Fixed Assets
The Companys fixed assets are recorded at cost. Depreciation is provided on the straight-line method over the following estimated useful lives: | ||
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Vehicles |
3 years |
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Equipment |
3-10 years |
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|
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Furniture and fixtures |
3-7 years |
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| ||
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Upon sale or retirement of fixed assets, the cost and related accumulated depreciation are removed from the Companys property accounts and the resulting gain or loss is recognized.
Maintenance, repairs and minor renewals and replacements are charged to expense when incurred. Betterments and major renewals and replacements are capitalized.
Income Taxes
On October 14, 2016, the Company elected Q-Sub status and converted to a Partnership for tax purposes. Accordingly, taxable income or losses are reported by the members on their individual income tax returns based on their percentage of ownership. Consequently, no provision for income taxes is reported in the accompanying financial statements. Tax years open for examination by taxing authorities include the years from 2015 through 2017.
Revenue Recognition
The Company recognizes revenues upon completion of services.
Advertising Expense
All advertising costs are expensed when incurred. For the six months ended June 30, 2018 and 2017 advertising expense was $35,891 and $25,258, respectively.
Use of Estimates
In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, (GAAP) management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Motley Services, LLC
Notes to Financial Statements
2. |
Significant Accounting Policies (Continued) |
|
Use of Estimates (Continued)
Areas where critical accounting estimates are made by management include:
· Depreciation of property and equipment
· Allowance for doubtful accounts
Risk Concentration
Financial instruments that potentially subject the Company to concentrations of credit risk are its receivables. The Company provides services to customers domestically. The Company continuously evaluates its customers credit worthiness and financial conditions and generally does not require collateral. The Company does not believe it is exposed to any material risk of concentration.
Recently Issued Accounting Pronouncements
Revenues from Contracts with Customers
In May of 2014, the Financial Accounting Standards Board (FASB) issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). The FASB and the International Accounting Standards Board (IASB) initiated a joint project to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. GAAP and IFRS that would:
1. Remove inconsistencies and weaknesses in revenue requirements.
2. Provide a more robust framework for addressing revenue issues.
3. Improve comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets.
4. Provide more useful information to users of financial statements through improved disclosure requirements.
5. Simplify the preparation of financial statements by reducing the number of requirements to which an entity must refer.
The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps: |
Motley Services, LLC
Notes to Financial Statements
2. |
Significant Accounting Policies (Continued) |
|
Recently Issued Accounting Pronouncements (Continued)
Revenues from Contracts with Customers (Continued)
Step 1: Identify the contract(s) with a customer.
Step 2: Identify the performance obligations in the contract.
Step 3: Determine the transaction price.
Step 4: Allocate the transaction price to the performance obligations in the contract.
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.
For nonpublic companies the amendments in this Update are effective for annual reporting periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019.
Management does not expect the adoption will have a material impact on the Companys financial statements.
Lease Accounting
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) which is effective for nonpublic companies beginning after December 15, 2019. Early application is permitted. Under the new provisions, all lessees will report a right-of-use asset and a liability for the obligation to make payments for all leases with the exception of those leases with a term of 12 months or less.
All other leases will fall into one of two categories:
· Financing leases, similar to capital leases, will require the recognition of an asset and liability, measured at the present value of the lease payments.
· Interest on the liability will be recognized separately from amortization of the asset.
· Principal repayments will be classified as financing outflows and payments of interest as operating outflows on the statement of cash flows. |
Motley Services, LLC
Notes to Financial Statements
2. |
Significant Accounting Policies (Continued) |
|
Lease Accounting (Continued)
· Operating leases will also require the recognition of an asset and liability measured at the present value of the lease payments.
· A single lease cost, consisting of interest on the obligation and amortization of the asset, calculated such that the amortization of the asset will increase as the interest amount decreases resulting in a straight-line recognition of lease expense.
· All cash outflows will be classified as operating on the statement of cash flows.
Lessor accounting remains substantially unchanged with the exception that no leases entered into after the effective date will be classified as leveraged leases.
Management has not evaluated the effect the adoption will have on its financial statements.
Classification for Certain Cash Receipts and Cash Payments
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230). ASU 2016-15 provides accounting guidance related to the presentation and classification of certain transactions in the statement of cash flows where diversity in practice exists. The guidance is effective for annual periods beginning after December 15, 2018, with early adoption permitted. The new standard is required to be applied with a modified retrospective approach to each prior reporting period presented and provides for certain practical expedients. Management does not expect the adoption to have a material impact on the Companys financial statements. |
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3. |
Accounts Receivable |
|
Accounts receivable at June 30, 2018 consists of trade receivables of $23,321,262. The Company factors certain of its receivables for cash flow financing purposes. Such receivables serve as collateral for the borrowing arrangement. See Note 6.
As of June 30, 2018, management considers accounts receivable to be fully collectible; accordingly, no allowance for doubtful accounts is required. If amounts become uncollectible, they will be charged to operations when that determination is made. |
Motley Services, LLC
Notes to Financial Statements
4. |
Fixed Assets |
|
Fixed assets consisted of the following at June 30, 2018: | ||||
|
|
|
| ||||
|
|
|
Wireline units |
|
$ |
7,102,612 |
|
|
|
|
Coil units |
|
20,811,816 |
| |
|
|
|
Pumps |
|
19,092,733 |
| |
|
|
|
10K units |
|
1,834,461 |
| |
|
|
|
Shop equipment |
|
4,620,414 |
| |
|
|
|
Nitrogen equipment |
|
709,524 |
| |
|
|
|
Trucks |
|
6,102,440 |
| |
|
|
|
Furniture and fixtures |
|
200,329 |
| |
|
|
|
Buildings and leasehold improvements |
|
554,028 |
| |
|
|
|
Equipment under development |
|
8,031,152 |
| |
|
|
|
|
|
69,059,509 |
| |
|
|
|
Accumulated depreciation and amortization |
|
(7,617,425 |
) | |
|
|
|
|
|
|
| |
|
|
|
Fixed assets, net |
|
$ |
61,442,084 |
|
|
|
|
| ||||
|
|
|
Equipment under development at June 30, 2018, consisted primarily of deposits on and purchases of segments of equipment not yet completed.
Depreciation expense for the six months ended June 30, 2018 and 2017 was $3,259,608 and $1,247,858, respectively. | ||||
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|
|
| ||||
5. |
Accrued Liabilities |
|
Accrued liabilities consisted of the following at June 30, 2018: | ||||
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|
|
| ||||
|
|
|
Accrued payroll and related expenses |
|
$ |
1,519,510 |
|
|
|
|
Accrued franchise taxes |
|
59,091 |
| |
|
|
|
Accrued property taxes |
|
297,878 |
| |
|
|
|
Accrued other |
|
919,597 |
| |
|
|
|
|
|
|
| |
|
|
|
|
|
$ |
2,796,076 |
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| ||||
6. |
Factoring Note Payable |
|
The Company signed an Accounts Receivable factoring agreement with Gulf Coast Bank and Trust Company dated January 11, 2017. The agreement was in effect for one year and was extended automatically for another year. The initial borrowing limit of $5,000,000 increased to $8,500,000 on June 27, 2017 under the first amendment to the agreement. Borrowings under the agreement are subject to interest at the current prime rate with a floor of 3.5% (currently 4.5%). Each invoice factored under the agreement is subject to a 10% reserve retained by the factor until the invoice amount is collected. Invoices that are not collected within 90 days of the invoice date are automatically charged against the current reserve balance.
As of June 30, 2018, the Company had no amounts of outstanding borrowings with the factor agreement. |
Motley Services, LLC
Notes to Financial Statements
7. |
Long-Term Debt |
|
Long-term debt as of June 30, 2018 is as follows: | ||||
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| ||||
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Vehicle financing notes payable to Ford Motor Credit, with combined monthly payments of $5,161 including interest at a rate of 5.89% for thirty-six months. The notes mature in April and July of 2019 and are secured by vehicles. Four of the notes either matured or were paid off during 2017. |
|
$ |
64,726 |
|
|
|
|
|
|
|
| |
|
|
|
Equipment financing note payable to Allegiance Capital, LLC, dated December 20, 2017, with payments of $29,151 per month for 60 months including interest at a rate of 8.75%. The note matures on December 20, 2021 and is secured by equipment. |
|
1,049,000 |
| |
|
|
|
|
|
|
| |
|
|
|
Vehicle financing notes payable to Ally Financial with combined monthly payments of $4,486 including interest at a rate of 5.89% for thirty-six months. The notes mature in April and July of 2019 and are secured by vehicles. |
|
120,565 |
| |
|
|
|
|
|
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| |
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Note payable to D-5 Investments, LLC, dated October 11, 2016, with monthly payments of interest only at a rate of 12% from November 1 2016, to June 1 of 2017 and monthly payments of $50,000 principal plus interest accrued on the outstanding loan balance at a rate of 12% from July 1, 2017 to September 1, 2019. The note matures on September 30, 2019 when all remaining outstanding principal and interest is due. The note is secured by all assets owned by the company that are not subject to liens. |
|
4,350,000 |
| |
|
|
|
|
|
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| |
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Equipment financing note payable to Allegiance Capital, LLC, dated January 27, 2017, with payments of $3,239 per month for 60 months including interest at a rate of 8.75%. The note matures on January 27, 2022 and is secured by equipment. |
|
118,898 |
| |
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|
|
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|
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| |
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Vehicle financing notes payable to Wells Fargo, with combined monthly payments of $5,704 including interest at a rate of 8.24% for thirty-six months. The notes mature from March to May of 2020 and are secured by vehicles. |
|
111,210 |
| |
|
|
|
|
|
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| |
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Equipment financing note payable to Allegiance Capital, LLC, dated March 7, 2017, with payments of $9,929 per month for 60 months including interest at a rate of 8.75%. The note matures on March 7, 2022 and is secured by equipment. |
|
378,817 |
|
Motley Services, LLC
Notes to Financial Statements
7. |
Long-Term Debt (Continued) |
|
Equipment financing note payable to Portfolio Advisors VIII, LLC, dated June 12, 2017, with payments of $9,986 per month for 60 months including interest at a rate of 9%. The note matures on June 12, 2022 and is secured by equipment. |
|
400,253 |
|
|
|
|
|
|
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Equipment financing note payable to Portfolio Advisors VIII, LLC, dated June 30, 2017, with payments of $6,078 per month for 36 months including interest at a rate of 10%. The note matures on June 30, 2020 and is secured by equipment. |
|
126,619 |
|
|
|
|
|
|
|
|
|
|
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Equipment financing note payable to Portfolio Advisors VIII, LLC, dated August 16, 2017, with payments of $12,915 per month for 36 months including interest at a rate of 10%. The note matures on August 16, 2020 and is secured by equipment. |
|
289,872 |
|
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Equipment financing note payable to Portfolio Advisors VIII, LLC, dated October 31, 2017, with payments of $27,659 per month for 60 months including interest at a rate of 9.5%. The note matures on October 31, 2022 and is secured by equipment. |
|
1,428,559 |
|
|
|
|
|
|
|
|
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Vehicle financing note payable to PACCAR Financial Corp. dated March 23, 2018, with payments of $10,149 per month for 48 months including interest at a rate of 6.22%. The note matures on April 7, 2022 and is secured by vehicles. |
|
405,705 |
|
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|
|
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|
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Note payable to Allegiance Capital, LLC, dated January 23, 2018, with monthly payments of $5,469, principal plus interest accrued on the outstanding loan balance at a rate of 9%. The note matures on January 23, 2022. The note is secured by mobile homes. |
|
195,938 |
|
|
|
|
|
|
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Term loan payable to PNC Bank, National Association, in the original amount of $8 million, dated March 16, 2018, with monthly principal payments of $166,667 plus interest at the rate of 7.5% for 36 months. The note matures on March 16, 2021 when a balloon payment of all unpaid principal and interest is due. Interest (7.5% as of June 30, 2018) is determined at the rate of 2.5% plus Prime Rate. The loan is subject to various covenants and is guaranteed by the Companys partners who pledged their full partnership interest as collateral. |
|
7,333,333 |
|
Motley Services, LLC
Notes to Financial Statements
7. |
Long-Term Debt (Continued) |
|
Revolving note payable to PNC Bank, National Association, with a borrowing limit of $20 million, dated March 16, 2018. Monthly payments of interest on the outstanding balance are due on the first business day of each month until maturity on March 16, 2021 when all outstanding interest and principal are due. Interest (6.5% as of June 30, 2018%) is determined at the rate of 1.5% plus Prime Rate. The note is subject to various covenants and is guaranteed by the Companys partners who pledged their full partnership interest as collateral. |
|
8,119,679 |
| |
|
|
|
|
|
24,493,174 |
| |
|
|
|
Less current portion of long-term debt |
|
(3,730,864 |
) | |
|
|
|
Less unamortized debt issuance costs |
|
(608,147 |
) | |
|
|
|
Long-term debt |
|
$ |
20,154,163 |
|
|
|
|
| ||||
|
|
|
Annual maturities of long-term debt for each of the next five years ending June 30 and thereafter are as follows: | ||||
|
|
|
| ||||
|
|
|
2019 |
|
$ |
3,730,864 |
|
|
|
|
2020 |
|
6,965,291 |
| |
|
|
|
2021 |
|
12,490,464 |
| |
|
|
|
2022 |
|
797,348 |
| |
|
|
|
2023 |
|
509,207 |
| |
|
|
|
Thereafter |
|
|
| |
|
|
|
|
|
|
| |
|
|
|
|
|
$ |
24,493,174 |
|
|
|
|
| ||||
|
|
|
As of June 30, 2018, the Company was in compliance with all of the covenants on its debt. | ||||
|
|
|
| ||||
8. |
Capital Lease Obligations |
|
The Company is the lessee of various equipment under capital leases that expire through March of 2023. The assets and liabilities under capital leases are recorded at the lower of the present value of the minimum lease payments or the fair value of the asset. The assets are depreciated over the lower of their related lease terms or their estimated productive lives. Depreciation of the assets under capital leases is included in the depreciation expenses for 2017 and 2016.
The following is a summary of property held under capital leases as of June 30, 2018: | ||||
|
|
|
| ||||
|
|
|
Equipment cost |
|
$ |
16,762,921 |
|
|
|
|
Less: accumulated depreciation |
|
(875,068 |
) | |
|
|
|
|
|
|
| |
|
|
|
Total |
|
$ |
15,887,853 |
|
Motley Services, LLC
Notes to Financial Statements
8. |
Capital Lease Obligations (Continued) |
|
Minimum future lease payments under capital leases for next five years ending June 30 and thereafter are as follows: | |||||||
|
|
|
| |||||||
|
|
|
2019 |
|
$ |
5,179,268 |
| |||
|
|
|
2020 |
|
5,238,055 |
| ||||
|
|
|
2021 |
|
4,510,281 |
| ||||
|
|
|
2022 |
|
1,594,880 |
| ||||
|
|
|
2023 |
|
572,097 |
| ||||
|
|
|
Thereafter |
|
|
| ||||
|
|
|
|
|
|
| ||||
|
|
|
Total minimum lease payments |
|
17,094,581 |
| ||||
|
|
|
|
|
|
| ||||
|
|
|
Less: amount representing interest |
|
(2,400,882 |
) | ||||
|
|
|
Less: current portion |
|
(4,050,209 |
) | ||||
|
|
|
|
|
|
| ||||
|
|
|
Capital leases, net of current portion |
|
$ |
10,643,490 |
| |||
|
|
|
| |||||||
9. |
Operating Leases |
|
The Company also leases the buildings and land where its facilities and yard are located under non-cancelable agreement with a related party. The agreement is classified as an operating lease and requires monthly payments of $52,500 based on the first amendments of the original agreement until it expires on September 30, 2021. Rental expenses under the agreement for the six months ended June 30, 2018 and 2017 totaled $265,000 and $131,250, respectively. Minimum annual rental commitments and minimal lease payments over the next five years ending June 30 and thereafter are as follows: | |||||||
|
|
|
| |||||||
|
|
|
|
|
Vehicle and Other |
|
Facility and |
| ||
|
|
|
2019 |
|
$ |
924,112 |
|
630,000 |
| |
|
|
|
2020 |
|
754,809 |
|
630,000 |
| ||
|
|
|
2021 |
|
257,419 |
|
630,000 |
| ||
|
|
|
2022 |
|
|
|
157,500 |
| ||
|
|
|
2023 |
|
|
|
|
| ||
|
|
|
Thereafter |
|
|
|
|
| ||
|
|
|
|
|
$ |
1,936,340 |
|
2,047,500 |
| |
|
|
|
| |||||||
|
|
|
The Company leases vehicles under cancelable agreements which expire through December of 2020. The leases are obtained under a commercial credit line with Ford Motor Credit Company dated January 24, 2014. The credit line term was extended through June of 2019. Under the provisions of the commercial credit line, Ford Motor Credit Company has agreed to purchase lease agreements from authorized dealerships which lease vehicles to the Company, in the cumulative amount of up to $3,800,000. Once this limit is reached, or the line term expires, Ford Motor Credit Company will not accept additional leases extended to the company. |
Motley Services, LLC
Notes to Financial Statements
9. |
Operating Leases (Continued) |
|
The Company leases vehicles under a non-cancellable agreement which expires on January 20, 2020. The leases are obtained under a commercial credit line with Ally Financial, Inc. dated January 13, 2017. The credit line term expired on January 31, 2018. Under the provisions of the commercial credit line, Ally Financial, Inc. has agreed to purchase lease agreements from authorized dealerships which lease vehicles to the Company, in the cumulative amount of up to $402,000. Once this limit is reached, or the line term expires, Ally Financial, Inc. will not accept additional leases extended to the company.
Vehicle rental expenses under the lease agreements specified above, for the six months ended June 30, 2018 and 2017 totaled $417,343 and $194,351, respectively. |
|
|
|
|
10. |
Related Parties |
|
During the six months ended June 30, 2018 and 2017, the Company rented the buildings and land where its facilities and yard are located, as discussed in Note 9 above, from Motley Capital, LLC, owned by the Companys CEO. The Company paid monthly rent of $21,875 per month from January to June of 2017, $40,000 per month from January to April 2018 and $52,500 per month from May to June of 2018. The total rent paid for the six months ended June 30, 2018 and 2017 was $225,000 and $131,250, respectively. June of 2018, the Company prepaid $52,500 for July of 2018.
As of June 30, 2018, the Company owed $4,350,000 under a note to District 5 Investments, LP as discussed in Note 7 above. The Company incurred $272,983 and $301,666.68 in interest on the note during the six months ended June 30, 2018 and 2017, respectively.
In 2017, the Company signed a lease agreement for two tractors at a cost of $100,000 each with Hercules Equipment Management, LLC, owned by District 5 Investment, LP. The lease is classified as capital. Monthly payments of $4,448 are payable to the related party until maturity in December of 2021. As of June 30, 2018, the Company owed $151,966 principal and incurred $9,660 and $11,577 in interest on the lease for the six months ended June 30, 2018 and 2017, respectively.
In 2017, the Company signed a lease agreement for two pumps at a cost of $1,150,000 each with Hercules Equipment Management, LLC, owned by District 5 Investment, LP. The lease is classified as capital. Monthly payments of $72,872 are payable to the related party until maturity in August of 2020. As of June 30, 2018, the Company owed $82,391 principal and incurred $1,674,970 and $2,087,463 in interest on the lease for the six months ended June 30, 2018. |
Motley Services, LLC
Notes to Financial Statements
10. |
Related Parties (Continued) |
|
In 2017, the Company leased on a month-to-month basis eight pump down units and two frac units from Hercules Equipment Management, LLC, owned by District 5 Investment, LP. The lease was classified as operating. The monthly payments varied based on use per unit. The agreement was cancelled and replaced on April 1, 2018 (see next paragraph). Total rent expense incurred under the lease for the three months ended March 31, 2018 and the six months ended June 30, 2017 was $864,647 and $709,849, respectively.
On April 1, 2018, the Company signed a lease agreement for eight pump down units and two frac units with Hercules Equipment Management, LLC, owned by District 5 Investment, LP. This agreement is classified as capital and it replaced the existing month-to-month agreement disclosed in Note 10 above. Monthly payments of $302,226 consisting of principal and interest are payable to the related party until maturity on September 30, 2021. The market value of the equipment leased is $10.9 million.
As of June 30, 2018, the Company owed $10,226,874 principal and incurred $233,553 in interest from the date of inception to June 30, 2018.
In 2017, the Company signed a lease agreement for two cranes at a cost of $1,100,016 each with a related party. The lease is classified as capital. Monthly payments of $39,687 are payable to the related party until maturity in June of 2022. As of June 30, 2018, the Company owed $1,881,509 principal and incurred $86,669 in interest on it for the six months ended June 30, 2018.
| |||||
|
|
|
| |||||
11. |
Significant Customers |
|
The Company had revenues from significant customers that accounted for the following percentages of the Companys total revenues for the six months ended June 30: | |||||
|
|
|
| |||||
|
|
|
|
|
2018 |
|
2017 |
|
|
|
|
Customer A |
|
31 |
% |
24 |
% |
|
|
|
Customer B |
|
22 |
% |
23 |
% |
|
|
|
Customer C |
|
10 |
% |
16 |
% |
|
|
|
Customer D |
|
8 |
% |
19 |
% |
|
|
|
| |||||
|
|
|
Management believes that in the unlikely event that the Company lost these customers, based on current market conditions, the Company would be able to find comparable work with other existing customers or new customers. | |||||
|
|
|
| |||||
12. |
Subsequent Events |
|
The Company has evaluated subsequent events through October 20, 2018, the date the financial statements were available to be issued. |