North Mill Holdco LLC and Subsidiaries
Notes to Consolidated Financial Statements
Upon allocating the purchase price to the fair value of assets acquired and liabilities
assumed, the book value of intangible assets, consisting of goodwill, increased by $6,250,000. The book value of assets acquired and liabilities assumed approximates fair value. The fair value of the loans acquired also effectively remove the
Companys allowance for loan losses for such acquired loans.
Acquisition related costs of $1,177,556, including legal, profession and
other expenses, were recorded in the period incurred and not included in the purchase price.
Additionally, pursuant to an Assignment of
Loan Agreement on December 31, 2019, NMC was assigned accounts receivable aggregating $8,208,283. These accounts have been recorded at their respective fair values. As compensation for these accounts, the assignor will be paid a monthly fee
based on the aggregate amount of the monthly interest and fees earned on the assigned accounts.
Significant Accounting Policies
Significant accounting policies are as follows:
Principles of consolidation: The financial statements include the accounts of NMC and its subsidiaries. All material intercompany
accounts and transactions have been eliminated in consolidation.
Revenue recognition: The Company recognizes interest and fee
income in accordance with ASC 310, Receivables and ASC 825, Interest. Interest income is recognized as earned based on the terms of the underlying loan agreement. Fees received for the origination of loans are deferred and amortized
into income over the contractual lives of the loans and annual fees received for loans are deferred and amortized into income over a twelve-month period using the straight-line method, which approximates the effective interest rate method.
Unamortized amounts are recognized as income at the time that loans are paid in full. Interest income on loans receivable is recognized using the interest method. Interest and fee income are accrued based on the outstanding loan balance and charged
monthly to the loan balance as earned, except in instances that a reasonable doubt exists as to the collectability of interest, in which case the accrual of income may be suspended.
The Company recognizes and measures revenue recognition on other fee income in accordance with ASC 606, Revenue from Contracts With
Customers. Other fee income, which includes wire transfers, field examination charges, late reporting fees and other items charged to borrowers, is recognized as charged.
Cash: The Company maintains its cash balances at several financial institutions which at various times during the year have exceeded the
threshold for insurance provided by the Federal Deposit Insurance Corporation.
Loans and accounts receivable: The Company provides
asset-based financing primarily in the form of revolving credit facilities collateralized by the borrowers assets, including, but not limited to, accounts receivable, inventory, equipment and general intangibles. The loan term is generally