Exhibit 99.2
AMPLEX ELECTRIC, INC.
LUCKEY, OHIO
FINANCIAL STATEMENTS
BALANCE SHEET DATES AS OF APRIL 30, 2024 AND OCTOBER 31, 2023
AND INCOME STATEMENTS AND CASH FLOWS
FOR THE SIX MONTHS ENDED APRIL 30, 2024 AND 2023
AND
REVIEW REPORT OF INDEPENDENT ACCOUNTANTS
Bolinger, Segars, Gilbert & Moss, L.L.P.
CERTIFIED PUBLIC ACCOUNTANTS
LUBBOCK, TEXAS
AMPLEX ELECTRIC, INC.
LUCKEY, OHIO
FINANCIAL STATEMENTS
BALANCE SHEET DATES AS OF APRIL 30, 2024 AND OCTOBER 31, 2023
AND INCOME STATEMENTS AND CASH FLOWS
FOR THE SIX MONTHS ENDED APRIL 30, 2024 AND 2023
AND
REVIEW REPORT OF INDEPENDENT ACCOUNTANTS
BOLINGER, SEGARS, GILBERT & MOSS, L.L.P.
CERTIFIED PUBLIC ACCOUNTANTS
AMPLEX ELECTRIC, INC.
LUCKEY, OHIO
FINANCIAL STATEMENTS
BALANCE SHEET DATES AS OF APRIL 30, 2024 AND OCTOBER 31, 2023 AND INCOME STATEMENTS AND CASH FLOWS
FOR THE SIX MONTHS ENDED APRIL 30, 2024 AND 2023
TABLE OF CONTENTS
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| Statement |
| Page |
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| Identification |
| No. |
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Review Report of Independent Accountants |
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| 1 |
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Financial Statements |
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Balance Sheets |
| Exhibit A |
| 2 |
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Statements of Income and Retained Earnings |
| Exhibit B |
| 3 |
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Statements of Cash Flows |
| Exhibit D |
| 4 |
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Notes to Financial Statements |
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| 5 |
BOLINGER, SEGARS, GILBERT & MOSS, L.L.P.
CERTIFIED PUBLIC ACCOUNTANTS
Bolinger, Segars, Gilbert & Moss, L.L.P.
CERTIFIED PUBLIC ACCOUNTANTS
PHONE: (806) 747-3806
FAX: (806) 747-3815
8215 Nashville Avenue
Lubbock, Texas 79423-1954
Independent Accountant’s Review Report
Board of Directors
Amplex Electric, Inc.
Luckey, Ohio
We have reviewed the accompanying financial statements of Amplex Electric, Inc., which comprise the balance sheets as of April 30, 2024 and October 31, 2023, and the related statements of income and retained earnings and cash flows for the six months ended April 30 2024 and 2023, and the related notes to the financial statements. A review includes primarily applying analytical procedures to management's financial data and making inquiries of management. A review is substantially less in scope than an audit, the objective of which is the expression of an opinion regarding the financial statements as a whole. Accordingly, we do not express such an opinion.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the financial statements that are free from material misstatement whether due to fraud or error.
Accountant’s Responsibility
Our responsibility is to conduct the review engagement in accordance with Statements on Standards for Accounting and Review Services promulgated by the Accounting and Review Services Committee of the AICPA. Those standards require us to perform procedures to obtain limited assurance as a basis for reporting whether we are aware of any material modifications that should be made to the financial statements for them to be in accordance with accounting principles generally accepted in the United States of America. We believe that the results of our procedures provide a reasonable basis for our conclusion.
Accountant’s Conclusion
Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with accounting principles generally accepted in the United States of America.
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Certified Public Accountants |
Lubbock, Texas
August 27, 2024
-1-
BOLINGER, SEGARS, GILBERT & MOSS, L.L.P.
CERTIFIED PUBLIC ACCOUNTANTS
-2-
AMPLEX ELECTRIC, INC.
Exhibit A
BALANCE SHEETS
APRIL 30, 2024 AND OCTOBER 31, 2023
ASSETS | ||||||||
|
| April 30, |
| October 31, | ||||
|
| 2024 |
| 2023 | ||||
CURRENT ASSETS |
|
|
|
|
|
| ||
Cash and Cash Equivalents |
| $ | 283,210 |
|
| $ | 369,721 |
|
Accounts Receivable Due from Customers (Less allowance for credit losses of $900 in 2024 and $1,600 in 2023) |
|
| 121,310 |
|
|
| 132,663 |
|
Accounts Receivable - Affiliate |
|
| 383,530 |
|
|
| 427,655 |
|
Materials and Supplies |
|
| 507,184 |
|
|
| 553,545 |
|
Current Portion of Prepaid Fiber Lease |
|
| 8,864 |
|
|
| 8,864 |
|
Prepayments |
|
| 508,046 |
|
|
| 414,770 |
|
|
| $ | 1,812,144 |
|
| $ | 1,907,218 |
|
OTHER NONCURRENT ASSETS |
|
|
|
|
|
| ||
Prepaid Fiber Lease, Less Current Portion |
| $ | 14,774 |
|
| $ | 19,206 |
|
Intangibles, Net of Amortization |
|
| 676,603 |
|
|
| 694,400 |
|
|
| $ | 691,377 |
|
| $ | 713,606 |
|
PROPERTY AND EQUIPMENT |
|
|
|
|
|
| ||
Plant In Service |
| $ | 23,090,959 |
|
| $ | 21,039,423 |
|
Plant Under Construction |
|
| 1,223,837 |
|
|
| 719,936 |
|
|
| $ | 24,314,796 |
|
| $ | 21,759,359 |
|
Less: Accumulated Depreciation |
|
| 8,138,666 |
|
|
| 7,351,112 |
|
|
| $ | 16,176,130 |
|
| $ | 14,408,247 |
|
|
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|
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|
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| ||
DEFERRED CHARGES |
| $ | 8,146 |
|
| $ | 19,589 |
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
| $ | 18,687,797 |
|
| $ | 17,048,660 |
|
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| ||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| ||||||||
CURRENT LIABILITIES |
|
|
|
|
|
| ||
Current Portion of Long-Term Debt |
| $ | 1,026,231 |
|
| $ | 535,547 |
|
Accounts Payable |
|
| 1,423,788 |
|
|
| 1,213,749 |
|
Other Current Liabilities |
|
| 8,600 |
|
|
| 6,795 |
|
Deferred Service Revenues |
|
| 77,333 |
|
|
| 475,152 |
|
Compensated Absences |
|
| 108,423 |
|
|
| 108,423 |
|
Accrued Interest Payable |
|
| 46,219 |
|
|
| 38,525 |
|
|
| $ | 2,690,594 |
|
| $ | 2,378,191 |
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NONCURRENT LIABILITIES |
|
|
|
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Long-Term Debt, Less Current Portion |
| $ | 7,208,256 |
|
| $ | 6,627,108 |
|
Unamortized Debt Issuance Costs |
|
| (127,076 | ) |
|
| (134,991 | ) |
Deferred Income Taxes |
|
| 1,756,344 |
|
|
| 1,604,789 |
|
|
| $ | 8,837,524 |
|
| $ | 8,096,906 |
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| ||
STOCKHOLDERS' EQUITY |
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| ||
Common Stock, 25,000 Shares Authorized, 21,000 |
| $ | 50,000 |
|
| $ | 50,000 |
|
Retained Earnings |
|
| 7,109,679 |
|
|
| 6,523,563 |
|
|
| $ | 7,159,679 |
|
| $ | 6,573,563 |
|
|
|
|
|
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| ||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
| $ | 18,687,797 |
|
| $ | 17,048,660 |
|
See accompanying notes to financial statements.
BOLINGER, SEGARS, GILBERT & MOSS, L.L.P.
CERTIFIED PUBLIC ACCOUNTANTS
-3-
AMPLEX ELECTRIC, INC.
Exhibit B
STATEMENTS OF INCOME AND RETAINED EARNINGS
FOR THE SIX MONTHS ENDED APRIL 30, 2024 AND 2023
|
| April 30, | ||||||
|
| 2024 |
|
| 2023 | |||
|
|
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|
OPERATING REVENUES |
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|
|
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|
|
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Wireless Internet Services |
| $ | 3,524,411 |
|
| $ | 3,610,191 |
|
Fiber Internet Services |
|
| 1,272,477 |
|
|
| 917,450 |
|
VoIP Services |
|
| 247,931 |
|
|
| 239,833 |
|
Streaming Video Services |
|
| 326,590 |
|
|
| 266,386 |
|
Miscellaneous Income |
|
| 289,105 |
|
|
| 261,400 |
|
Uncollectible Recoveries (Revenues) |
|
| 225 |
|
|
| (2,877 | ) |
Total Operating Revenues |
| $ | 5,660,739 |
|
| $ | 5,292,383 |
|
|
|
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OPERATING EXPENSES |
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|
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|
|
|
Cost of VoIP |
| $ | 44,270 |
|
| $ | 41,146 |
|
Cost of Internet Services |
|
| 310,079 |
|
|
| 305,088 |
|
Cost of Streaming Video |
|
| 316,140 |
|
|
| 227,281 |
|
Plant Specific Operations |
|
| 724,025 |
|
|
| 729,976 |
|
Plant Nonspecific Operations |
|
| 453,468 |
|
|
| 494,372 |
|
Depreciation and Amortization |
|
| 786,671 |
|
|
| 892,341 |
|
Customer Operations |
|
| 341,913 |
|
|
| 299,287 |
|
Corporate Operations |
|
| 1,597,007 |
|
|
| 1,445,222 |
|
General Taxes |
|
| 60,271 |
|
|
| 81,729 |
|
Total Operating Expenses |
| $ | 4,633,844 |
|
| $ | 4,516,442 |
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME |
| $ | 1,026,895 |
|
| $ | 775,941 |
|
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE) |
|
|
|
|
|
|
|
|
Interest and Dividend Income |
| $ | 177 |
|
| $ | 4,355 |
|
Gain on Sale of Assets |
|
| 1,200 |
|
|
|
|
|
Amortization of Debt Issuance Cost |
|
| (7,915 | ) |
|
| (6,936 | ) |
Interest Expense |
|
| (282,863 | ) |
|
| (185,470 | ) |
Other, Net |
|
| 177 |
|
|
| (6,195 | ) |
|
| $ | (289,224 | ) |
| $ | (194,246 | ) |
|
|
|
|
|
|
|
|
|
NET INCOME BEFORE INCOME TAXES |
| $ | 737,671 |
|
| $ | 581,695 |
|
|
|
|
|
|
|
|
|
|
Income Tax Expense |
|
| 151,555 |
|
|
| 247,390 |
|
|
|
|
|
|
|
|
|
|
NET INCOME |
| $ | 586,116 |
|
| $ | 334,305 |
|
|
|
|
|
|
|
|
|
|
RETAINED EARNINGS - NOVEMBER 1, |
|
| 6,523,563 |
|
|
| 5,531,440 |
|
|
|
|
|
|
|
|
|
|
RETAINED EARNINGS - APRIL 30, |
| $ | 7,109,679 |
|
| $ | 5,865,745 |
|
See accompanying notes to financial statements.
BOLINGER, SEGARS, GILBERT & MOSS, L.L.P.
CERTIFIED PUBLIC ACCOUNTANTS
-4-
AMPLEX ELECTRIC, INC.
Exhibit C
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED APRIL 30, 2024 AND 2023
|
| April 30, | ||||||
|
| 2024 |
| 2023 | ||||
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
Net Income |
| $ | 586,116 |
|
| $ | 334,305 |
|
Adjustments to Reconcile Net Income to Net Cash from Operating Activities: |
|
|
|
|
|
|
|
|
Depreciation |
|
| 751,079 |
|
|
| 892,341 |
|
Amortization of Intangibles |
|
| 17,796 |
|
|
| 17,796 |
|
Amortization of Debt Issuance Costs |
|
| 7,915 |
|
|
| 6,936 |
|
Deferred Income Taxes |
|
| 151,555 |
|
|
| 247,390 |
|
Gain on Sale of Assets |
|
| (1,200 | ) |
|
|
|
|
Receivables |
|
| 55,478 |
|
|
| (57,453 | ) |
Materials and Supplies |
|
| 46,360 |
|
|
| (50,358 | ) |
Prepayments |
|
| (93,275 | ) |
|
| (76,112 | ) |
Prepaid Fiber Lease |
|
| 4,432 |
|
|
| 4,432 |
|
Accounts Payable |
|
| (257,677 | ) |
|
| 35,665 |
|
Other Current Liabilities |
|
| 2,063 |
|
|
| (77,536 | ) |
Deferred Service Revenues |
|
| 77,333 |
|
|
| 27,231 |
|
Deferred Charges |
|
| 11,443 |
|
|
| (8,208 | ) |
Net Cash from Operating Activities |
| $ | 1,359,418 |
|
| $ | 1,296,429 |
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
Additions to Telecommunications Plant |
| $ | (2,517,762 | ) |
| $ | (2,815,773 | ) |
Net Activity on Equity Securities |
|
|
|
|
|
| 455 |
|
Net Cash from Investing Activities |
| $ | (2,517,762 | ) |
| $ | (2,815,773 | ) |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
Proceeds from Long-Term Borrowing |
| $ | 1,481,587 |
|
| $ | 1,467,056 |
|
Repayment of Long-Term Debt |
|
| (409,754 | ) |
|
| (109,183 | ) |
Net Cash from Financing Activities |
| $ | 1,071,833 |
|
| $ | 1,357,873 |
|
|
|
|
|
|
|
|
|
|
NET CHANGE IN CASH AND CASH EQUIVALENTS |
| $ | (86,511 | ) |
| $ | (161,471 | ) |
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS - OCTOBER 31, |
|
| 369,721 |
|
|
| 473,676 |
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS - APRIL 30, |
| $ | 283,210 |
|
| $ | 312,205 |
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION |
|
|
|
|
|
|
|
|
Cash Paid During the Year for: |
|
|
|
|
|
|
|
|
Interest |
| $ | 282,863 |
|
| $ | 185,470 |
|
Income Taxes |
| $ | 0 |
|
| $ | 0 |
|
See accompanying notes to financial statements.
BOLINGER, SEGARS, GILBERT & MOSS, L.L.P.
CERTIFIED PUBLIC ACCOUNTANTS
-5-
AMPLEX ELECTRIC, INC.
NOTES TO FINANCIALSTATEMENTS
Nature of Operations
Amplex Electric, Inc. (the Company) is a provider of broadband internet, Voice Over Internet Protocol (VOIP), and video services within a service area located primarily in Northwest and Northcentral Ohio.
System of Accounts
The accounting records of the Company conform to the Uniform System of Accounts prescribed by the Federal Communications Commission for telephone companies.
Revenue Recognition
Monthly service plan revenues derived from VOIP and internet service are billed for services to be provided in the future. The portion of the revenues identified as out of period are deferred as service revenues at the end of each month.
The FASB issued ASU 2014-09, Revenue from Contracts with Customers, Topic 606, which provides a new framework for the recognition of revenue.
All revenues are accounted for under ASC 606 because all operating revenues are considered to be contracts with customers.
Generally, revenues that are derived from customers are cancellable on a short-term basis and are billed monthly and recognized as revenue in the month that the performance obligation is fulfilled.
Sales of equipment and other services that are provided are considered to be a separate performance obligation. When equipment and installation is a distinct performance obligation, the Company records the sale of the equipment when the customer takes possession of the products and services are accepted by the customer.
Revenue recognized from fixed term contracts that bundle services or equipment is allocated based on the standalone selling price of all required performance obligations of the contract and any discounts are recognized over the contract term. Promotional discounts relating to bundled services are attributed to each required component of the bundled services. There were no material costs to acquire customer contracts that would be required to be deferred and amortized over the contract period.
Deferred service revenues represent amounts billed to customers for internet services not performed as of April 30, 2024 and October 31, 2023.
Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets 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 period. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers cash and working funds to be cash and cash equivalents.
BOLINGER, SEGARS, GILBERT & MOSS, L.L.P.
CERTIFIED PUBLIC ACCOUNTANTS
-6-
AMPLEX ELECTRIC, INC.
NOTES TO FINANCIALSTATEMENTS
Concentrations of Credit Risk
Although the Company maintains their deposits in federally insured institutions, deposits may at times exceed insured amounts. Deposit accounts are insured up to $250,000.
Investments
The Company has adopted FASB ASU 2016-01, Financial Instruments: Recognition and Measurement of Financial Assets and Financial Liabilities, Topic 321, which provides guidance for the initial and subsequent recognition of financial assets. Topic 321 eliminates the distinction between trading and available for sale equity securities. Equity investments are valued at fair value with unrealized gains or losses recognized in net income. Prior amounts that were classified in Other Comprehensive Income are presented as a cumulative effect of the adoption of ASC 321 and are recorded in retained earnings.
Investment levels are based on inputs used to calculate fair market value of investments. Those inputs are defined for each level as follows:
Level 1 – Inputs include quoted prices in active markets for identical assets.
Level 2 – Inputs include available indirect information, such as quoted prices for similar assets in active markets, or quoted prices for identical or similar assets in markets that are not active.
Level 3 – Inputs are subjective and generally based on the entity’s own assumptions on how knowledgeable parties would price assets and are developed using the best information available in the circumstances.
Securities transactions are recognized on the trade date (the date the order to buy or sell is executed). Income from investments is recorded as earned on an accrual basis.
Materials and Supplies
Materials and supplies are stated at the lower of cost or net realizable value.
Advertising Costs
The Company’s policy is to directly expense all nondirect-response advertising costs as incurred. The total advertising costs for the six months ended April 30, 2024 and 2023 were $78,646 and $76,144, respectively.
Trade Accounts Receivable
In the normal course of business, the Company recognizes accounts receivable for services billed. Accounts receivable are ordinarily due 30 days after the issuance of the invoice. Accounts past due more than 45 days are considered delinquent. No interest is accrued on delinquent outstanding balances. The Company provides an allowance for doubtful accounts, which is based upon a review of outstanding receivables, historical collection information and existing economic conditions.
Intangible Assets
Intangible assets with finite lives are being amortized on the straight-line basis over five years. Such assets are periodically evaluated as to the recoverability of carrying values.
Reclassifications
Certain amounts in the prior year financial statements have been reclassified for comparative purpose to conform to the presentation in the current year’s financial statements.
BOLINGER, SEGARS, GILBERT & MOSS, L.L.P.
CERTIFIED PUBLIC ACCOUNTANTS
-7-
AMPLEX ELECTRIC, INC.
NOTES TO FINANCIALSTATEMENTS
Prepaid fiber leases consist of Indefeasible Right of Use (IRU) for portions of dark fiber with a telecommunications carrier. The Company made payment to the carrier and recognizes the expense over a period equal to the term of the IRU agreement. Prepaid fiber lease expenses expected to be recognized as follows:
May 1, 2024 thru April 30, 2025 |
| $ | 8,864 |
|
May 1, 2025 thru April 30, 2026 |
|
| 8,864 |
|
May 1, 2026 thru April 30, 2027 |
|
| 5,910 |
|
|
| $ | 23,638 |
|
The carrying basis and accumulated amortization of recognized intangible assets at April 30, 2024 and October 31, 2023, were:
|
| April 30, 2024 |
| October 31, 2023 | ||||
Amortized Intangible Assets |
|
|
|
|
|
|
|
|
Internal Use Software |
| $ | 177,962 |
|
| $ | 177,962 |
|
Goodwill - Xakbee |
|
| 30,584 |
|
|
|
|
|
Accumulated Amortization |
|
| (157,923 | ) |
|
| (109,542 | ) |
|
| $ | 50,623 |
|
| $ | 68,420 |
|
Unamortized Intangible Assets |
|
|
|
|
|
|
|
|
ARIN allocated IPv4 Licenses |
| $ | 46,080 |
|
| $ | 46,080 |
|
FCC CBRS Licenses |
|
| 579,900 |
|
|
| 579,900 |
|
|
| $ | 625,980 |
|
| $ | 625,980 |
|
Total |
| $ | 676,603 |
|
| $ | 694,400 |
|
The Company’s future cash flows are not materially impacted by its ability to extend or renew agreements related to its amortizable intangible assets.
Amortization expense for the six months ended April 30, 2024 and 2023, was $17,796 and $17,796, respectively. Estimated amortization expense for each of the following two years is:
May 1, 2024 thru April 30, 2025 |
| $ | 35,592 |
May 1, 2025 thru April 30, 2026 |
|
| 15,031 |
BOLINGER, SEGARS, GILBERT & MOSS, L.L.P.
CERTIFIED PUBLIC ACCOUNTANTS
-8-
AMPLEX ELECTRIC, INC.
NOTES TO FINANCIALSTATEMENTS
Plant in service is stated at original cost. Upon sale or retirement of an asset, the related costs and accumulated depreciation are removed from the accounts, and any gain or loss is recognized and included in gain (loss) on disposal of assets. The cost of maintenance and repairs is charged to operating expenses. The Company provides for depreciation on a straight-line basis at annual rates which will depreciate the property and equipment over its estimated useful life. Following are the major classes of property and equipment in service as of April 30, 2024 and October 31, 2023:
|
| Original Cost |
|
|
|
| Accumulated Depreciation | |||||||||||
|
|
| April 30, |
|
|
| October 31, |
|
| Depreciable |
|
| April 30, |
|
|
| October 31, |
|
|
|
| 2024 |
|
|
| 2023 |
|
| Life in Years |
|
| 2024 |
|
|
| 2023 |
|
Vehicles and Work Equipment |
| $ | 1,479,339 |
|
| $ | 1,361,184 |
|
| 5 - 7 |
| $ | 1,172,468 |
|
| $ | 1,138,960 |
|
Construction Equipment |
|
| 312,219 |
|
|
| 312,219 |
|
| 5 - 10 |
|
| 138,439 |
|
|
| 116,138 |
|
Leasehold Improvements |
|
| 210,841 |
|
|
| 176,613 |
|
| 15 |
|
| 42,353 |
|
|
| 35,863 |
|
Furniture and Fixtures |
|
| 320,896 |
|
|
| 316,282 |
|
| 5 |
|
| 213,077 |
|
|
| 199,992 |
|
Network Equipment |
|
| 4,913,109 |
|
|
| 4,849,570 |
|
| 5 - 7 |
|
| 3,557,722 |
|
|
| 3,142,085 |
|
Fiber Plant |
|
| 13,228,503 |
|
|
| 11,444,284 |
|
| 15 - 30 |
|
| 909,843 |
|
|
| 706,930 |
|
Customer Premise Equipment |
|
| 2,575,752 |
|
|
| 2,528,971 |
|
| 4 - 5 |
|
| 2,081,045 |
|
|
| 1,991,017 |
|
Video Equipment |
|
| 14,985 |
|
|
| 14,985 |
|
| 5 - 7 |
|
| 7,481 |
|
|
| 6,411 |
|
Towers |
|
| 35,315 |
|
|
| 35,315 |
|
| 5 - 10 |
|
| 16,238 |
|
|
| 13,716 |
|
|
| $ | 23,090,959 |
|
| $ | 21,039,423 |
|
|
|
| $ | 8,138,666 |
|
| $ | 7,351,112 |
|
The Company recognized depreciation expense of $751,079 and $892,341 for the six months ended April 30, 2024 and 2023, respectively.
The Company uses the asset and liability method of accounting for income taxes. The objective of the asset and liability method is to establish deferred tax assets and liabilities for the temporary difference between the financial reporting basis and the tax basis of the Company’s assets and liabilities at enacted tax rates expected to be in effect when such amounts are realized or settled. Income taxes are provided for tax effects of transactions reported in the financial statements and consist of taxes currently due, plus deferred taxes related primarily to accelerated depreciation and net operating loss (NOL) carryovers. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will result in a tax expense or benefit when recognized.
Any net operating losses incurred and not utilized are either carried back to offset prior taxable income or carried forward to offset future taxable income, depending on the taxing jurisdiction. Generally, federal net operating losses may be carried forward to offset future taxable income for a period not exceeding 20 years; however, beginning in 2018, net operating losses that are incurred may be carried forward indefinitely. At April 30, 2024, the Company has federal net operating loss carryovers of $5,806,109 available for carryover. In accordance with ASU No. 2015-17 Income Taxes, the Company classifies all deferred taxes as noncurrent. The net deferred tax liability in the accompanying balance sheet include the following components at April 30, 2024 and October 31, 2023:
|
|
| April 30, 2024 |
|
|
| October 31, 2023 |
|
Deferred Income Taxes |
|
|
|
|
|
|
|
|
Deferred Federal Tax Assets |
| $ | 31,061 |
|
| $ | 30,476 |
|
Deferred Tax Assets - NOL |
|
| 1,219,283 |
|
|
| 1,246,712 |
|
Deferred Federal Tax Liabilities |
|
| (3,006,688 | ) |
|
| (2,881,977 | ) |
|
| $ | (1,756,344 | ) |
| $ | (1,604,789 | ) |
BOLINGER, SEGARS, GILBERT & MOSS, L.L.P.
CERTIFIED PUBLIC ACCOUNTANTS
-9-
AMPLEX ELECTRIC, INC.
NOTES TO FINANCIALSTATEMENTS
Income taxes reflected in the statements of income consist of the following:
|
|
| April 30, |
| ||||
|
|
| 2024 |
|
|
| 2023 |
|
Federal Income Taxes |
|
|
|
|
|
|
|
|
Deferred Tax Expense |
| $ | 151,555 |
|
| $ | 247,390 |
|
Income Tax Expense |
| $ | 151,555 |
|
| $ | 247,390 |
|
During the six months ended April 30, 2024 and 2023, the cash paid for income taxes was $0 and $0, respectively.
The Company adheres to the “uncertain tax positions” provisions of accounting principles generally accepted in the United States of America. The Company determined that it is more likely than not that its tax positions will be sustained upon examination by the Internal Revenue Service (IRS) or other State taxing authority and that all tax benefits are likely to be realized upon settlement with taxing authorities.
The Company files income tax returns in the U.S. federal jurisdiction and in the State of Ohio. The Company is no longer subject to U.S. federal and state income tax examinations by federal and state taxing authorities for years before 2020 and 2019.
Long-term debt consists of:
|
|
| April 30, 2024 |
|
| October 31, 2023 |
Various Vehicle Notes, 3.75% to 4.99% |
| $ | 237,190 |
| $ | 179,850 |
Live Oak Bank Commercial Note, 7.25% |
|
| 4,810,129 |
|
| 5,000,000 |
Live Oak Bank Commercial Note, 5.00% |
|
| 1,684,004 |
|
| 1,721,261 |
Live Oak Bank Commercial Note, 5.00% |
|
| 900,000 |
|
| 114,536 |
Nicholas Financial Note, 9.55% |
|
| 494,000 |
|
|
|
Huntington Bank Commercial Note, 3.75% |
|
| 109,164 |
|
| 147,008 |
|
| $ | 8,234,487 |
| $ | 7,162,655 |
Less Current Portion |
|
| 1,026,231 |
|
| 535,547 |
|
| $ | 7,208,256 |
| $ | 6,627,108 |
As of April 30, 2024 the annual requirements for principal payments on long-term debt for the next five years are as follows:
2024 |
| $ | 1,026,231 |
2025 |
|
| 605,841 |
2026 |
|
| 725,253 |
2027 |
|
| 740,992 |
2028 |
|
| 765,957 |
Thereafter |
|
| 4,370,213 |
|
| $ | 8,234,487 |
Substantially all assets of the Company are pledged as security for the long-term debt under certain loan agreements with the Live Oak Banking Company.
BOLINGER, SEGARS, GILBERT & MOSS, L.L.P.
CERTIFIED PUBLIC ACCOUNTANTS
-10-
AMPLEX ELECTRIC, INC.
NOTES TO FINANCIALSTATEMENTS
During the six months ended April 30, 2024 and 2023, the cash paid for interest on notes payable was $282,863 and $185,470, respectively.
The Company rents its office facilities and certain transmission space from a company owned by the Company’s majority shareholders. The Company is on an annual rental agreement. During the six months ended April 30, 2024 and 2023 amounts paid for rent were $165,000 and $75,000, respectively.
The Company has entered into a debt agreement with Live Oak Bank to borrow funds. The Company has guaranteed the loan, along with its related party, Redbug Properties. The Company received funds in the amount of $958,208 on this loan that relate to refinancing of debt held by Redbug Properties. The loan funds, and the related liabilities were transferred to Redbug Properties, which holds the physical assets related to the debt refinanced.
Amounts receivable from and payable to affiliated companies as of April 30, 2024 and October 31, 2023, are as follows:
|
| April 30, |
| October 31, | ||||
|
| 2024 |
| 2023 | ||||
Accounts Receivable from Red Bug, LLC |
| $ | 250,597 |
|
| $ | 294,722 |
|
Accounts Receivable from Red Bug Properties, LLC |
|
| 132,933 |
|
|
| 132,933 |
|
Net Accounts Receivable - Affiliates |
| $ | 383,530 |
|
| $ | 427,655 |
|
As of April 30, 2024, there were no claims, assessments, or pending litigation of a material nature against the Company.
During 2023, the Company received approval for funding through RUS ReConnect Program for a total amount of $21,341,792 in order to serve certain census blocks in rural Northwest Ohio. The Company is required to provide service in these areas for 28 years, which is the composite economic life of the assets funded by the ReConnect loan.
On December 31, 2022 the Company has granted options to purchase 90 shares of common stock to specified employees at a price per share of $742.86. As of April 30, 2024, none of the options have been exercised.
The Company’s management has evaluated the subsequent events through August 27, 2024, the date the financial statements were available for issue.
BOLINGER, SEGARS, GILBERT & MOSS, L.L.P.
CERTIFIED PUBLIC ACCOUNTANTS
