Exhibit No. 99.3
ALLSTATE HOME LOANS, INC.
UNAUDITED FINANCIAL STATEMENTS
FOR THE SEVEN MONTHS ENDED JULY 31, 2006
| Balance Sheet -- As of July 31, 2006 (unaudited) | F-1 |
| | |
| Statements of Operations -- For the Seven Months Ended July 31, 2006 (unaudited) | F-2 |
| | |
| Statements of Cash Flows -- For the Seven Months Ended July 31, 2006 (unaudited) | F-3 |
| | |
| Notes to Financial Statements | F-4 |
ALLSTATE HOME LOANS, INC.
BALANCE SHEET
| | | July 31, 2006 (unaudited) | |
| | | | |
| Assets | | | | |
| Current assets: | | | | |
| Cash and cash equivalents | | $ | 979,513 | |
| Loans available for sale | | | 30,958,228 | |
| Loan receivable | | | 1,941,776 | |
| Accounts receivable | | | 413,188 | |
| Prepaid and other current assets | | | 1,138,145 | |
| Total current assets | | | 35,430,849 | |
| Property and equipment, net | | | 325,006 | |
| | | | | |
| Other assets | | | 746,192 | |
| | | | | |
| Total assets | | $ | 36,502,048 | |
| Liabilities and Stockholders' Deficit | | | | |
| Current liabilities: | | | | |
| Accounts payable and accrued expenses | | $ | 818,330 | |
| Note payable | | | 1,720,110 | |
| Line of credit | | | 30,569,939 | |
| Total current liabilities | | | 33,108,379 | |
| Total liabilities | | | 33,108,379 | |
| Stockholders' equity: | | | | |
| Common stock | | | 26,000 | |
| Additional paid in capital | | | 619,963 | |
| Retained earnings | | | 3,976,749 | |
| Net income | | | (1,229,043 | ) |
| Total stockholders' equity | | | 3,393,669 | |
| Total liabilities and stockholders' equity | | $ | 36,502,048 | |
ALLSTATE HOME LOANS, INC.
STAEMENT OF OPERATIONS
FOR THE SEVEN MONTHS ENDED JULY 31, 2006
unaudited
| | | July 31, 2006 | |
| | | | |
| Revenue | | $ | 4,639,631 | |
| | | | | |
| Cost of sales | | | 2,354,666 | |
| | | | | |
| Gross profit | | | 2,284,965 | |
| | | | | |
| Expenses | | | | |
| Employee related costs | | | 2,423,349 | |
| Selling, general and administrative | | | 1,073,061 | |
| Interest expense | | | 17,598 | |
| | | | | |
| Total expenses | | | 3,514,008 | |
| | | | | |
| Net income | | $ | (1,229,043 | ) |
ALLSTATE HOME LOANS, INC.
STATEMENTS OF CASH FLOWS
FOR THE SEVEN MONTHS ENDED JULY 31, 2006
unaudited
| | | Seven Months Ended July 31, 2006 | |
| | | | |
Cash flows from operating activities: | | | |
| Net loss | | $ | (1,272,393 | ) |
| | | | | |
Changes in operating assets and liabilities: | | | | |
| (Increase) decrease in accounts receivable | | | (405,661 | ) |
| (Increase) decrease in loan receivable | | | 841,731 | |
| (Increase) decrease in mortgage loans held for sale | | | 95,797,406 | |
| (Increase) decrease in other current assets | | | (90,463 | ) |
| (Increase) decrease in other assets | | | 56,894 | |
| Increase (decrease) in accounts payable and accrued expenses | | | (494,322 | ) |
| Net cash provided by operating activities | | | 94,433,193 | |
Cash flows from investing activities: | | | | |
| Write down of fixed assets | | | 202,071 | |
| Net cash provided by investing activities | | | 202,071 | |
Cash flows from financing activities: | | | | |
| Net advances on lines of credit | | | (95,716,890 | ) |
| Net proceeds on notes payable | | | 402,927 | |
| Net cash used for financing activities | | | (95,313,963 | ) |
Net increase (decrease) in cash and cash equivalents | | | (678,700 | ) |
Cash and cash equivalents, beginning of period | | | 1,658,213 | |
Cash and cash equivalents, end of period | | $ | 979,513 | |
Supplemental disclosure of cash flow information | | | | |
| Interest paid | | $ | -- | |
ALLSTATE HOME LOANS, INC.
DBA ALLSTATE FUNDING
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2006
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
Allstate Home Loans, Inc., DBA Allstate Funding, operates as a mortgage broker company for residential loans. The company was incorporated and commenced on September 11, 1990.
Loan Receivable
The Loan Receivable-Loan Sales consists of loans approved and waiting funding as of July 31, 2006, was $30,958,228. The Loan Receivables for the Warehouse lines are as follows:
| RFC | | $ | 22,783,788 | |
| IMPAC | | $ | 8,174,440 | |
Notes Receivable
The company has notes receivable listed on the Current Assets section for varying rates and years.
Property and Equipment
Property and equipment are recorded at cost. Depreciation of property and equipment and amortization of franchise fee and organization costs are provided over the estimated useful lives of the assets, between 5 and 7 years, using both the straight line and double declining balance methods.
Income Taxes
The Company, elected to be taxed as a "C" corporation effective January 1, 2004. A provision and liability for Federal income tax has been included in these financial statements; the minimum corporate income tax imposed by the state of California had been provided for.
Investments
The company has an investment accounts with the brokerage firm of TVIDX. The lower of cost or market method is being used for financial statements purposes.
Note Payable - RFC
The Company established a "Master Mortgage Loan Purchasing" Agreement with Residential Funding Corporation. This loan is in the form of a line of credit.
ALLSTATE HOME LOANS, INC.
DBA ALLSTATE FUNDING
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2006
The terms of the agreement are as follows:
| | A. | Collateral includes F.R.A, V.A. and conventional conforming residential mortgage |
| | B. | The "Warehouse" period of ownership of the collateralized loans may not exceed 45 days. |
| | C. | The Fees include an interest rate of 1.75% over the prevailing banks prime rate. |
| | D. | The loan value is 98% of the collateral, stated above, not to exceed the unpaid principal amount of such residential mortgage loan. |
Note Payable - IMP AC
The Company established an agreement with the above banks with the same terms as above.
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