WHOLESALE, INC.
COMBINED FINANCIAL STATEMENTS
SEPTEMBER 30, 2018
WHOLESALE, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
SEPTEMBER 30, 2018
(See Independent Accountant's Review Report)
| | PAGE |
INDEPENDENT ACCOUNTANT'S REVIEW REPORT
| | 1-2 |
| | | | | | | | |
COMBINED BALANCE SHEETS
| | | | | 3 |
| | | | | | | | |
COMBINED STATEMENTS OF OPERATIONS
| | | 4 |
| | | | | | | | |
COMBINED STATEMENTS OF STOCKHOLDER'S EQUITY
| | 5 |
| | | | | | | | |
COMBINED STATEMENTS OF CASH FLOWS
| | | 6 |
| | | | | | | | |
NOTES TO COMBINED FINANCIAL STATEMENTS
| | | 7-15 |
| | | | | | | | |
SUPPLEMENTARY INFORMATION
| | | | 16 |
| | | | | | | | |
COMBINING BALANCE SHEET – SEPTEMBER 30, 2018
| | 17 |
| | | | | | | | |
COMBINING BALANCE SHEET – DECEMBER 31, 2017
| | | 18 |
| | | | | | | | |
COMBINING STATEMENT OF OPERATIONS – SEPTEMBER 30, 2018
| 19 |
| | | | | | | | |
COMBINING STATEMENT OF OPERATIONS – SEPTEMBER 30, 2017
| 20 |
INDEPENDENT ACCOUNTANT'S REVIEW REPORT
To the Stockholder
Wholesale, Inc.
Mt. Juliet, Tennessee
We have reviewed the accompanying combined financial statements of Wholesale, Inc., which comprise the combined balance sheets as of September 30, 2018, and the related combined statements of operations, stockholders' equity, and cash flows for the nine month period then ended, and the related notes to the financial statements. A review includes primarily applying analytical procedures to management's financial data and making inquiries of company 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 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 September 30, 2018 financial statements in order for them to be in accordance with accounting principles generally accepted in the United States of America.
Other Matter - Balance Sheet at December 31, 2017
The December 31, 2017 balance sheet was audited by us, and we expressed an unmodified opinion on it in our report dated October 22, 2018. We have not performed any auditing procedures since that date.
Other Matter - Statements for the period ended September 30, 2017
The September 30, 2017 financial statements were reviewed by us. Based on our review, we are not aware of any material modifications that should be made to the accompanying September 30, 2017 financial statements in order for them to be in accordance with accounting principles generally accepted in the United States of America.
Report on Supplementary Information
The accompanying combining schedules are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from, and relates directly to, underlying accounting and other records used to prepare the financial statements. The supplementary information has been subjected to the review procedures applied in our review of the basic financial statements. We are not aware of any material modifications that should be made to the supplementary information. We have not audited the supplementary information and do not express an opinion on such information.
Chattanooga, Tennessee
January 10, 2019
WHOLESALE, INC.
COMBINED BALANCE SHEETS
SEPTEMBER 30, 2018 AND DECEMBER 31, 2017
(See Independent Accountant's Review Report)
ASSETS
| CURRENT ASSETS | (Reviewed) As of September 30, 2018 | (Audited) As of December 31, 2017 |
| Cash and cash equivalents | $2,497,659 | 3,461,002 |
| Accounts receivables | 4,051,862 | 2,162,214 |
| Vehicle inventory, net of valuation allowance | 58,932,938 | 47,253,754 |
| Other receivables | 461,858 | 535,091 |
| Prepaid expense | 310,267 | 214,578 |
| Investments | 880,091 | 973,146 |
| Total current assets | 67,134,675 | 54,599,785 |
| OTHER ASSETS | | |
| Property and equipment, net | 2,779,022 | 2,886,693 |
| Due from stockholder | - | 3,621,422 |
| Total other assets | 2,779,022 | 6,508,115 |
| TOTAL ASSETS | $69,913,697 | $61,107,900 |
LIABILITIES AND STOCKHOLDER'S EQUITY |
| CURRENT LIABILITIES | | |
| Checks drawn in excess of available bank balance | $3,074,292 | 3,711,995 |
| Note payable - floorplan | 56,367,075 | 47,797,323 |
| Accounts payable | 3,740,747 | 1,094,279 |
| Due to related party | 720,000 | 215,000 |
| Accrued expenses and liabilities | 3,600,604 | 3,137,376 |
| Deferred revenue | 100,000 | 100,000 |
| Income tax payable | 379,502 | 230,831 |
| Total current liabilities | 67,982,220 | 56,286,804 |
| LONG-TERM LIABILITIES | | |
| Deferred tax liability | 46,000 | 18,000 |
| Total long-term liabilities | 46,000 | 18,000 |
| TOTAL LIABILITIES | 68,028,220 | 56,304,804 |
| STOCKHOLDER'S EQUITY | | |
Common stock - $1 par value, 1,000 shares authorized, issued and outstanding | 1,000 | 1,000 |
| Retained earnings | 1,884,477 | 4,802,096 |
| Total stockholder's equity | 1,885,477 | 4,803,096 |
| TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY | $69,913,697 | $61,107,900 |
The accompanying notes are an integral part of the combined financial statements.
WHOLESALE, INC.
COMBINED STATEMENTS OF OPERATIONS
NINE MONTH PERIODS ENDED SEPTEMBER 30, 2018 AND 2017
(See Independent Accountant's Review Report)
| | | |
| REVENUES | | |
| Wholesale vehicles | $424,245,853 | $392,995,166 |
| Retail vehicles | 65,703,165 | 65,580,843 |
| Other sales and revenues | 7,108,132 | 7,922,926 |
| Total revenues | 497,057,150 | 466,498,935 |
| EXPENSES | | |
| Cost of sales | 480,221,497 | 450,810,483 |
| Selling, general and administrative | 13,825,952 | 12,759,977 |
| Depreciation and amortization | 244,312 | 178,175 |
| Total expenses | 494,291,761 | 463,748,635 |
| OPERATING INCOME | 2,765,389 | 2,750,300 |
| Interest expense | (2,030,693) | (1,398,468) |
| Investment income | 125,312 | 36,241 |
| INCOME BEFORE TAXES | 860,008 | 1,388,073
|
| Provision for income taxes | 86,000 | 48,500
|
| NET INCOME | $774,008 | $1,339,573 |
The accompanying notes are an integral part of the combined financial statements.
WHOLESALE, INC.
COMBINED STATEMENTS OF STOCKHOLDER'S EQUITY
NINE MONTH PERIOD ENDED SEPTEMBER 30, 2018
(See Independent Accountant's Review Report)
| | Common Stock Shares Amount | | |
BALANCE - December 31, 2017 | 1,000 | $1,000 | 4,802,096 | $4,803,096 |
| | | | | |
| Net income | -
| -
| 774,008 | 774,008 |
| | | | | |
| Stockholder distributions | -
| -
| (3,691,627) | (3,691,627) |
| | | | | |
BALANCE - September 30, 2018 | 1,000 | $1,000 | $1,884,477 | $1,885,477 |
WHOLESALE, INC.
COMBINED STATEMENTS OF CASH FLOWS
NINE MONTH PERIODS ENDED SEPTEMBER 30, 2018 AND 2017
(See Independent Accountant's Review Report)
| | | |
| CASH FLOWS FROM OPERATING ACTIVITIES | | |
| Net income | $774,008 | $1,339,573 |
| Adjustments to reconcile net income to net cash from operating activities: | | |
| Depreciation and amortization | 244,312 | 178,175 |
| Realized and unrealized loss (gain) on investments | (97,362) | (34,554) |
| Loss on disposal of property and equipment | | 227,928 |
| Provision for deferred income taxes | 28,000 | (56,000) |
| Reinvested interest and dividend income, net | (27,962) | (22,919) |
| Changes in assets and liabilities: | | |
| Accounts receivable | (1,889,648) | (1,563,227) |
| Vehicle inventory | (11,679,184) | (13,102,752) |
| Other receivables | 73,233 | (10,562) |
| Prepaid expenses | (95,689) | (152,380) |
| Note payable - floorplan | 8,569,752 | 14,553,751 |
| Accounts payable | 2,646,468 | 396,798 |
| Accrued expenses and liabilities | 463,228 | 933,746 |
| Deferred revenue | | 100,000 |
| Income tax payable | 148,671 | 90,892 |
| Net cash from operating activities | (842,173) | 2,878,469 |
| CASH FLOWS FROM INVESTING ACTIVITIES | | |
| Due from related party | 505,000 | 150,000 |
| Purchases of property and equipment | (136,641) | (1,657,484) |
| Proceeds from sale of investments | | 3,263,005 |
| Purchases of investments | 218,379 | |
| Change in due from stockholder | 3,621,422 | (3,236,382) |
| Net cash from investing activities | 4,208,160 | (1,480,861) |
| CASH FLOWS FROM FINANCING ACTIVITIES | | |
| Checks drawn in excess of bank balance | (637,703) | 1,217,460 |
| Stockholder distributions | (3,691,627) | (1,530,005) |
| Net cash from financing activities | (4,329,330) | (312,545) |
| NET CHANGE IN CASH AND CASH EQUIVALENTS | (963,343) | 1,085,063 |
| Cash and cash equivalents - beginning of period | 3,461,002 | 2,971,534 |
| Cash and cash equivalents - end of period | $2,497,659 | $4,056,597 |
| SUPPLEMENTAL DISCLOSURES | | |
| Cash paid for interest | $1,480,260 | $1,454,643 |
| Cash paid for income taxes | $58,000 | $58,000 |
WHOLESALE, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
SEPTEMBER 30, 2018
(See Independent Accountant's Review Report)
NOTE 1— ORGANIZATION AND DESCRIPTION OF BUSINESS
Organization
The combined financial statements comprise those of Wholesale, Inc. and SRB Remarketing, LLC, collectively referred to as the "Company".
Wholesale, Inc. was incorporated on April 24, 2003, in the state of Tennessee. SRB Remarketing, LLC was formed on May 4, 2016 as a Tennessee limited liability company.
Description of Business
The Company is engaged in the retail and wholesale sales of motor vehicles. The Company operates a retail location in Madison, Tennessee, and a combined retail and wholesale location in Mt. Juliet, Tennessee.
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash Equivalents and Contingent Risk Regarding Cash Balances
The Company considers cash in the bank and all highly liquid investments with an original maturity of three months or less to be cash. Under our cash management system, outstanding checks that are in excess of the cash balances at certain banks are included under current liabilities in the combined balance sheets and changes in these amounts are reflected in financing cash flows in the accompanying combined statements of cash flows. The Company considers contracts in transit to be cash equivalents as the contracts are normally purchased by a financial institution for face value within a few business days.
Accounts Receivable
Accounts receivable consist primarily of amounts due from customers, third-party finance companies and related parties. Management considers receivables outstanding for ninety days to be delinquent and believes it maintains an adequate allowance for any uncollectable amounts. Interest is not charged on accounts considered delinquent. Management establishes an allowance for doubtful accounts based on historical experience and trends.
Vehicle inventory consists of used vehicles, primarily acquired at auction. Direct and indirect vehicle reconditioning costs including parts and labor, inbound transportation costs and other incremental costs are capitalized as a component of inventory. Inventory is stated at the lower of cost or net realizable value. Vehicle inventory cost is determined by specific identification. Net realizable value is the estimated selling price less costs to complete, dispose and transport the vehicles. Selling prices are derived from historical data and trends, such as sales price and inventory turn times of similar vehicles, as well as independent, market resources. Each reporting period the Company recognizes any necessary adjustments to reflect vehicle inventory at the lower of cost or net realizable value through cost of sales in the accompanying combined income statements.
Property and Equipment
Property and equipment consist of land, buildings and improvements, transportation fleet equipment, software and furniture, fixtures and equipment and is stated at cost less accumulated depreciation and amortization. Repairs and maintenance costs that extend the life or utility of an asset are also capitalized. Ordinary repairs and maintenance are charged to expense as incurred. Costs incurred during construction are capitalized as construction in progress and reclassified to the appropriate categories when the project is completed.
Depreciation and amortization are computed using the straight-line method over the lesser of the remaining lease term or the following estimated useful lives:
Furniture, fixtures, and equipment 3-7 years
Leasehold improvements 5-15 years
Software 3 years
Vehicles 3 years
Shipping and Handling Costs
The Company is charged shipping costs on each vehicle delivered to the dealership. These costs are expensed in cost of sales.
Investments
The Company's investments in marketable securities are classified as available for-sale. The Company has elected the fair value option. Thus, investments are recorded at fair value on the balance sheet as current assets, with the change in fair value during the period included in earnings.
Income Taxes
Income taxes are reported in accordance with Financial Standards Accounting Board (FASB) Accounting Standards Codification (ASC) Topic 740, Income Taxes. This statement requires the establishment of deferred tax accounts for all temporary differences between the book and tax basis of assets and liabilities. In addition, deferred tax accounts must be adjusted to reflect new rates if enacted into law.
Effective January 1, 2010, the Company elected S corporation status. Earnings and losses after that date are included in the personal income tax returns of the stockholder and taxed at the individual level. Accordingly, the Company will not incur additional federal income tax obligations from current operations, and future financial statements will not include a provision for federal income taxes on current operations. The Company remains subject to state of Tennessee excise tax on profits at a rate of 6.5%.
Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes related primarily to differences between depreciation and unrealized gains or losses for financial and income tax reporting. The deferred taxes represent the future tax return consequences of those differences, which will either be deductible or taxable when the assets and liabilities are recovered or settled.
Revenue Recognition
The Company records revenue when vehicles are delivered to customers. Conditions for completing a sale include having an agreement with the customer, including pricing, and the sales price must be reasonably expected to be collected.
The Company arranges financing for customers through various financial institutions and receives a commission from the financial institution either in a flat fee amount or in an amount equal to the difference between the interest rates charged to customers over the predetermined interest rates set by the financial institution.
The Company also receives commissions from the sale of various insurance contracts to customers. The Company may be assessed a chargeback fee in the event of early cancellation of a loan or insurance contract by the customer.
Interest Expense
The Company recognizes interest expense at the earlier of when incurred or when paid, with certain exceptions.
Use of Estimates
The presentation of financial statements in conformity with 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 period. Actual results could differ from those estimates.
NOTE 3 — ACCOUNTS RECEIVABLE
Accounts receivable consists of the following as of:
| | | |
| Trade | $3,842,558 | $1,588,800 |
| Finance | 197,574 | 234,690 |
| Employees | 11,730 | 338,724 |
| | $4,051,862 | $2,162,214 |
NOTE 4 — INVENTORY
Inventory consists of the following as of:
| | | |
| Used vehicles | $60,161,524 | $48,446,419 |
| Parts and other | 8,414 | 44,335 |
| | 60,169,938 | 48,490,754 |
| Used vehicle valuation allowance | (1,237,000) | (1,237,000) |
| | $58,932,938 | $47,253,754 |
NOTE 5 — PROPERTY AND EQUIPMENT, NET
Property and equipment consist of the following major classifications as of:
| | | |
| Furniture, fixtures, and equipment | $918,881 | $876,010 |
| Leasehold improvements | 3,123,596 | 3,103,861 |
| Software | 284,153 | 209,852 |
| Vehicles | 57,362 | 57,362 |
| Accumulated depreciation | (1,604,970) | (1,360,392) |
| | $2,779,022 | $2,886,693 |
NOTE 6 — NOTE PAYABLE — FLOORPLAN
The Company has a floor plan arrangement with a third party to finance its used vehicle inventory, which is secured by substantially all of its assets and is renewed on an annual basis. The note includes a personal guarantee of payment by the stockholder and another related party. The note had a maximum availability of $70,000,000 at December 31, 2017 and September 30, 2018, and bears interest at a rate per annum equal to one-month LIBOR plus 3.25%
NOTE 7 — INVESTMENTS
Investments held by the Company include debt and equity securities and money market funds. In accordance with ASC Topic 320, Investments-Debt and Equity Securities, these securities are classified as available-for-sale and are reported at their fair values as determined by the market price listed by the appropriate trading exchange on the last day of the year.
Cost and fair value of investments at September 30, 2018, are as follows:
| | | | | |
| Money market funds | $39,079 | $39,079 | $- | $- |
| Corporate bonds | 111,563 | 119,267 | - | (7,704) |
| Equities | 729,449 | 645,847 | 83,602 | - |
| Total | $880,091 | $804,193 | $83,602 | $(7,704) |
| (Continued) | | | | |
WHOLESALE, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
SEPTEMBER 30, 2018
(See Independent Accountant's Review Report)
| | | | | |
| Restricted investments: | | | | |
| Money market funds | $51,638 | $51,638 | $- | $- |
| Corporate bonds | 453,282 | 466,491 | - | (13,209) |
| Equities | 206,301 | 184,432 | 21,869 | - |
| Total | 711,221 | 702,561 | 21,869 | (13,209) |
| | | | | |
| Other investments: | | | | |
| Money market funds | 91,453 | 91,453 | - | - |
| Equities | 148,302 | 132,797 | 15,505 | - |
| Exchange traded funds | 22,170 | 19,943 | 2,227 | - |
| Total | 261,925 | 244,193 | 17,732 | - |
| | $973,146 | $946,754 | $39,601 | $(13,209) |
Contractual maturities of available -for-sale debt securities as of September 30, 2018:
| Due in one year or less | $- |
| Due in 1-2 years | - |
| Due in 2-5 years | - |
| Due after 5 years | 111,563 |
| Total investments in debt securities | $111,563 |
NOTE 8 — FAIR VALUE MEASUREMENTS
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in an orderly transaction between unaffiliated market participants at the measurement date.
Assets and liabilities measured at fair value are categorized based on whether the inputs are observable in the market and the degree that the inputs are observable. The categorization of financial instruments within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The hierarchy is prioritized into three levels (with Level 3 being the lowest) defined as follows:
●
Level 1: Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access.
●
Level 2: Observable inputs other than prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated with observable market data.
●
Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies, and similar techniques that use significant unobservable inputs.
The carrying amounts reported for financial instruments approximate their fair values.
| | | Fair Value Measurements Using: |
| | | | |
| Money market funds | $39,079 | $39,079 | $- |
| Corporate bonds | 111,563 | - | 111,563 |
| Equities | 729,449 | 729,449 | - |
| Total investments | $880,091 | $768,528 | $111,563 |
| | | | |
| Money market funds | $143,091 | $143,091 | $- |
| Corporate bonds | 453,282 | - | 453,282 |
| Equities | 354,603 | 354,603 | - |
| Exchange Traded Funds | 22,170 | 22,170 | - |
| Total investments | $973,146 | $519,864 | $453,282 |
WHOLESALE, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
SEPTEMBER 30, 2018
(See Independent Accountant's Review Report)
NOTE 9 – INCOME TAXES
The state income tax provision consists of the following as of:
| | | |
| | | |
| Current tax expense | $58,000 | $104,500 |
Deferred tax expense (benefit) | 28,000 | (56,000) |
| Total provision for income taxes | $86,000 | $48,500 |
Net deferred income taxes on the balance sheet include the following amounts of deferred income tax assets and liabilities as of:
| | | |
| | | |
| Deferred tax assets | $- | $- |
| Deferred tax liabilities | (46,000) | (18,000) |
| Net | $(46,000) | $(18,000) |
Deferred income taxes are provided for the temporary differences between the financial reporting basis and tax basis of the Company's assets and liabilities. The deferred income tax liabilities result from the use of accelerated methods of depreciation of property and equipment for income tax purposes and from unrelated gains on marketable securities.
NOTE 10 — UNCERTAIN TAX POSITIONS
The Company follows the guidance of FASB ASC Topic 740-10, Income Taxes, which prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. In addition, it provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition.
Based on its evaluation, the Company has concluded that there are no significant uncertain tax positions requiring recognition in its financial statements. The Company's evaluation was performed for the tax years ended December 31, 2015 through the nine month period ended September 30, 2018, for U.S. federal income tax, and for the state of Tennessee, the years which remain subject to examination as of September 30, 2018.
NOTE 11— RELATED PARTY TRANSACTIONS
The Company leases its administrative offices and retail facilities on a month-to-month basis from the sole stockholder of the Company for approximately $54,000 per month. Total rent paid to the stockholder was $486,000, for the nine-month periods ended September 30, 2018 and 2017.
In the normal course of operations, the Company utilizes transportation services of Wholesale Express, LLC ("Express"), a related party through common ownership. Freight purchases from Express totaled $1,495,983 for the nine-month period ended September 30, 2018. As of September 30, 2018, the Company had a due to Express for $720,000.
Amounts due from stockholder represent unreimbursed personal expenses paid by the Company on behalf of the stockholder. This receivable is due on demand and interest is not charged. The amount due from the stockholder totaled $0 and $3,621,422 as of September 30, 2018 and December 31, 2017, respectively.
NOTE 12 — RISKS AND UNCERTAINTIES
The Company has investments in various marketable securities. Investment securities, in general, are exposed to various risks, such as interest rate, credit, and overall market volatility. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term and those changes could materially affect the fair market value of the marketable securities reported in the balance sheet.
NOTE 13 — CONCENTRATIONS
The Company is dependent on a third-party provider of wholesale auto auctions. The Company is dependent on their ability to provide services on a timely basis and at favorable pricing terms. The loss of this principal provider or a significant reduction in service availability could have a material adverse effect on the Company. The Company believes that its relationship with this provider is satisfactory.
NOTE 14 — COMMITMENTS AND CONTINGENCIES
The Company is subject to various claims that arise in the normal course of business. Management believes that any liability it may incur would not have a material adverse effect on its financial condition or its results of operations.
NOTE 15 — SUBSEQUENT EVENTS
Management has evaluated events and transactions subsequent to September 30, 2018 through the date of the independent accountant's review report (the date the financial statements were available to be issued) for potential recognition or disclosure in the combined financial statements. Other than the matter identified below, management has not identified any items requiring recognition or disclosure.
In October 2018, the Company agreed to sell the remaining equity interest and merge with RumbleOn, Inc. Following the transaction in October 2018, SRB Remarketing, LLC ceased all business activities and is no longer in operation.
SUPPLEMENTARY INFORMATION
WHOLESALE, INC.
COMBINING BALANCE SHEET
SEPTEMBER 30, 2018
ASSETS
| | | | | |
| CURRENT ASSETS | | | | |
| Cash and cash equivalents | $2,470,389 | $27,270 | $- | $2,497,659 |
| Receivables, net | 4,080,830 | - | (28,968) | 4,051,862 |
| Vehicle inventory | 58,932,938 | - | - | 58,932,938 |
| Other receivables | 461,858 | - | - | 461,858 |
| Prepaid expense | 310,267 | - | - | 310,267 |
| Investments | 880,091 | - | - | 880,091 |
| Total current assets | 67,136,373 | 27,270 | (28,968) | 67,134,675 |
| | | | | |
| OTHER ASSETS | | | | |
| Property and equipment, net | 2,779,022 | - | - | 2,779,022 |
| Due from stockholder | - | - | - | - |
| Total other assets | 2,779,022 | - | - | 2,779,022 |
| | | | | |
| TOTAL ASSETS | $69,915,395 | $27,270 | $(28,968) | $69,913,697 |
| | | | | |
| LIABILITIES AND STOCKHOLDER'S EQUITY |
| | | | | |
| CURRENT LIABILITIES | | | | |
| Checks drawn in excess of available bank balance | $3,074,292 | $- | $- | $3,074,292 |
| Note payable - floorplan | 56,367,075 | - | - | 56,367,075 |
| Accounts payable | 3,740,746 | 28,969 | (28,968) | 3,740,747 |
| Due to related party | 720,000 | - | - | 720,000 |
| Accrued expenses and liabilities | 3,600,604 | - | - | 3,600,604 |
| Deferred revenue | 100,000 | - | - | 100,000 |
| Income tax payable | 379,502 | - | - | 379,502 |
| Total current liabilities | 67,982,219 | 28,969 | (28,968) | 67,982,220 |
| | | | | |
| LONG-TERM LIABILITIES | | | | |
| Deferred tax liability | 46,000 | - | - | 46,000 |
| Total long-term liabilities | 46,000 | - | - | 46,000 |
| | | | | |
| TOTAL LIABILITIES | 68,028,219 | 28,969 | (28,968) | 68,028,220 |
| | | | | |
| STOCKHOLDER'S EQUITY | | | | |
| Common stock - $1 par value, 1,000 shares authorized, issued and outstanding | 1,000 | - | - | 1,000 |
| Retained earnings | 1,886,176 | (1,699) | - | 1,884,477 |
| Total stockholder's equity | 1,887,176 | (1,699) | - | 1,885,477 |
| | | | | |
| TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY | $69,915,395 | $27,270 | $(28,968) | $69,913,697 |
WHOLESALE, INC.
COMBINING BALANCE SHEET
DECEMBER 31, 2017
|
| | | | | |
| CURRENT ASSETS | | | | |
| Cash and cash equivalents | $3,383,285 | $77,717 | $- | $3,461,002 |
| Receivables, net | 2,239,594 | 20,750 | (98,130) | 2,162,214 |
| Vehicle inventory | 47,253,754 | - | - | 47,253,754 |
| Other receivables | 535,091 | - | - | 535,091 |
| Prepaid expense | 214,578 | - | - | 214,578 |
| Restricted investments | 711,221 | - | - | 711,221 |
| Other investments | 261,925 | - | - | 261,925 |
| Total current assets | 54,599,448 | 98,467 | (98,130) | 54,599,785 |
| | | | | |
| OTHER ASSETS | | | | |
| Property and equipment, net | 2,886,693 | - | - | 2,886,693 |
| Due from stockholder | 3,621,422 | - | - | 3,621,422 |
| 6,508,115 | - | - | 6,508,115 |
| TOTAL ASSETS | $61,107,563 | $98,467 | $(98,130) | $61,107,900 |
| | | | | |
LIABILITIES AND STOCKHOLDER'S EQUITY |
| | | | | |
| CURRENT LIABILITIES | | | | |
| Checks drawn in excess of available bank balance | $3,711,995 | $- | $- | $3,711,995 |
| Note payable - floorplan | 47,797,323 | - | | 47,797,323 |
| Accounts payable | 1,094,279 | 98,130 | (98,130) | 1,094,279 |
| Due to related party | 215,000 | - | - | 215,000 |
| Accrued expenses and liabilities | 3,137,376 | - | - | 3,137,376 |
| Deferred revenue | 100,000 | - | - | 100,000 |
| Income tax payable | 230,831 | - | - | 230,831 |
| Total current liabilities | 56,286,804 | 98,130 | (98,130) | 56,286,804 |
| LONG-TERM LIABILITIES | | - | | - |
| Deferred tax liability | 18,000 | - | - | 18,000 |
| Total long-term liabilities | 18,000 | - | - | 18,000 |
| | | | | |
| TOTAL LIABILITIES | 56,304,804 | 98,130 | (98,130) | 56,304,804 |
| | | | | |
| STOCKHOLDER'S EQUITY | | | | |
| Common stock - $1 par value, 1,000 shares authorized, issued and outstanding | 1,000 | - | - | 1,000 |
| Retained earnings | 4,801,759 | - | - | 4,802,096 |
Total stockholder's equity | 4,802.759 | - | - | 4,803,096 |
| TOTAL LIABILITIES ANDSTOCKHOLDER'S EQUITY | $61,107,563 | $98,467 | $(98,130) | $61,107,900 |
WHOLESALE, INC.
COMBINING STATEMENT OF OPERATIONS
NINE MONTH PERIOD ENDED SEPTEMBER 30, 2018
| REVENUES | | | | |
| Wholesale vehicles | $423,923,715 | $3,587,611 | $(3,265,473) | $424,245,853 |
| Retail vehicles | 65,703,165 | - | - | 65,703,165 |
| Other sales and revenues | 7,108,132 | - | - | 7,108,132 |
| Total revenues | 496,735,012 | 3,587,611 | (3,265,473) | 497,057,150 |
| | | | | |
| EXPENSES | | | | |
| Cost of sales | 479,907,915 | 3,579,055 | (3,265,473) | 480,221,497 |
| Selling, general and administrative | 13,815,360 | 10,592 | - | 13,825,952 |
| Depreciation and amortization | 244,312 | - | - | 244,312 |
| Total expenses | 493,967,587 | 3,589,647 | (3,265,473) | 494,291,761 |
| | | | | |
| OPERATING INCOME (LOSS) | 2,767,425 | (2,036) | - | 2,765,389 |
| Interest expense | (2,030,693) | - | - | (2,030,693) |
| Investment income | 125,312 | - | - | 125,312 |
| | | | | |
| INCOME (LOSS) BEFORE TAXES | 862,044 | (2,036) | - | 860,008 |
| Provision for income taxes | 86,000 | - | - | 86,000 |
| | | | | |
| NET INCOME (LOSS) | $776,044 | $(2,036) | $- | $774,008 |
WHOLESALE, INC.
COMBINING STATEMENT OF OPERATIONS
NINE MONTH PERIOD ENDED SEPTEMBER 30, 2017
| REVENUES | | | | |
| Wholesale vehicles | $392,866,681 | $2,611,266 | $(2,482,781) | $392,995,166 |
| Retail vehicles | 65,580,843 | - | - | 65,580,843 |
| Other sales and revenues | 7,922,926 | - | - | 7,922,926 |
| Total revenues | 466,370,450 | 2,611,266 | (2,482,781) | 466,498,935 |
| | | | | |
| EXPENSES | | - | - | |
| Cost of sales | 450,686,788 | 2,606,476 | (2,482,781) | 450,810,483 |
| Selling, general and administrative | 12,752,609
| 7,368 | - | 12,759,977
|
| Depreciation and amortization | 178,175 | | - | 178,175 |
| Total expenses | 463,617,572
| 2,613,844 | (2,482,781) | 463,748,635
|
| | | | | |
| OPERATING INCOME | 2,752,878
| (2,578) | - | 2,750,300
|
| Interest expense | (1,398,468) | - | - | (1,398,468) |
| Investment income | 36,241 | - | - | 36,241 |
| INCOME BEFORE TAXES | 1,390,651
| (2,578) | - | 1,388,073
|
| Provision for income taxes | 48,500
| - | - | 48,500
|
| | | | | |
| NET INCOME | $1,342,151 | $(2,578) | $- | $1,339,573 |
