Exhibit 99.6
ST LABORATORIES GROUP, LLC
CONROE, TEXAS
FINANCIAL STATEMENTS
NINE MONTHS ENDED
SEPTEMBER 30, 2013 AND 2012
ST LABORATORIES GROUP, LLC
TABLE OF CONTENTS
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FINANCIAL STATEMENTS | |
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Unaudited Balance Sheets | 2 |
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Unaudited Statements of Income | 3 |
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Unaudited Statements of Changes in Stockholders’ Equity | 4 |
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Unaudited Statements of Cash Flows | 5 |
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Notes to Financial Statements (Unaudited) | 6 |
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ST LABORATORIES GROUP, LLC
CONROE, TEXAS
BALANCE SHEETS
SEPTEMBER 30, 2013(UNAUDITED) AND DECEMBER 31, 2012
| | 2013 | | 2012 | |
| | (Unaudited) | |
ASSETS | | | | | |
Current Assets | | | | | |
Cash | | $ | 74,173 | | $ | 197,701 | |
Accounts Receivable | | 327,572 | | 210,421 | |
Total Current Assets | | 401,745 | | 408,122 | |
TOTAL ASSETS | | $ | 401,745 | | $ | 408,122 | |
LIABILITIES AND MEMBERS’ EQUITY | | | | | |
Current Liabilities | | | | | |
Accounts Payable | | $ | 18,258 | | $ | 11,704 | |
Accrued Expenses | | 17,220 | | 9,174 | |
Total Current Liabilities | | 35,478 | | 20,878 | |
TOTAL LIABILITIES | | 35,478 | | 20,878 | |
MEMBERS’ EQUITY | | 366,267 | | 387,244 | |
TOTAL LIABILITIES AND MEMBERS’ EQUITY | | $ | 401,745 | | $ | 408,122 | |
The accompanying notes are an integral part of these financial statements.
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ST LABORATORIES GROUP, LLC
CONROE, TEXAS
UNAUDITED STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2013 AND 2012
| | 2013 | | 2012 | |
NET SALES | | $ | 2,494,812 | | $ | 2,357,345 | |
COST OF SALES | | | | | |
Equipment Rental | | 106,866 | | 83,942 | |
Freight | | 12,073 | | 9,152 | |
Lab Expense and Supplies | | 241,048 | | 192,452 | |
Labor | | 1,483,816 | | 1,211,887 | |
| | 1,843,803 | | 1,497,433 | |
GROSS PROFIT | | 651,009 | | 859,912 | |
GENERAL AND ADMINISTRATIVE EXPENSES | | 478,940 | | 471,874 | |
OPERATING INCOME | | 172,069 | | 388,038 | |
OTHER INCOME (EXPENSE) | | | | | |
Miscellaneous income | | — | | — | |
Total Other Income (Expense) | | — | | — | |
INCOME BEFORE INCOME TAXES | | 172,069 | | 388,038 | |
PROVISION FOR INCOME TAXES | | 8,046 | | 9,138 | |
NET INCOME | | $ | 164,023 | | $ | 378,900 | |
The accompanying notes are an integral part of these financial statements.
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ST LABORATORIES GROUP, LLC
CONROE, TEXAS
UNAUDITED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2013
| | MEMBERS’
EQUITY | |
BALANCE AS OF DECEMBER 31, 2012 | | $ | 387,244 | |
Distributions | | (185,000 | ) |
Net income | | 164,023 | |
BALANCE AS OF SEPTEMBER 30, 2013 | | $ | 366,267 | |
The accompanying notes are an integral part of these financial statements.
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ST LABORATORIES GROUP, LLC
CONROE, TEXAS
UNAUDITED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2013 AND 2012
| | 2013 | | 2012 | |
CASH FLOWS FROM OPERATING ACTIVITIES | | | | | |
Cash received from customers | | $ | 2,367,738 | | $ | 2,530,792 | |
Cash paid to suppliers and employees | | (2,297,738 | ) | (2,283,390 | ) |
State income taxes paid | | (8,528 | ) | (10,924 | ) |
Net cash provided by operating activities | | 61,472 | | 236,478 | |
CASH FLOWS FROM FINANCING ACTIVITIES | | | | | |
Distributions paid | | (185,000 | ) | (100,000 | ) |
Net cash used in financing activities | | (185,000 | ) | (100,000 | ) |
Net increase (decrease) in cash | | (123,528 | ) | 136,478 | |
Cash at beginning of year | | 197,701 | | — | |
Cash at end of year | | $ | 74,173 | | $ | 136,478 | |
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES: | | | | | |
Net income | | $ | 164,023 | | $ | 378,900 | |
(Increase) Decrease in: | | | | | |
Accounts receivable | | (117,151 | ) | (60,708 | ) |
Accounts payable | | 6,554 | | (90,853 | ) |
Accrued expenses | | 8,046 | | 9,139 | |
Net cash provided by operating activities | | $ | 61,472 | | $ | 236,478 | |
The accompanying notes are an integral part of these financial statements.
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ST LABORATORIES GROUP, LLC
CONROE, TEXAS
UNAUDITED NOTES TO FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2013
NOTE I - NATURE OF ACTIVITIES AND BASIS OF PRESENTATION
Nature of Activities
ST Laboratories Group, LLC (the “Company”) was organized in the State of Texas on August 10, 2009, with operations commencing on May 1, 2010, and is engaged in the performance of analytical testing using standard and proprietary methods. The Company acquired a testing lab with 30 years of serving as the standard for testing laboratories for the petroleum, petrochemical and chemical industries. The Company currently operates testing locations in Pasadena, Texas, Conroe, Texas, and Harvey, Louisiana. Chemical Specialists and Development, Inc. (CSD, Inc.) provides the work force for the Company and is reimbursed by the Company for all wages and benefits.
Basis of Presentation
The accompanying unaudited financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information. As such, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments, except as disclosed herein) considered necessary for a fair statement have been included.
The unaudited financial data as of December 31, 2012 presented in these unaudited financial statements were derived from Company’s audited financial statements, but do not include all disclosures required by U.S. GAAP. Interim financial data should be read in conjunction with the audited financial statements and accompanying notes for the fiscal year ended December 31, 2012.
Uncertain Tax Positions
Management has determined that the Company does not have any uncertain tax positions and associated unrecognized benefits or liabilities that materially impact the financial statements or related disclosures. Since tax matters are subject to some degree of uncertainty, there can be no assurance that the Company’s tax returns will not be challenged by the taxing authorities and that the Company or its members will not be subject to additional tax, penalties, and interest as a result of such challenge. Generally, the Company’s tax returns remain open for three years for federal income tax examination.
NOTE 2 - COMMITMENTS AND CONTINGENCIES
The company leases lab equipment from CSD, Inc. The original term of the lease commenced on May 1, 2010, with automatic renewal for each successive twelve (12) month period, unless either party notifies the other party of its intention to terminate the lease. Effective January 1, 2013, the rent increased to $10,000 per month. Equipment rental expenses for the nine months ended September 30, 2013 and 2012 were $90,000 and $67,500 respectively.
The Company subleases a lab facility from CSD, Inc. The term of the lease entered into by CSD, Inc. commenced on August 17, 2009 and expires sixty-eight (68) months and fifteen (15) days from the commencement date, on April 30, 2015. CSD, Inc. makes monthly payments of $4,500 and ST Labs reimburses CSD, Inc. Rent expenses for the nine months ended September 30, 2013 and 2012 were $40,500 respectively.
The Company leases a lab facility in Louisiana. The term of the lease commenced on May 1, 2010 and expired April 30, 2011, with automatic renewals for four (4) additional periods of twelve (12) months for a total of five (5) years, unless on or before the expiration of the term, the Company notifies the landlord of its intention not to renew the lease. Rent expense for the nine months ending September 30, 2013 and 2012 was $7,650.
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ST LABORATORIES GROUP, LLC
CONROE, TEXAS
UNAUDITED NOTES TO FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2013
NOTE 3 - RELATED PARTY TRANSACTIONS
A reciprocal agreement exists between CSD, Inc. and the Company. CSD, Inc. provides administrative support services to the Company in exchange for all chemical testing laboratory services and materials required by CSD, Inc. The Company received a flat monthly fee of $50,000 from the commencement of the agreement in May 2010, until March 2012, when the amount was increased to $62,500 per month. A majority of the members of the Company are shareholders in CSD, Inc. The following table illustrates the amounts transacted with CSD, Inc.:
Balance Sheet (as of September 30, 2013 and December 31, 2012, respectively) | | | | | |
Accounts Payable to CSD, Inc. | | $ | — | | $ | — | |
Income Statement (for the nine months ended September 30, 2013 and 2012, respectively) | | | | | |
Sales to CSD, Inc. | | $ | 678,787 | | $ | 700,616 | |
Amounts remitted to CSD, Inc. included in Cost of Sales | | $ | 1,608,481 | | $ | 1,346,537 | |
Amounts remitted to CSD, Inc. included in General and Administrative expenses | | $ | 212,988 | | $ | 207,785 | |
NOTE 4 - MAJOR CUSTOMERS
CSD, Inc. is a major customer for the Company. Annual sales to CSD, Inc. for the nine months ended September 30, 2013 and 2012 represented twenty-seven percent (27%) and thirty percent (30%), respectively, of total sales.
NOTE 5 - SUBSEQUENT EVENTS
The Company, along with CSD, Inc., was acquired by a subsidiary of Nexeo Solutions Holdings, LLC (“Nexeo Solutions”). Nexeo Solutions completed the transaction on December 2, 2013. As of the closing date, CSD, Inc. entered into a revised equipment lease acceptable to Nexeo and the various rental trucking equipment suppliers.
Events occurring after September 30, 2013 have been evaluated through January 29, 2014, the date when these financial statements were available to be issued.
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