Exhibit 99.2
INTERWEST TRANSFER COMPANY, INC
Condensed Financial Statements
September 30, 2017 and 2016 (Unaudited)
INTERWEST TRANSFER COMPANY, INC
TABLE OF CONTENTS
Page | |
Condensed Financial Statements: | |
Unaudited Condensed Balance Sheet | 1 |
Unaudited Condensed Statements of Operations | 2 |
Unaudited Condensed Statements of Stockholders' Equity | 3 |
Unaudited Condensed Statements of Cash Flows | 4 |
Notes to Financial Statements | 5-7 |
INTERWEST TRANSFER COMPANY, INC.
UNAUDITED CONDENSED BALANCE SHEET
SEPTEMBER 30, 2017
Assets | |
SEPTEMBER 30, 2017 | |
Current Assets: | |
Cash | $62,672 |
Accounts receivable, net of allowance of $4,456 | 84,671 |
Prepaid expenses | 17,060 |
Total Current Assets | 164,403 |
Property and equipment, net | 11,768 |
Total Assets | $176,171 |
Liabilities and Stockholders’ Equity | |
Current Liabilities: | |
Accounts payable | $3,075 |
Accrued payroll | 8,598 |
Deferred revenue | 21,138 |
Total current liabilities | 32,811 |
Stockholders' Equity: | |
Common stock, $1.00 par value 50,000 shares authorized, 27 issued and outstanding | 27 |
Additional paid-in capital | 5,728 |
Retained earnings | 137,605 |
Total Stockholders' Equity | 143,360 |
Total Liabilities and Stockholders' Equity | $176,171 |
-1-
INTERWEST TRANSFER COMPANY, INC.
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016
Nine Months Ended September 30, 2017 | Nine Months Ended September 30, 2016 | |
Revenues, net | $1,222,745 | $1,248,641 |
Operating Expenses: | ||
Bank and credit card fees | 12,083 | 13,261 |
Computer expenses | 17,229 | 19,222 |
Delivery and postage | 20,389 | 25,011 |
Depreciation expense | 5,504 | 8,421 |
Insurance | 51,680 | 42,195 |
Outside services | 21,654 | 9,711 |
Printing | 44,790 | 67,485 |
Professional fees | 115,190 | 27,931 |
Rent, related party | 54,000 | 76,500 |
Salaries, wages and related benefits | 422,194 | 297,802 |
Salaries, officer and stockholder | 38,462 | 93,077 |
Telephone | 9,947 | 8,695 |
Vehicle expenses | 22,047 | 9,997 |
Other operating expenses | 17,007 | 20,980 |
Total operating expenses | 852,176 | 720,288 |
Operating income (loss) | 370,569 | 528,353 |
Other income, interest | 17 | 3 |
Income (loss) before provision for income taxes | 370,586 | 528,356 |
Provision (benefit) for income taxes | -- | -- |
Net income (loss) | $370,586 | $528,356 |
Net income (loss) per share | $13,725 | $19,569 |
The accompanying notes are an integral part of the financial statements.
-2-
INTERWEST TRANSFER COMPANY, INC.
UNAUDITED CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY
NINE MONTH PERIOD ENDING SEPTEMBER 30, 2017
Additional | ||||
Common Stock | Paid-In | Retained | ||
Shares | Amount | Capital | Earnings | |
Balance, December 31, 2016 | 27 | $27 | $5,728 | $985,022 |
Net income for the nine-month period ended September 30, 2017 | -- | -- | -- | 370,586 |
Distributions to shareholder | -- | -- | -- | (1,218,003) |
Balance, September 30, 2017 | 27 | $27 | $5,728 | $137,605 |
The accompanying notes are an integral part of the financial statements.
-3-
INTERWEST TRANSFER COMPANY, INC.
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016
Nine Months Ended September 30, 2017 | Nine Months Ended September 30, 2016 | |
Cash flows from operating activities: | ||
Net income (loss) | $370,586 | $528,356 |
Adjustments to reconcile net income (loss) to Net cash provided by operating activities: | ||
Depreciation | 5,504 | 8,421 |
(Increase) decrease in: | ||
Accounts receivable | 39,587 | (5,235) |
Prepaid expenses | 6,763 | 91,900 |
Increase (decrease) in: | ||
Accounts payable | (6,978) | 52,046 |
Accrued expenses | 5,943 | (2,188) |
Deferred revenue | 21,138 | 21,375 |
Net cash provided (used) by operating activities | 442,543 | 694,675 |
Cash flows from investing activities, Acquisition of equipment | -- | -- |
Cash flows from financing activities, Distribution to shareholder | (1,218,003) | -- |
Net increase (decrease) in cash | (775,460) | 694,675 |
Cash, beginning of period | 838,132 | 50,837 |
Cash, end of period | $62,672 | $745,512 |
Supplemental disclosures: | ||
Interest paid | $-- | $-- |
Income taxes paid | $-- | $12,529 |
The accompanying notes are an integral part of the financial statements.
-4-
INTERWEST TRANSFER COMPANY, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
1.
Summary of Business and Significant Accounting Policies
a.
Summary of Business
The Company was incorporated under the laws of the State of Utah on May 13, 1971. The Company is in the business of maintaining corporate shareholder records for publicly traded and private companies. On January 1, 2016 the company changed its year end from May 31 to December 31.
b.
Basis of Presentation
The accompanying financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) as promulgated in the United States of America.
c.
Cash Flows
For purposes of the statement of cash flows, the Company considers all highly liquid investments purchased with a maturity of three months or less to be cash or cash equivalents.
d.
Accounts Receivable
Accounts receivable are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollectable amounts through a charge to earnings and a credit to a valuation allowance based on its assessment of the current status of individual accounts. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge of valuation allowance and credit to trade accounts receivable. Changes in the valuation allowance have not been material to the financial statements.
e.
Property and Equipment
Property and equipment is valued at cost. The company’s property and equipment are depreciated using primarily the straight-line method.
-5-
Notes to Financial Statements – Continued:
f.
Income Taxes
Effective January 1, 2016 the Company with the consent of its shareholder has elected under the Internal Revenue Code to be an S corporation. In lieu of corporate income taxes, the shareholders of an S corporation are taxed on their proportionate share of the Company’s taxable income. Therefore, no provision or liability for federal or state income taxes has been included in the 2016 financial statements.
Due to electing S corporation status the Company changed its year end from May 31 to December 31.
g.
Net Income per Share
The net income per share calculation is based on the weighted average number of shares outstanding during the period.
h.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
2.
Cash – Credit Risk
The Company has cash deposits totaling $613,640 at various banks at September 30, 2017. This exceeds the $250,000 covered by federal depository insurance by $95,910.
3.
Property and Equipment
Property and equipment consist of the following as of September 30, 2017:
September 30, 2017 | |
Furniture and Fixtures | $115,886 |
Office Equipment | 146,435 |
262,321 | |
Accumulated Depreciation | (250,553) |
$11,768 |
Depreciation expense for the nine month period ended September 30, 2017 is $5,504.
-6-
Notes to Financial Statements – Continued:
4.
Operating Leases
The Company leases office space from its president and stockholder on a month to month basis. The lease can be canceled with a 30-day notice from either party. Rent expense for the nine month periods ended September 30, 2017 and 2016 was $54,000 and $76,500, respectively.
5.
Retirement Plan
The Company has a 401K plan covering substantially all of its employees. During the nine-month period ended September 30, 2017 and 2016, the Company contributed $6,786 and $3,443, respectively.
6.
Subsequent Event
On October 2, 2017, Issuer Direct Corporation acquired all of the outstanding stock of Interwest Transfer Company, Inc. for $1,935,000 in cash and 25,235 shares of common stock (equivalent value of $333,000 at closing) paid at closing and $960,000 of cash to be paid equally over three years, resulting in a total purchase price of approximately $3,228,000 subject to a closing working capital adjustment as outlined in the stock purchase agreement.
-7-