Exhibit 99.2
NAVE COMMUNICATIONS COMPANY
BALANCE SHEET
(UNAUDITED)
| | | December 31, 2013 | | |
| Assets | | | | |
| Current assets: | | | | |
Cash and cash equivalents | | $ | 99,278 | | |
Accounts receivable, net of allowance of $137,982 | | | 1,732,333 | | |
| Inventories | | | 2,223,869 | | |
Prepaid expenses | | | 36,729 | | |
| Total current assets | | | 4,092,209 | | |
| | | | | | |
| Property and equipment, at cost | | | 726,459 | | |
| Less accumulated depreciation and amortization | | | (422,755 | ) | |
| Net property and equipment | | | 303,704 | | |
| | | | | | |
| Other assets | | | 120,000 | | |
| | | | | | |
| Total assets | | $ | 4,515,913 | | |
| | | | | | |
| Liabilities and Equity | | | | | |
| Current liabilities: | | | | | |
Line of credit | | $ | 1,200,000 | | |
Current portion of capital lease obligations | | | 24,364 | | |
Accounts payable and accrued expenses | | | 2,058,869 | | |
| Total current liabilities | | | 3,283,233 | | |
| | | | | | |
| Capital lease obligation, less current portion | | | 54,752 | | |
| | | | | | |
| Equity: | | | | | |
Common stock, no par value, 1,000 shares authorized, 500 shares issued and outstanding | | | 47,936 | | |
Retained earnings | | | 1,129,992 | | |
Total equity | | | 1,177,928 | | |
| Total liabilities and equity | | $ | 4,515,913 | | |
| | | | | | |
NAVE COMMUNICATIONS COMPANY
STATEMENTS OF INCOME
(UNAUDITED)
| | | Three Months Ended December 31, | |
| | | 2013 | | | 2012 | |
| | | | | | | |
| Net sales | | $ | 4,071,296 | | | $ | 2,710,696 | |
| Cost of sales | | | 2,220,280 | | | | 1,523,061 | |
| Gross profit | | | 1,851,016 | | | | 1,187,635 | |
| General and administrative expenses | | | 1,713,475 | | | | 1,672,630 | |
| Operating income (loss) | | | 137,541 | | | | (484,995 | ) |
| Other income (expense), net: | | | | | | | | |
Other expense | | | 4,785 | | | | − | |
Interest expense | | | 18,298 | | | | 13,098 | |
| Other income (expense), net | | | 23,083 | | | | 13,098 | |
| Net income (loss) | | $ | 114,458 | | | $ | (498,093 | ) |
NAVE COMMUNICATIONS COMPANY
STATEMENTS OF CASH FLOWS
(UNAUDITED)
| | | Three Months Ended December 31, | |
| | | 2013 | | | 2012 | |
| Cash Flow from Operating Activities | | | | | | |
| Net income | | $ | 114,458 | | | $ | (456,685 | ) |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | |
Depreciation and amortization | | | 25,254 | | | | 27,353 | |
Provision for doubtful accounts | | | 34,982 | | | | 70,490 | |
Changes in assets and liabilities: | | | | | | | | |
Accounts receivable | | | 119,837 | | | | 954,871 | |
Inventories | | | (589,859 | ) | | | (125,093 | ) |
Other current assets | | | (126,371 | ) | | | (28,026 | ) |
Accounts payable and accrued expenses | | | 96,633 | | | | 286,651 | |
| Net cash provided by (used in) operating activities | | | (325,066 | ) | | | 729,561 | |
| | | | | | | | | |
| Cash Flows from Investing Activities | | | | | | | | |
| Disposal of property and equipment | | | − | | | | 6,162 | |
| | | | | | | | | |
| Cash Flows from Financing Activities | | | | | | | | |
| Draws on line of credit | | | 310,100 | | | | 431,000 | |
| Payments on line of credit | | | (300,000 | ) | | | (555,000 | ) |
| Payments on capital lease obligations | | | (4,397 | ) | | | (4,594 | ) |
| Distributions | | | − | | | | (398,642 | ) |
| Net cash provided by (used in) financing activities | | | 5,703 | | | | (527,236 | ) |
| | | | | | | | | |
| Net increase (decrease) in cash and cash equivalents | | | (319,363 | ) | | | 208,487 | |
| Cash and cash equivalents, beginning of period | | | 418,641 | | | | − | |
| | | | | | | | | |
| Cash and cash equivalents, end of period | | $ | 99,278 | | | $ | 208,487 | |
NAVE COMMUNICATIONS COMPANY
NOTES TO FINANCIAL STATEMENTS
Note 1 – Description of Business
Nave Communications Company (the Company) was incorporated under the laws of the state of Maryland in 1999. The Company's principal business is to serve as a reseller of new, refurbished and used telecommunications networking equipment, and to offer brokering and asset recovering services to the telecommunication providers.
Note 2 – Line of Credit
The Company has a revolving line of credit with a bank up to $2,000,000 through March 7, 2014. Interest is payable monthly at the greater of the Prime rate or the lender's minimum interest rate plus 2% (3.75% at December 31, 2013). The line of credit is secured by a first lien on substantially all assets of the Company and is unconditionally guaranteed by the Company's majority stockholders. Under the agreement with the bank, the Company is required to maintain certain financial covenants. The outstanding balance on the line of credit was $1,200,000 as of December 31, 2013.
Note 3 – Capital Lease Obligations
The Company leases their telephone system under a capital lease which expires in September 2017. The effective interest rate is 9.3%. Payments are due in monthly installments of $644.
The Company leases a truck under a capital lease which expires in May 2017. The effective interest rate is 5.1%. Payments are due in monthly installments of $1,425.
