Attached files
| file | filename |
|---|---|
| 8-K/A - CURRENT REPORT - CHARLESTON BASICS INC | f8k122309a1_charleston.htm |
| EX-99.1 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF PANELTECH INTERNATIONAL, L.L.C. - CHARLESTON BASICS INC | f8k122309a1ex99ia_charleston.htm |
Exhibit
99.2
PANELTECH
INTERNATIONAL, LLC
AND
SUBSIDIARY
CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
For the
Nine Months Ended September 30, 2009 and 2008
PANELTECH
INTERNATIONAL, LLC AND SUBSIDIARY
CONTENTS
| Page | |
| CONSOLIDATED FINANCIAL STATEMENTS | |
| Consolidated Balance Sheets | 1-2 |
| Condensed Consolidated Statements of Operations | 3 |
| Condensed Consolidated Statement of Changes in Members’ Equity | 4 |
| Condensed Consolidated Statements of Cash Flows | 5-6 |
| NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS | 7-17 |
| PANELTECH INTERNATIONAL, LLC AND SUBSIDIARY | ||||||||
| CONDENSED CONSOLIDATED BALANCE SHEET | ||||||||
| September 30, 2009 | ||||||||
|
ASSETS
|
||||||||
|
CURRENT ASSETS
|
||||||||
|
Cash
|
$ | 2,330 | ||||||
|
Accounts
receivable, less allowance for
|
||||||||
|
doubtful
accounts of $44,323
|
1,118,494 | |||||||
|
Inventories
|
1,963,652 | |||||||
|
Prepaid
expenses and other current assets
|
32,426 | |||||||
|
|
||||||||
|
Total
Current Assets
|
$ | 3,116,902 | ||||||
|
PROPERTY AND
EQUIPMENT, Net
|
2,048,349 | |||||||
|
OTHER ASSETS
|
||||||||
|
Other
assets
|
85,983 | |||||||
|
Deferred
loan costs, net of accumulated
|
||||||||
|
amortization
of $15,332
|
28,952 | |||||||
|
Intangible
assets, net of accumulated
|
||||||||
|
amortization
of $49,500
|
220,500 | |||||||
|
Total
Other Assets
|
335,435 | |||||||
|
TOTAL
ASSETS
|
$ | 5,500,686 | ||||||
See
accompanying notes to condensed consolidated financial statements.
1
| PANELTECH INTERNATIONAL, LLC AND SUBSIDIARY | ||||||||
| CONDENSED CONSOLIDATED BALANCE SHEET | ||||||||
| September 30, 2009 | ||||||||
|
LIABILITIES AND MEMBERS'
EQUITY
|
||||||||
|
CURRENT LIABILITIES
|
||||||||
|
Line
of credit
|
$ | 1,442,372 | ||||||
|
Accounts
payable
|
532,725 | |||||||
|
Accrued
expenses and other current liabilities
|
225,259 | |||||||
|
Current
maturities of long-term debt
|
305,067 | |||||||
|
Capital
lease obligations
|
16,427 | |||||||
|
Total
Current Liabilities
|
$ | 2,521,850 | ||||||
|
OTHER LIABILITIES
|
||||||||
|
Long
term debt, less current maturities
|
1,841,623 | |||||||
|
Capital
lease obligations, less current portion
|
28,914 | |||||||
|
Total
Other Liabilities
|
1,870,537 | |||||||
|
TOTAL
LIABILITIES
|
4,392,387 | |||||||
|
COMMITMENTS AND
CONTINGENCIES
|
||||||||
|
MEMBERS' EQUITY
|
1,108,299 | |||||||
|
TOTAL
LIABILITIES AND
|
||||||||
|
MEMBERS'
EQUITY
|
$ | 5,500,686 | ||||||
See
accompanying notes to condensed consolidated financial
statements.
2
| PANELTECH INTERNATIONAL, LLC AND SUBSIDIARY | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
| For the Nine Months Ended September 30, 2009 and 2008 | ||||||||
|
2009
|
2008
|
|||||||
|
NET SALES
|
$ | 6,979,912 | $ | 13,911,586 | ||||
|
|
||||||||
|
COST OF SALES
|
5,416,963 | 10,342,554 | ||||||
|
|
||||||||
|
GROSS
PROFIT
|
1,562,949 | 3,569,032 | ||||||
|
|
||||||||
|
OPERATING EXPENSES
|
2,203,584 | 1,492,007 | ||||||
|
|
||||||||
|
OPERATING
(LOSS) INCOME
|
(640,635 | ) | 2,077,025 | |||||
|
|
||||||||
|
OTHER EXPENSE
|
||||||||
|
Interest
expense
|
(142,427 | ) | (206,466 | ) | ||||
|
|
||||||||
|
NET
(LOSS) INCOME
|
$ | (783,062 | ) | $ | 1,870,559 | |||
|
|
||||||||
See
accompanying notes to condensed consolidated financial
statements.
3
| PANELTECH INTERNATIONAL, LLC AND SUBSIDIARY | ||||
| CONDENSED CONSOLIDATED STATEMENT OF CHANGES | ||||
| IN MEMBERS' EQUITY | ||||
|
For
the Nine Months Ended September 30, 2009
|
||||
|
MEMBERS' EQUITY - January 1,
2009
|
$ | 1,891,361 | ||
|
Net
loss
|
(783,062 | ) | ||
|
MEMBERS' EQUITY - September 30,
2009
|
$ | 1,108,299 | ||
See
accompanying notes to condensed consolidated financial
statements.
4
| PANELTECH INTERNATIONAL, LLC AND SUBSIDIARY | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| For the Nine Months Ended September 30, 2009 and 2008 | ||||||||
|
2009
|
2008
|
|||||||
|
CASH FLOWS FROM OPERATING
ACTIVITIES
|
||||||||
|
Net
(loss) income
|
$ | (783,062 | ) | $ | 1,870,559 | |||
|
Adjustments
to reconcile net (loss) income to
|
||||||||
|
net
cash (used in) provided by operating activities:
|
||||||||
|
Depreciation
and amortization
|
289,642 | 288,021 | ||||||
|
Amortization
expense
|
27,611 | 29,160 | ||||||
|
Provisions
for doubtful accounts
|
24,323 | 66,560 | ||||||
|
Changes
in operating assets and liabilities:
|
||||||||
|
Accounts
receivable
|
399,817 | (1,648,498 | ) | |||||
|
Inventories
|
313,940 | (393,236 | ) | |||||
|
Prepaid
expenses and other current assets
|
13,279 | 46,247 | ||||||
|
Other
assets
|
(85,983 | ) | -- | |||||
|
Accounts
payable
|
(395,156 | ) | 756,457 | |||||
|
Accrued
expenses and other current liabilities
|
23,172 | 9,261 | ||||||
|
TOTAL
ADJUSTMENTS
|
610,645 | (846,028 | ) | |||||
|
|
||||||||
|
NET
CASH (USED IN) PROVIDED BY
|
||||||||
|
OPERATING
ACTIVITIES
|
(172,417 | ) | 1,024,531 | |||||
|
|
||||||||
|
CASH USED IN INVESTING
ACTIVITIES
|
||||||||
|
Purchases
of property and equipment
|
(60,668 | ) | (110,083 | ) | ||||
|
CASH FLOWS FROM FINANCING
ACTIVITIES
|
||||||||
|
Net
borrowings (repayments) under line of credit
|
83,184 | (484,730 | ) | |||||
|
Borrowings
(repayments) of notes payable
|
159,796 | (264,702 | ) | |||||
|
Payments
on capital lease obligations
|
(11,479 | ) | (9,672 | ) | ||||
|
Distributions
to shareholders
|
-- | (209,042 | ) | |||||
|
|
||||||||
|
NET
CASH PROVIDED BY (USED IN)
|
||||||||
|
FINANCING
ACTIVITIES
|
$ | 231,501 | $ | (968,146 | ) | |||
See
accompanying notes to condensed consolidated financial
statements.
5
| PANELTECH INTERNATIONAL, LLC AND SUBSIDIARY | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF | ||||||||
| CASH FLOWS, Continued | ||||||||
| For the Nine Months Ended September 30, 2009 and 2008 | ||||||||
|
2009
|
2008
|
|||||||
|
NET
DECREASE IN CASH
|
$ | (1,584 | ) | $ | (53,698 | ) | ||
|
|
||||||||
|
CASH - Beginning
|
3,914 | 57,705 | ||||||
|
|
||||||||
|
CASH - Ending
|
$ | 2,330 | $ | 4,007 | ||||
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION
|
||||||||
|
Cash
paid during the period for:
|
||||||||
|
Interest
|
$ | 142,976 | $ | 215,769 | ||||
|
Taxes
|
$ | -- | $ | -- | ||||
|
Non-cash
investing and financing activities:
|
||||||||
|
Equipment
financed
|
$ | -- | $ | 78,822 | ||||
See
accompanying notes to condensed consolidated financial
statements.
6
PANELTECH
INTERNATIONAL, LLC AND SUBSIDIARY
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 -
Organization
Organization and Basis of
Presentation
Paneltech,
International LLC. (the “Company”) was organized on February 15, 1996, as a
Washington limited liability company. The Company manufactures
phenolic webs and panels, transports logs and provides consulting services to
companies in the timber industry. Its customers are located throughout the
United States. The accompanying consolidated financial statements include the
accounts of the Company’s wholly owned subsidiary, Paneltech Rainscreen LLC
(“Rainscreen”). All significant intercompany balances and transactions have been
eliminated.
The
results for the nine months ended September 30, 2009 are not necessarily
indicative of the results to be expected for the full fiscal year and have not
been audited. In the opinion of management, the accompanying
unaudited consolidated financial statements contain all adjustments, consisting
primarily of normal recurring accruals, necessary for a fair statement of the
results of operations for the periods presented and the consolidated balance
sheet at September 30, 2009. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to the SEC rules and regulations. These financial statements
should be read in conjunction with the financial statements and notes thereto
for the year ended December 31, 2008.
In June
2009, the Financial Accounting Standards Board (“FASB”) issued Statement
No. 168, “The FASB Accounting Standards Codification and the Hierarchy of
Generally Accepted Accounting Principles -- a replacement of FASB Statement
No. 162.” Under the Statement, The FASB Accounting Standards
Codification (“ASC”) became the source of authoritative U.S. generally accepted
accounting principles (“GAAP”) recognized by the FASB to be applied by
nongovernmental entities. Rules and interpretive releases of the Securities and
Exchange Commission (“SEC”) under authority of federal securities laws are
also sources of authoritative GAAP for SEC registrants. On the effective date of
this Statement, the Codification superseded all then-existing non-SEC accounting
and reporting standards. All other non-grandfathered non-SEC accounting
literature not included in the Codification will become non-authoritative. This
Statement was effective for financial statements issued for interim and annual
periods ending after September 15, 2009. In the FASB’s view, the issuance
of this Statement and the Codification will not change GAAP, except for those
nonpublic nongovernmental entities that must now apply the American Institute of
Certified Public Accountants Technical Inquiry Service Section 5100,
“Revenue Recognition,” paragraphs 38-76. The adoption of this Statement did not
have a material impact on the Company’s consolidated financial
statements.
7
PANELTECH
INTERNATIONAL, LLC AND SUBSIDIARY
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 -
Summary of Significant
Accounting Policies
Inventories
Inventories,
which consist of raw materials and finished goods, are stated at the lower of
cost (first-in, first-out method) or market.
Property and
Equipment
Property
and equipment are stated at cost. The costs of additions and
betterments are capitalized and expenditures for repairs and maintenance are
expensed in the period incurred. When items of property and equipment
are sold or retired, the related costs and accumulated depreciation are removed
from the accounts and any gain or loss is included in income.
Depreciation
of property equipment is provided utilizing the straight-line method over the
estimated useful lives of the respective assets as follows:
| Manufacturing equipment | 5 to 10 years |
| Furniture and fixtures | 3 to 5 years |
| Mobile equipment | 5 to 10 years |
Income
Taxes
The
Company is an LLC and Members of an LLC are taxed on their proportionate share
of the Company’s taxable income. Accordingly, no provision for federal or state
income tax has been provided for in the accompanying consolidated financial
statements.
State
income taxes are computed based on the provisions of ASC 740, "Accounting for
Income Taxes." Deferred tax assets and liabilities are recognized for the
estimated future tax effects attributed to temporary differences between the
book and tax bases of assets and liabilities and for carry-forward items. The
measurement of current and deferred tax assets and liabilities is based on
enacted law.
Members’
Equity
The
Company’s operating agreement provides for, among other things, requirements
regarding capital contributions, membership interests, distributions, and
management of the Company, transfer of ownership, and dissolution or liquidation
of the Company.
In
accordance with the Company’s operating agreement, net profits or losses of the
Company are allocated to the members in proportion to their ownership in the
Company at any particular time. The Company’s operating agreement
also specifies, based on available cash, as determined by the Board of
Management in its sole discretion, the Company shall distribute funds to its
members.
8
PANELTECH
INTERNATIONAL, LLC AND SUBSIDIARY
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 -
Summary of Significant
Accounting Policies, continued
Revenue
Recognition
Sales are
recognized when products are shipped to customers. Provisions for
discounts and rebates to customers, estimated returns and allowances, and other
adjustments are provided for in the same period that the related sales are
recognized.
The
Company has inventory on consignment with certain customers, whereby revenue is
not recorded until the customer has consumed products from the consigned
inventory and title has passed. Revenue derived from consignment transactions
was $66,011 and $-- for the nine months ended September 30, 2009 and 2008,
respectively. Inventories on consignment at customers were $42,499 as of
September 30, 2009.
Advertising
The
Company expenses all advertising costs as incurred. Advertising
expense amounted to $11,815 and $4,161 for the nine months ended September 30,
2009 and 2008, respectively.
Shipping and
Handling
The
Company classifies revenue from customers related to shipping and handling
charges as a component of net sales and the corresponding freight charges
classified in cost of sales.
Intangible
Assets
The
Company’s amortizable intangible assets include trade name and
patents. These assets are being amortized using the straight-line
method over their estimated useful lives of ten years.
In the
event that facts and circumstances indicate that the cost of an asset may be
impaired, an evaluation of recoverability would be performed. If an evaluation
is required, the estimated future undiscounted cash flows associated with the
asset would be compared to the asset’s carrying amount to be determined if an
impairment to fair value is required.
Impairment of Long-Lived
Assets
In the
event that facts and circumstances indicate that the cost of an asset may be
impaired, an evaluation of recoverability would be performed. If an
evaluation is required, the estimated future undiscounted cash flows associated
with the asset would be compared to the asset's carrying amount to determine if
a write-down to fair value is required.
Use of Estimates in the
Financial Statements
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America 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
9
PANELTECH
INTERNATIONAL, LLC AND SUBSIDIARY
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 -
Summary of Significant
Accounting Policies, continued
Use of Estimates in the
Financial Statements, continued
of
revenues and expenses during the reporting period. Actual results
could differ from those estimates. Estimates that are particularly
susceptible to change relate to the determination of the allowance for loan
losses.
Fair Value of Financial
Instruments
The
carrying amounts reported in the balance sheet for cash, lines of credit and
other liabilities approximate fair value based on the short-term maturity of
these instruments. The carrying amounts reported in the balance sheet
for long-term obligations approximate fair value as such instruments feature
contractual interest rates that are consistent with current market rates of
interest or have effective yields that are consistent with instruments of
similar risk.
Recent Accounting
Pronouncements
In
June 2009, the FASB issued Statement No. 167, “Amendments to FASB
Interpretation No. 46(R)” to amend certain requirements of FASB
Interpretation No. 46 (revised December 2003), “Consolidation of
Variable Interest Entities” to improve financial reporting by enterprises
involved with variable interest entities and to provide more relevant and
reliable information to users of financial statements. The Statement is
effective as of the beginning of each reporting entity’s first annual reporting
period that begins after November 15, 2009, for interim periods within that
first annual reporting period, and for interim and annual reporting periods
thereafter. Earlier application is prohibited. The Company will review the
requirements of FASB No. 167 and comply with its requirements. The Company
does not expect that the adoption of this Statement will have a material impact
on the Company’s consolidated financial statements. This standard has not yet
been integrated into the Accounting Standards Codification.
In June
2009, the FASB issued SFAS No. 166, “Accounting for Transfers of Financial
Assets — an amendment of FASB Statement No. 140,” to improve the reporting for
the transfer of financial assets resulting from 1) practices that have developed
since the issuance of SFAS No. 140, “Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities,” that are not consistent
with the original intent and key requirements of that Statement and (2) concerns
of financial statement users that many of the financial assets (and related
obligations) that have been derecognized should continue to be reported in the
financial statements of transferors. SFAS 166 must be applied as of the
beginning of each reporting entity’s first annual reporting period that begins
after November 15, 2009, for interim periods within that first annual reporting
period and for interim and annual reporting periods thereafter. Earlier
application is prohibited. The Company does not currently engage in the transfer
of financial assets and therefore, does not expect that the adoption of SFAS 166
will have a material impact on the Company’s consolidated financial statements.
SFAS 166 has been included in the Transfers and Servicing Topic of the FASB ASC
(Topic 860).
10
PANELTECH
INTERNATIONAL, LLC AND SUBSIDIARY
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 -
Summary of Significant
Accounting Policies, continued
Recent Accounting
Pronouncements, continued
In May
2009, the FASB issued SFAS No. 165, “Subsequent Events,” which establishes
general standards of and accounting for and disclosure of events that occur
after the balance sheet date but before financial statements are issued or are
available to be issued. SFAS 165 was effective for interim and annual periods
ending after June 15, 2009. As required by SFAS 165, the Company has evaluated
subsequent events through January 12, 2010, which is the date of its condensed
consolidated financial statements as of and for the nine months ended September
30, 2009. SFAS 165 has been included in the Subsequent Events Topic of the FASB
ASC (Topic 855)
In April
2009, the FASB issued authoritative guidance regarding, Determining Fair Value
When the Volume and Level of Activity for the Asset or Liability Have
Significantly Decreased and Identifying Transactions That Are Not Orderly which
provides additional guidance for estimating fair value when there is an inactive
market or the market is not orderly. This guidance is effective for
interim and annual periods ending after June 15, 2009. The adoption of this
guidance did not have a material impact on the Company’s consolidated results of
operations or financial condition.
In April
2009, the FASB issued authoritative guidance regarding Interim Disclosures about
Fair Value of Financial Instruments. This guidance requires
disclosure about fair value of financial instruments in interim periods, as well
as annual financial statements. This guidance is effective for
interim periods ending after June 15, 2009. The adoption of this guidance
did not have a material impact on the Company’s consolidated results of
operations or financial condition.
In
December 2007, the FASB issued authoritative guidance regarding Business
Combinations which reestablishes principles and requirements for determining how
an enterprise recognizes and measures the fair value of certain assets and
liabilities acquired in a business combination, including non-controlling
interests, contingent consideration, and certain acquired contingencies. This
guidance also requires acquisition-related transaction expenses and
restructuring costs be expensed as incurred rather than capitalized as a
component of the business combination. This guidance will be applicable
prospectively to business combinations for which the acquisition date is on or
after the beginning of the first annual reporting period beginning on or after
December 15, 2008. The adoption of this guidance would have an impact on
accounting for any businesses acquired after the effective date of this
pronouncement.
11
PANELTECH
INTERNATIONAL, LLC AND SUBSIDIARY
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 -
Summary of Significant
Accounting Policies, continued
Recent Accounting
Pronouncements, continued
In
December 2007, FASB issued authoritative guidance regarding Non-controlling
Interests in Consolidated Financial Statements. This guidance requires all
entities to report minority interests in subsidiaries as equity in the
consolidated financial statements, and requires that transactions between
entities and non-controlling interests be treated as equity. This guidance
is effective for fiscal years, and interim periods within those fiscal years,
beginning on or after December 15, 2008 with earlier adoption
prohibited. The adoption of this pronouncement did not have a
material impact on the Company’s financial position, results of operations and
cash flows.
In April
2008, the FASB issued authoritative guidance regarding Determination of the
Useful Life of Intangible Assets. This guidance amends the factors
that should be considered in developing renewal or extension assumptions used to
determine the useful life of a recognized intangible asset under ASC 350
Goodwill and Other Intangible Assets (“ASC 350”). The objective of
this guidance is to improve the consistency between the useful life of a
recognized intangible asset under ASC 350 and the period of expected cash flows
used to measure the fair value of the asset under ASC 805 Business Combinations,
and other U.S. GAAP principles. This guidance is effective for fiscal
years beginning after December 15, 2008. The adoption of this
pronouncement did not have a material impact on the Company’s financial
position, results of operations and cash flows.
The FASB
and the SEC have issued certain other authoritative guidance and regulations
that will become effective in subsequent periods and are not expected to have a
significant impact on the Company’s consolidated financial statements at the
time they become effective.
NOTE 3 -
Inventories
Inventory
at September 30, 2009 consists of the following:
|
Raw
materials
|
$ | 1,294,407 | ||
|
Finished
goods
|
669,245 | |||
| $ | 1,963,652 |
12
PANELTECH
INTERNATIONAL, LLC AND SUBSIDIARY
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 -
Property and
Equipment
Property
and equipment at September 30, 2009 consists of the following:
|
Manufacturing
equipment
|
$ | 4,175,657 | ||
|
Furniture
and fixtures
|
95,050 | |||
|
Mobile
equipment
|
984,073 | |||
| 5,254,780 | ||||
|
Less: accumulated
depreciation and amortization
|
(3,206,431 | ) | ||
| $ | 2,048,349 |
Property
and equipment, at September 30, 2009, includes $84,000 of assets acquired under
capital lease obligations. Depreciation and amortization for the nine months
ended September 30, 2009 and 2008 amounted to $289,642 and $288,021,
respectively.
NOTE 5 -
Line of
Credit
The
Company has a $1,700,000 line of credit with a lending institution (the
“Lender”), which was to expire on November 30, 2009. The line bears interest at
1.75 points over the Lender's index rate (3.25% at September 30, 2009). The line
of credit is secured by accounts receivable, inventory, equipment and the
personal guarantees from members. The balance outstanding at September 30, 2009
was $1,442,372.
The
Company's line of credit agreement with the bank contains certain restrictions
and covenants. Under these restrictions, the Company must maintain certain
levels of working capital and net worth and maintain certain financial ratios
(current ratio, cash flow coverage, and debt to net worth).
On
November 30, 2009, the Lender further extended the line of credit to February
28, 2010. The line was reduced to $1,500,000 and bears interest at
3.75 points over the bank’s index rate.
13
PANELTECH
INTERNATIONAL, LLC AND SUBSIDIARY
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 -
Notes
Payable
|
The
Company has several Notes payable with varying monthly installments
ranging from $902 to $20,545. These Notes bear interest ranging from prime
(3.25% at September 30, 2009), plus 1.5% to 9% and matures at various
dates through 2015. During the nine months ended September 30, 2009, the
Company received proceeds in the amount of $375,272 in connection with an
existing equipment loan financing arrangement. These notes are
collateralized by substantially all assets of the Company and certain of
those notes are personally guaranteed by its members.
|
$ | 2,146,690 | ||
|
Less: current
portion
|
(305,067 | ) | ||
|
Long-Term
Portion
|
$ | 1,841,623 |
Future
maturities of Notes Payable are as follows:
|
For
the Years
Ending
|
Amount
|
|||
|
2010
|
$ | 305,067 | ||
|
2011
|
351,608 | |||
|
2012
|
344,747 | |||
|
2013
|
283,537 | |||
|
2014
|
260,924 | |||
|
Thereafter
|
600,807 | |||
|
Total
|
$ | 2,146,690 | ||
NOTE 7 -
Capital Lease
Obligations
On May 2,
2007, the Company entered into an equipment lease agreement with NMHG Financial
Services for monthly installments of $1,628, with an annual interest rate of
8.77% secured by the related equipment. The lease matures May
2012.
14
PANELTECH
INTERNATIONAL, LLC AND SUBSIDIARY
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7 -
Capital Lease
Obligations, continued
Future
minimum lease payments under capital leases are as follows:
|
For
the Years
Ending
|
Amount
|
|||
|
2010
|
$ | 19,536 | ||
|
2011
|
19,536 | |||
|
2012
|
11,396 | |||
|
Total
minimum lease payments
|
50,468 | |||
|
Less
amount representing interest
|
(5,127 | ) | ||
|
Present
value of minimum lease payments
|
$ | 45,341 | ||
NOTE 8 -
Commitments
Employee Benefits
Plan
The
Company maintained a 401(k) plan covering all eligible employees of the
Company. Contributions to the plan are at the discretion of the
Company. There were no contribution to the plan by the Company during
the nine months ended September 30, 2009 and 2008.
Operating
Leases
The
Company leases certain buildings and equipment under long-term leases. The
Company's leases include month-to-month operating leases, as well as leases
which expire at various intervals over the next five years.
During
the nine months ended September 30, 2009 and 2008, rental expenses under
long-term lease obligations were $892,879 and $1,134,057, respectively. Future
obligations over the terms of the Company's long-term leases as of September 30,
2009 are as follows:
|
For
the Years
Ending
|
Facility
|
Equipment
|
Total
|
|||||||||
|
2010
|
$ | 160,798 | $ | 617,059 | $ | 777,857 | ||||||
|
2011
|
68,783 | 390,697 | 459,480 | |||||||||
|
2012
|
-- | 285,442 | 285,442 | |||||||||
|
2013
|
-- | 6,211 | 6,211 | |||||||||
|
Total
|
$ | 229,581 | $ | 1,299,409 | $ | 1,528,990 | ||||||
15
NOTE 8 -
Commitments,
continued
Leasing
Activities
The
Company leases railcars to customers under operating leases. These leases expire
over the next five years. Currently, there are 314 log cars on lease, with rents
ranging between $465 to $525 per car per month. Equipment under operating leases
was $501,397 and $501,397 at September 30, 2009 and 2008, respectively, and is
included in property and equipment in the accompanying condensed consolidated
balance sheet. Accumulated depreciation on equipment operating leases was
$286,815 and $239,877 at September 30, 2009 and 2008, respectively. Rent income
received for the nine months ended September 30, 2009 and 2008 was $911,092 and
$1,294,333, respectively. Minimum future rental income is as
follows:
|
For
the Years
Ending
|
Amount
|
|||
|
2010
|
$ | 645,615 | ||
|
2011
|
644,040 | |||
|
2012
|
603,090 | |||
|
Total
|
$ | 1,892,745 | ||
NOTE 9 -
Subsequent
Events
On
December 23, 2009, Paneltech International LLC (“Paneltech”) completed a reverse
merger (the “Merger”) with publicly traded Charleston Basics,
Inc. (“Charleston” or the “Company”) (OTCBB:CHBS) a company that
previously sold outdoor camping goods and tactical gear. Following
the Merger, Charleston sold all of its pre-Merger assets relating to this
business. Under the terms of the Merger, Paneltech merged with and
into Paneltech Products, Inc., a Delaware corporation and wholly-owned
subsidiary of Charleston, to become Charleston’s principal operating business.
Charleston intends to change its name to “Paneltech International Holdings,
Inc.”
As a
result of the transaction, the former members of Paneltech currently own
approximately 90% of the outstanding common stock of the Company (before
adjusting for any conversion or exercise of any preferred stock or warrants into
common stock of the Company). Also in connection with the Merger, the
sole officer/director of the Company was replaced.
16
PANELTECH
INTERNATIONAL, LLC AND SUBSIDIARY
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9 -
Subsequent
Events, continued
Immediately
following consummation of the Merger, the Company entered into Securities
Purchase Agreements with two investors and raised an aggregate of $1.5 Million
in an offering of the Company’s preferred stock and warrants pursuant to which
the Company is seeking to raise an aggregate of $3.0 Million (the “Offering”) on
or before January 22, 2010. Under the terms of the Offering, if the
full $3.0 Million is raised in the Offering, the preferred stock will be
convertible into 33.33% of the outstanding common stock of Charleston (on an as
converted basis) at the time Merger was consummated, and the warrants will be
exercisable into one-third of the common stock into which the preferred stock
acquired in the Offering is convertible. Of the $1.5 million of
proceeds raised, $375,000 was used to buy back certain shares held by a former
member of Paneltech. The Company also issued a Promissory Note in the
amount of $375,000 to complete the purchase of shares from the former
member.
17