Attached files
Exhibit 99.3
Kuchera Defense Systems, Inc.
Financial Statements
September 30, 2009 and 2008
Unaudited
Kuchera Defense Systems, Inc.
Table of Contents
September 30, 2009 and 2008
| Financial Statements (Unaudited) | ||
| Balance Sheets |
1 | |
| Statements of Operations |
2 | |
| Statements of Cash Flows |
3 | |
| Notes to Financial Statements |
4 | |
Kuchera Defense Systems, Inc.
Balance Sheets
September 30, 2009 and June 30, 2009
| Unaudited September 2009 |
Audited June 2009 | |||||
| Assets |
||||||
| Current assets |
||||||
| Cash |
$ | 4,017,690 | $ | 735,064 | ||
| Accounts receivable, net of allowance for doubtful accounts of $93,610 at September 30, 2009 and June 30, 2009, respectively |
6,555,920 | 8,137,451 | ||||
| Due from related party |
— | 53,397 | ||||
| Inventory |
17,331,105 | 16,922,534 | ||||
| Prepaid expenses |
114,572 | 116,201 | ||||
| Prepaid taxes |
— | 683,381 | ||||
| Prepaid materials |
4,330,629 | 5,593,584 | ||||
| Other current assets |
20,650 | 21,423 | ||||
| Total current assets |
32,370,567 | 32,263,035 | ||||
| Property and equipment, net |
2,633,148 | 2,635,724 | ||||
| Intangible assets, net |
2,333 | 4,083 | ||||
| Cash surrender value, officers’ life insurance |
244,922 | 207,404 | ||||
| $ | 35,250,970 | $ | 35,110,246 | |||
| Liabilities and Stockholders’ Equity |
||||||
| Current liabilities |
||||||
| Accounts payable |
$ | 3,281,171 | $ | 1,795,748 | ||
| Accrued expenses |
349,650 | 581,285 | ||||
| Line of credit |
750,000 | 750,000 | ||||
| Loans from related party |
— | — | ||||
| Due to related party |
25,529 | 985,774 | ||||
| Other current liabilities |
40,967 | 22,000 | ||||
| Progress liquidation payable |
11,080,795 | 14,188,022 | ||||
| Current maturities of capital leases |
— | 14,534 | ||||
| Provision for income taxes |
632,218 | — | ||||
| Total current liabilities |
16,160,329 | 18,337,363 | ||||
| Capital leases, net of current maturities |
42,521 | 26,949 | ||||
| Stockholders’ equity |
||||||
| Common stock, $0.01 par value, 300,000 shares authorized, 60,000 shares issued and outstanding |
500 | 500 | ||||
| Retained earnings |
19,047,619 | 16,745,434 | ||||
| Total stockholders’ equity |
19,048,119 | 16,745,934 | ||||
| $ | 35,250,969 | $ | 35,110,246 | |||
1
Kuchera Defense Systems, Inc.
Statements of Operations
For the Three Months Ended September 30, 2009 and 2008
| 2009 | 2008 | |||||||
| Sales, net |
$ | 15,822,888 | $ | 13,683,021 | ||||
| Cost of sales |
9,920,687 | 9,043,221 | ||||||
| Gross profit |
5,902,201 | 4,639,800 | ||||||
| Operating expenses |
2,191,629 | 2,705,897 | ||||||
| Income from operations |
3,710,572 | 1,933,903 | ||||||
| Other income (expense) |
||||||||
| Interest income |
2,451 | 10,372 | ||||||
| Interest expense |
(6,629 | ) | (12,674 | ) | ||||
| Miscellaneous income, net |
(212 | ) | (9,124 | ) | ||||
| (4,390 | ) | (11,426 | ) | |||||
| Income before provision for income taxes |
3,706,182 | 1,922,477 | ||||||
| Provision for income taxes |
1,404,000 | 677,173 | ||||||
| Net income |
$ | 2,302,182 | $ | 1,245,304 | ||||
2
Kuchera Defense Systems, Inc.
Consolidated Statements of Cash Flows
For the Three Months Ended September 30, 2009 and 2008
| 2009 | 2008 | |||||||
| Cash flows from operating activities |
||||||||
| Net income |
$ | 2,302,182 | $ | 1,245,304 | ||||
| Adjustments to reconcile net income to net cash provided (used) by operating activities |
||||||||
| Depreciation and amortization |
78,991 | 78,027 | ||||||
| Deferred income taxes |
— | (584,235 | ) | |||||
| Changes in operating assets and liabilities |
||||||||
| Accounts receivable |
1,581,531 | (2,255,608 | ) | |||||
| Due from related party |
53,397 | 40,729 | ||||||
| Inventory |
(408,571 | ) | 97,559 | |||||
| Prepaid expenses |
1,629 | (8,175 | ) | |||||
| Prepaid taxes |
683,381 | 298,799 | ||||||
| Prepaid materials |
1,262,955 | (58,064 | ) | |||||
| Other current assets |
773 | (2,271 | ) | |||||
| Accounts payable |
1,485,423 | 2,301,857 | ||||||
| Accrued expenses |
(231,635 | ) | 114,213 | |||||
| Due to related party |
(960,245 | ) | (2,370,812 | ) | ||||
| Other current liabilities |
18,967 | — | ||||||
| Progress liquidation payable |
(3,107,227 | ) | 2,403,930 | |||||
| Provision for income taxes |
632,218 | 1,363,658 | ||||||
| Net cash provided (used) by operating activities |
3,393,768 | 2,664,912 | ||||||
| Cash flows from investing activities |
||||||||
| Purchase of property and equipment |
(69,868 | ) | (8,942 | ) | ||||
| Increase in cash surrender value of life insurance |
(37,518 | ) | — | |||||
| Change in loans to related party |
— | 12,500 | ||||||
| Net cash used by investing activities |
(107,386 | ) | 3,558 | |||||
| Cash flows from financing activities |
||||||||
| Repayment of obligations under capital lease |
(3,756 | ) | — | |||||
| Change in line of credit, net |
— | (1,000,000 | ) | |||||
| Net cash (used) provided by financing activities |
(3,756 | ) | (1,000,000 | ) | ||||
| Net change in cash |
3,282,627 | 1,668,470 | ||||||
| Cash |
||||||||
| Beginning of year |
735,064 | 816,956 | ||||||
| End of year |
$ | 4,017,691 | $ | 2,485,426 | ||||
| Supplemental disclosures of noncash information |
||||||||
| Cash paid for: |
||||||||
| Income taxes |
$ | 87,238 | $ | 855,423 | ||||
| Interest |
$ | 6,629 | $ | 12,674 | ||||
3
Notes to Financial Statement
| 1. | Nature of Business |
Kuchera Defense Systems, Inc. (the “Company”), founded in 1985 and headquartered in Windber, Pennsylvania, is an ISO-9001 certified electronic manufacturing service company providing cutting edge circuit card assembly technology, cable harness, electro-mechanical manufacturing, system integration, and engineering services. The Company’s customers include both military and commercial organizations located throughout the United States.
Certain information and footnote disclosures required in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. Statements are subject to possible adjustments in connection with the annual audit of the Company’s accounts. In the opinion of the Company’s management, the accompanying unaudited condensed financial statements contain all adjustments (consisting only of normal recurring adjustments), which the Company considers necessary for the fair presentation of the Company’s financial position as of September 30, 2009 and the results of its operations and cash flows for the three month period ended September 30, 2009 and 2008. Results for the interim period are not necessarily indicative of results that may be expected for the entire year or for any other interim periods. The unaudited condensed financial statements should be read in conjunction with the audited financial statements of the Company and the notes thereto as of and for the fiscal year ended June 30, 2009 included in the Company’s Form 8-K/A filed with the Commission on March 2, 2010.
| 2. | Subsequent Events |
The Company has evaluated subsequent events occurring after the balance sheet date through the date of March 2, 2010, which is the date the financial statements were available to be issued.
On January 20, 2010 three newly formed subsidiaries, API Systems, Inc. (“API Systems”), API Defense, Inc. (“API Defense”) and API Defense USA, Inc. (“API USA” and collectively with API Systems and API Defense, the “API Subsidiaries”) entered into an asset purchase agreement (the “Agreement”) with Kuchera Defense Systems, Inc. (“KDS”), KII, Inc. (“KII”) and Kuchera Industries, LLC (“K Industries” and collectively with KDS and KII, the “Kuchera Companies”) dated January 20, 2010 pursuant to which API and the API Subsidiaries purchased substantially all of the assets of the Kuchera Companies.
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