CENTRAL CARTING DISPOSAL, INC. AND
CCI HAULING, INC.

COMBINED BALANCE SHEETS
MARCH 31, 2011 AND DECEMBER 31, 2010

 

 

See Notes to Combined Financial Statements

CENTRAL CARTING DISPOSAL, INC. AND
CCI HAULING, INC.

COMBINED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2011 AND 2010

 

 

See Notes to Combined Financial Statements

CENTRAL CARTING DISPOSAL, INC. AND
CCI HAULING, INC.

COMBINED STATEMENTS OF STOCKHOLDER’S EQUITY
THREE MONTHS ENDED MARCH 31, 2011 AND 2010

 

 

See Notes to Combined Financial Statements

CENTRAL CARTING DISPOSAL, INC. AND
CCI HAULING, INC.

COMBINED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2011 AND 2010

 

 

See Notes to Combined Financial Statements

CENTRAL CARTING DISPOSAL, INC. AND
CCI HAULING, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

 

 

Nature of Business

 

Central Carting Disposal, Inc. (“CCD”), founded in 1996 and headquartered in Dade City, Florida, provides refuse collection and disposal services to its commercial and residential customers located in the Florida counties of Pasco, Citrus, Sumter, Hillsborough and Hernando.

 

CCI Hauling, Inc. (“CCI”), founded in 2002 and headquartered in Dade City, Florida, provides roll-off refuse collection and disposal services to commercial customers located in the Florida counties of Pasco, Citrus, Sumter, Hillsborough and Hernando.

 

Principles of Combination and Consolidation

 

CCD and CCI (collectively the “Company”) have common ownership and management. The financial statements of these two companies have been combined in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810 “Consolidation”. All inter-company transactions are eliminated in these combined financial statements.

 

 

Use of Estimates

 

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, liabilities, revenue and expenses and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates and such differences could affect the results of operations reported in future periods.

 

Cash and Cash Equivalents

 

The Company considers all cash accounts and all highly liquid short-term investments purchased with an original maturity of three months or less to be cash or cash equivalents. As of March 31, 2011 and December 31, 2010, the Company did not have any investments with maturities greater than three months.

 

Accounts Receivable

 

Accounts receivable consist of amounts due from customers for services. Accounts receivable are reported net of an allowance for doubtful accounts. The allowance is management’s best estimate of uncollectible amounts and is based on a number of factors, including overall credit quality, age of outstanding balances, historical write-off experience and specific account analysis that projects the ultimate collectability of the outstanding balances. As of March 31, 2011 and December 31, 2010, the allowance was $75,000 and $80,000, respectively.

 

CENTRAL CARTING DISPOSAL, INC. AND
CCI HAULING, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)

 

Property and Equipment

 

Property and equipment is stated at cost, less accumulated depreciation and amortization. Depreciation and amortization is provided using the straight-line method over the estimated useful lives of individual assets or classes of assets as follows:

 

 

When an asset is sold or otherwise disposed, the related cost and accumulated depreciation or amortization are removed from the respective accounts and the gain or loss is recognized. Maintenance and repairs are charged to expense when incurred.

 

Intangible Assets

 

The Company accounts for intangible assets under FASB ASC Topic 350, “Intangibles-Goodwill and Other” under which intangible assets are recorded at cost. Those assets with a determinable estimated useful life are amortized on a straight-line basis over their estimated lives. Intangible assets with an indefinite life are not subject to amortization. These assets are evaluated at least annually for impairment in accordance with FASB ASC 350-30-35-1, “Subsequent Measurement”.

 

Long-lived Assets

 

In accordance with FASB ASC 360-10-35 “Impairment of Disposal of Long-lived Assets”, losses related to the impairment of long-lived assets are recognized when the carrying amount is not recoverable and exceeds its fair value. When facts and circumstances indicate that the carrying values of long-lived assets may be impaired, management of the Company evaluates recoverability by comparing the carrying value of the assets to projected future cash flows, in addition to other qualitative and quantitative analyses.

 

Revenue Recognition

 

Revenue is recognized when the collection and disposal services are performed. Deferred revenue consists of amounts collected from customers as of March 31, 2011 and December 31, 2010 for services to be performed in the future.

 

Income Taxes

 

Effective January 1, 1997, CCD’s stockholder and on October 23, 2002, CCI’s stockholder elected that the corporations be taxed under the provisions of Subchapter S of the Internal Revenue Code. Under this provision, the stockholders are taxed on their proportionate share of the Company’s taxable income. As a Subchapter S corporation, the Company bears no liability or expense for income taxes.

 

FASB ASC 740-10, “Income Taxes”, clarifies the accounting for income taxes, by prescribing a minimum recognition threshold a tax position is required to meet before being recognized in the balance sheet. It also provides guidance on derecognition, measurement and classification of amounts related to uncertain tax positions, accounting for and disclosure of interest and penalties, accounting in interim period disclosures and transition relating to the adoption of new accounting standards. Under FASB ASC 740-10, the recognition for uncertain tax positions should be based on a more likely than not threshold that the tax position will be sustained upon audit. The tax position is measured as the largest amount of benefit that has a greater than fifty

 

CENTRAL CARTING DISPOSAL, INC. AND
CCI HAULING, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)

 

percent probability of being realized upon settlement. Management has determined that adoption of this topic has had no effect on the Company’s balance sheet.

 

Fair Value of Financial Instruments

 

At March 31, 2011 and December 31, 2010, the Company did not have any outstanding financial derivative instruments. The carrying amounts of cash and the current portion of accounts receivable approximate fair value due to the short maturity of these instruments. The non-current notes receivable are presented at fair value due to rates generally being at current market rates. The fair value of the Company’s long-term debt, estimated based on the current borrowing rates available to the Company for bank loans with similar terms and maturities, approximates the carrying value of these liabilities.

 

Segment Information

 

FASB ASC 280, “Segment Reporting,” establishes standards for reporting information regarding operating segments in annual financial statements. Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the chief operating decision-maker, or decision-making group in making decisions on how to allocate resources and assess performance.

 

The Company manages, allocates resources and reports in one business segment. The Company’s chief operating decision-maker, as defined under FASB ASC 280, is the Company’s chief executive officer. Based on the information reviewed by its chief executive officer, the Company operates in one business segment.

 

 

Property and equipment as of March 31, 2011 and December 31, 2010 consist of the following:

 

 

Depreciation expense for the three months ended March 31, 2011 and 2010 is $133,002 and $121,732, respectively.

 

CENTRAL CARTING DISPOSAL, INC. AND
CCI HAULING, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)

 

 

Intangible assets as of March 31, 2011 and December 31, 2010 consist of the following:

 

 

Amortization expense for the three months ended March 31, 2011 and 2010 is $8,275 and $8,275, respectively.

 

At March 31, 2011, projected aggregate annual amortization expense is as follows:

 

 

CENTRAL CARTING DISPOSAL, INC. AND
CCI HAULING, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)

 

 

Long-term debt as of March 31, 2011 and December 31, 2010 consists of the following:

 

 

CENTRAL CARTING DISPOSAL, INC. AND
CCI HAULING, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)

 

As of March 31, 2011, principal payments due on long-term debt are as follows:

 

 

The Company was making monthly payments of $2,125 to a former shareholder of the Company. This note is payable as a result of the purchase of Company stock from this shareholder in 2002. The balance on this note was paid off subsequent to March 31, 2011.

 

 

The Company leases its headquarters from the stockholder on a month-to-month basis. During the three months ended March 31, 2011 and 2010, the Company paid this related party $13,257 and $13,257, respectively, as rent for the use of this facility.

 

 

Supplemental Disclosure of Cash Flow Information

 

Supplemental cash flow information with respect to the three months ended March 31, 2011 and 2010 is as follows:

 

 

Advertising

 

The company expenses advertising costs as incurred. Advertising expenses for the three months ended March 31, 2011 and 2010 are approximately $1,300 and $3,900, respectively.

 

Environmental Liability

 

The Company is subject to liability for any environmental damage, including personal injury and property damage arising from off-site environmental contamination caused by pollutants or hazardous substances if the Company arranges to transport, treat or dispose of those materials. Any substantial liability incurred by the Company arising from environmental damage could have a material adverse effect on the Company’s business, financial condition and results of operations. The Company is not presently aware of any situations that it expects would have a material adverse impact on its results of operations or financial condition.

 

CENTRAL CARTING DISPOSAL, INC. AND
CCI HAULING, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)

 

 

The Company evaluated all events and transactions through July 8, 2011, the date these financial statements were issued. During this period, there were no material recognizable or non-recognizable subsequent events except for the following:

 

On June 6, 2011, the Company entered into an agreement under which it sold certain assets and liabilities of the Company to Choice Environmental Services, Inc., a wholly-owned subsidiary of Swisher Hygiene, Inc. Assets sold included substantially all supplies, accounts receivable, property and equipment, rights under contracts, customer lists, and other intangible assets.