Exhibit 99.1

VRONA & VAN SCHUYLER CPAS, PLLC

CERTIFIED PUBLIC ACCOUNTANTS

WENDCHARLES I, LLC

FINANCIAL STATEMENTS—INCOME TAX BASIS

DECEMBER 29, 2013 AND DECEMBER 30, 2012

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VRONA & VAN SCHUYLER CPAS, PLLC

CERTIFIED PUBLIC ACCOUNTANTS

ADMIN@VRONAVANSCHUYLERCPA.COM

WWW.VRONAVANSCHUYLERCPA.COM

 

240 LONG BEACH ROAD		240 WEST 35TH ST. STE 300
ISLAND PARK, NY 11558-1541		NEW YORK, NY 10001-2506
TEL: 516-670-9479		TEL: 21 2-868-3750
FAX: 516-670-9477		FAX: 212-868-3727

INDEPENDENT ACCOUNTANTS’ REVIEW REPORT

To the Members

Wendcharles I, LLC

27 Central Avenue

Cortland, New York

We have reviewed the accompanying statements of assets, liabilities and members’ capital-income tax basis of Wendcharles I, LLC as of December 29, 2013 and December 30, 2012 and the related statements of revenues and expenses-income tax basis, changes in members’ capital-income tax basis and cash flows-income tax basis for years then ended. A review includes primarily applying analytical procedures to management’s financial data and making inquiries of company management. A review is substantially less in scope than an audit, the objective of which is the expression of an opinion regarding the financial statements as a whole. Accordingly, we do not express such an opinion.

Management is responsible for the preparation and fair presentation of the financial statements in accordance with the income tax basis of accounting and for designing, implementing, and maintaining internal control relevant to the preparation and fair presentation of the financial statements.

Our responsibility is to conduct the reviews in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. Those standards require us to perform procedures to obtain limited assurance that there are no material modifications that should be made to the financial statements. We believe that the results of our procedures provide a reasonable basis for our report.

Based on our reviews, we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with the income tax basis of accounting, as described in Note 1.

CERTIFIED PUBLIC ACCOUNTANTS

January 27, 2014

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VRONA & VAN SCHUYLER CPAs, PLLC

CERTIFIED PUBLIC ACCOUNTANTS

 

Wendcharles I, LLC

Statements of Assets, Liabilities and Members’ Capital-Income Tax Basis

December 29, 2013 and December 30, 2012

 

		2013				2012
ASSETS
Current assets:
Cash (Note 1I)		$	117,670			$	285,295
Inventories—(Note 1C)			56,625				74,594
Prepaid expenses and other current assets			26,667				6,824
Total current assets			200,962				366,713
Property and equipment—(Notes 1D and 2)			491,248				655,205
Other assets:
Goodwill, net of accumulated amortization of $477,646 in 2013 and $569,196 in 2012—(Note 1E)			1,313,534				2,057,863
Deferred costs, net of accumulated amortization of $0 in 2013 and $68,492 in 2012—(Note 1F)			0				34,922
Deposits			11,190				11,190
Total other assets			1,324,724				2,103,975
TOTAL ASSETS		$	2,016,934			$	3,125,893
LIABILITIES AND MEMBERS’ CAPITAL
Current liabilities:
Current maturities of long-term debt—(Note 3)		$	281,742			$	186,883
Accounts payable, accrued expenses and taxes payable			700,259				813,842
Total current liabilities			982,001				1,000,725
Long-term debt, less current maturities—(Note 3)			1,028,102				1,642,768
Total liabilities			2,010,103				2,643,493
Commitments and contingencies—(Notes 3, 4, 5 and 7)			—				—
Members’ capital—(Notes 1A, 5 and 6B)			6, 831				482,400
TOTAL LIABILITIES AND MEMBERS’ CAPITAL		$	2,016,934			$	3,125,893

See independent accountants’ review report and notes to the financial statements.

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VRONA & VAN SCHUYLER CPAs, PLLC

CERTIFIED PUBLIC ACCOUNTANTS

 

Wendcharles I, LLC

Statements of Revenues and Expenses-Income Tax Basis

For the Years Ended December 29, 2013 and December 30, 2012

 

		2013				2012
Sales—net		$	11,105,515			$	12,725,776
Cost of sales—net			3,257,032				3,923,538
Gross profit			7,848,483				8,802,238
Labor expenses			3,701,479				4,308,571
Store operating and occupancy expenses			2,315,324				2,631,789
General and administrative expenses			737,953				696,211
Advertising expenses—(Note 4A)			602,059				661,776
Royalty expense—(Note 4A)			444,221				509,031
Depreciation and amortization—(Notes 1D, 1E, and 1F)			339,014				625,483
Interest expense—(Note 3)			58,552				58,678
Total operating expenses			8,198,602				9,491,539
Operating income (loss)			(350,119	)			(689,301	)
Gain/(loss) on sale/(disposal) of assets			(131,071	)			(14,342	)
Gain on sale of restaurant			399,724				10,460
Loss on closing of restaurant			(512, 844	)			0
Workers’ compensation refund			140,000				515,000
Other income			66,631				29,956
Excess (deficiency) of revenues over expenses—(Note 1G)		$	(387,679	)		$	(148,227	)

See independent accountants’ review report and notes to the financial statements.

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VRONA & VAN SCHUYLER CPAs, PLLC

CERTIFIED PUBLIC ACCOUNTANTS

 

Wendcharles I, LLC

Statements of Changes in Members’ Capital-Income Tax Basis

For the Years Ended December 29, 2013 and December 30, 2012

 

Members’ Capital, December 25, 2011		$	758,467
Excess (deficiency) of revenues over expenses December 30, 2012			(148,227	)
Distributions paid to members			(127,840	)
Members’ Capital, December 30, 2012			482,400
Excess (deficiency) of revenues over expenses December 29, 2013			(387,679	)
Distributions paid to members			(87,890	)
Members’ Capital, December 29, 2013		$	6,831

See independent accountants’ review report and notes to the financial statements.

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VRONA & VAN SCHUYLER CPAs, PLLC

CERTIFIED PUBLIC ACCOUNTANTS

 

Wendcharles I, LLC

Statements of Cash Flows-Income Tax Basis

For the Years Ended December 29, 2013 and December 30, 2012

 

		2013				2012
Cash flows from operating activities:
Excess (deficiency) of revenues over expenses		$	(387,679	)		$	(148,227	)
Adjustments to reconcile to net cash provided by operating activities:
Depreciation and amortization			339,014				625,483
(Gain)/loss on (sale)/disposal of assets			131,071				14,342
Gain on sale of restaurant			(399,724	)			(10,460	)
Increase (decrease) in cash attributed to changes in assets and liabilities:
Decrease (increase) in inventories			17,969				25,819
Decrease (increase) in prepaid expenses and other current assets			(19,843	)			779
Increase (decrease) in accounts payable, accrued expenses and taxes			(113,583	)			(240,660	)
Loss on disposal of assets, closing of restaurants			209,483				0
Total adjustments			164,387				415,303
Net cash provided by operating activities			(223,292	)			267,076
Cash flows from investing activities:
Capital expenditures, tangible and intangible assets			(147,197	)			(389,143	)
Net cash provided by (used in) investing activities			(147,197	)			(389,143	)
Cash flows from financing activities:
Closing costs			(500	)			0
Repayments of note payable			(1,619,807	)			(175,348	)
Members’ distributions			(87,890	)			(127,840	)
Proceeds from sale of restaurant			811,061				66,922
Proceeds from debt			1,100,000				180,000
Net cash provided by (used in) financing activities			202,864				(56,266	)
Net increase (decrease) in cash			(167,625	)			(178,333	)
Cash, beginning of period			285,295				463,628
Cash, end of period		$	117,670			$	285,295
Additional Cash Flow Information:
Interest paid during the year		$	56,359			$	58,381

See independent accountants’ review report and notes to the financial statements.

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VRONA & VAN SCHUYLER CPAs, PLLC

CERTIFIED PUBLIC ACCOUNTANTS

 

Wendcharles I, LLC

Notes to the Financial Statements

December 29, 2013 and December 30, 2012

Note 1—Summary of Significant Accounting Policies

 

(A)

The Company:

Wendcharles I, LLC was formed on June 24, 2008 pursuant to the South Carolina Code of Laws to acquire, own and operate eleven existing Wendy’s Old Fashioned Hamburger Restaurants in the Charleston, South Carolina metropolitan area. As part of the same overall transaction, another South Carolina limited liability company, Wendcharles II, LLC, affiliated with the Company by certain common management and ownership interests, acquired six other existing Wendy’s Old Fashioned Hamburger Restaurants in and proximate to North Charleston. The restaurants were all acquired from one unrelated seller for an aggregate purchase price of $5,760,000, less net adjustments to the Company of approximately $14,000. The Company’s recorded goodwill in the amount of approximately $4,060,000. The purchase price was financed principally by a $3,500,000 loan from Bank of America, with the balance provided by capital contributions of the members. The acquisition closed and restaurant operations commenced on September 16, 2008.

The leases for the eleven leasehold estates, all in South Carolina, were assigned to the Company from different lessors. Four locations each are in Charleston and North Charleston and three are in Mt. Pleasant as follows: Charleston: 1721 Sam Rittenberg Boulevard; 194 Cannon Street; 343 Folly Road; and 5275 International Blvd; North Charleston: 4113 Rivers Avenue; 5115 Dorchester Rd; 9145 University Blvd; and 4892 Ashley Phosphate Road; Mt Pleasant: 361 Highway 17 By-Pass; 935 Chuck Dawley Boulevard; and 596 Long Point Road. (See Note 4B).

On December 26, 2011 the Company sold its Sam Rittenberg Boulevard location to Wendcharles II, LLC, a related party. (See Notes 1A and 2).

In 2013 the Company closed its 5115 Dorchester Road store and sold its 4892 Ashley Phosphate Road store to Wendcharles II, LLC.

The Company is to continue in perpetuity, except it is to be dissolved as a result of the sale of all business operations or the sale of all or substantially all of its assets, in each of such cases upon the receipt of the consideration therefor in cash or the reduction to cash of non-cash consideration, or upon the occurrence of certain events as set forth in the operating agreement. (See Note 5B).

The Company currently operates eight restaurants, all of which are leased.

 

(B)

Income Tax Basis of Accounting:

The Company is treated as a partnership for Federal and South Carolina income tax purposes. The accompanying financial statements have been prepared on the basis of accounting used to prepare the Company’s federal partnership return. Such other comprehensive basis of accounting differs from generally accepted accounting principles. Accordingly, the accompanying financial statements are not intended to present financial position and results of operations in accordance with generally accepted accounting principles.

See independent accountants’ review report.

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VRONA & VAN SCHUYLER CPAs, PLLC

CERTIFIED PUBLIC ACCOUNTANTS

 

Wendcharles I, LLC

Notes to the Financial Statements

December 29, 2013 and December 30, 2012

 

Note 1—Summary of Significant Accounting Policies—(Continued):

 

(C)

Inventories:

Inventories represent food and supplies and are stated at cost.

 

(D)

Property, Equipment and Depreciation:

Property and equipment are stated at cost. Depreciation is provided by application of the straight-line method over depreciable lives as follows:

 

Land improvements			15 years
Leasehold improvements			15 to 39 years
Restaurant equipment			5 to 7 years
Automobile			5 years

If it had qualifying property placed in service during the year, the Company has taken additional depreciation deductions in accordance with the federal government’s enactment of the Economic Stimulus Act of 2008, amended by the American Recovery and Reinvestment Act of 2009, the Small Business Jobs Act of 2010, and the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010.

 

(E)

Goodwill:

Goodwill, representing the excess of the purchase price over the fair value of the assets acquired, is amortized over fifteen years.

 

(F)

Deferred Costs:

The Company capitalized the costs incurred in obtaining its financing and its leases. These costs are amortized over the life of the loan.

 

(G)

Income Taxes:

The Company was organized as a Limited Liability Company under the laws of South Carolina and is not subject to any federal or state income tax. For federal and South Carolina income tax purposes, the Company is treated as a partnership. Accordingly, each member is required to report on his federal and applicable state income tax return his distributive share of all items of income, gain, loss, deduction, credit and tax preference of the Company for any taxable year, whether or not any cash distribution has been or will be made to such member.

The Company’s tax returns are subject to examination by the Federal and State taxing authorities. The tax laws, rules and regulations governing these returns are complex, technical and subject to varying interpretations. If an examination required the Company to make adjustments, the profit or loss allocated to the members would be adjusted accordingly. Management believes the Company is no longer subject to tax examinations for the years prior to 2010.

Although income tax rules are used to determine the timing of the reporting revenues and expenses, non-taxable and non-deductible expenses are included in the determination of net income in the accompanying financial statements.

 

See independent accountants’ review report.

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VRONA & VAN SCHUYLER CPAs, PLLC

CERTIFIED PUBLIC ACCOUNTANTS

 

Wendcharles I, LLC

Notes to the Financial Statements

December 29, 2013 and December 30, 2012

 

Note 1—Summary of Significant Accounting Policies—(Continued):

 

 

(H)

Fiscal Year:

The Company’s annual accounting period is a fiscal year ending on the last Sunday of December. The 2013 fiscal year represents 52 weeks and the 2012 fiscal year represent 53 weeks.

 

(I)

Cash:

The Company maintains its cash in various banks. The accounts at each bank are guaranteed by the Federal Deposit Insurance Corporation, to a maximum of $250,000. At any time during the year, the cash balance may exceed $250,000.

 

(J)

Use of Estimates:

The preparation of financial statements in conformity with the income tax accrual basis of accounting requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from these estimates.

 

(K)

Advertising:

The Company expenses all advertising costs when incurred.

 

(L)

Sales Tax:

The Company collects sales tax and remits to the state of South Carolina. The liability is reflected in taxes payable on the balance sheet.

Note 2—Property and Equipment

Property and equipment consist of the following:

 

		2013				2012
Land improvements		$	120,103			$	117,621
Leasehold improvements			866,067				951,877
Restaurant equipment			1,425,263				1,698,017
Construction in progress			0				0
Automobile			13,514				4, 940
Total			2,424,947				2,772,455
Less: Accumulated depreciation			1,933,699				2,117,250
Property and equipment, net		$	491,248			$	655,205

In 2013 the Company closed its 5115 Dorchester Road store and recognized a loss of $512,844 on the closing.

In 2013 the Company sold its 4892 Ashley Phosphate Road store to Wendcharles II, LLC a related company for $630,000. The Company recognized a gain of $399,724 on the sale.

 

See independent accountants’ review report.

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VRONA & VAN SCHUYLER CPAs, PLLC

CERTIFIED PUBLIC ACCOUNTANTS

 

Wendcharles I, LLC

Notes to the Financial Statements

December 29, 2013 and December 30, 2012

 

Note 3—Acquisition Debt

 

At the closing of the purchase transaction, the Company and its affiliate, Wendcharles II, LLC, jointly obtained a $3,500, 000 loan from Bank of America, with interest at a floating rate, initially equal to the thirty-day adjusted LIBOR plus 250 basis points for the period commencing on the closing date until four quarterly financial reports have been submitted and reviewed in accordance with the loan agreement and, thereafter, equal to the thirty day adjusted LIBOR plus a margin based on the funded debt to earnings before interest, taxes depreciation and amortization (“EBITDA”) ratio. Based on the relative values of the leasehold interests acquired, $1,800,000 and $1,700,000, representing 51% and 49%, respectively, of the total principal amount, were recorded on the books of the Company and its affiliate, although they are jointly and severally liable for the loan.

A combined initial payment of interest only of $7,277, based on LIBOR of 2.49%, set two business days before the closing date was due and paid on October 1, 2008. Beginning on November 1, 2008 and ending on August 1, 2015, monthly payments of interest and principal are due in an amount sufficient to amortize the loan over 13.5 years. LIBOR is adjusted on the first business day of each month. The loan matures on August 16, 2015. The loan was repaid in 2013.

On March 17, 2010, the Company borrowed $250,000 from Wen-Restaurants LLC (a related company, see note 6C). Repayment terms were $2,440 per month including interest at 3.25% per annum. In November 2013 the Company prepaid $45,126 to reduce the loan balance to $125,000. New terms are monthly payments of $1,221 including interest of 3.25% for 120 months.

Aggregate principal payments are as follows:

 

2014		$	10,784
2015			11,140
2016			11,507
2017			11,887
2018			12,279
Thereafter			66,521
		$	124,118

In October 2011 the Company borrowed $120,000 from M&T Bank. Repayment terms are $3,333 per month for 36 months plus interest at 3.25%.

The annual principle payments are as follows:

 

2014		$	35,555

In April 2012 the Company borrowed $180,000 from Wendcapital LLC, a related party. Repayment terms are $1,757 per month for 144 months at an interest rate of 6%. Additional interest may be charged if certain performance based sales are realized.

 

See independent accountants’ review report.

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VRONA & VAN SCHUYLER CPAs, PLLC

CERTIFIED PUBLIC ACCOUNTANTS

 

Wendcharles I, LLC

Notes to the Financial Statements

December 29, 2013 and December 30, 2012

 

Note 3—Acquisition Debt—(Continued):

 

The future principal payments are as follows:

 

2014		$	11,674
2015			12,394
2016			13,159
2017			13,970
2018			14,882
Thereafter			95,956
		$	162,035

On June 27, 2013 the Company borrowed $1,100,000 from M&T Bank. Repayment terms are approximately $18,644 plus interest at 3% for 59 months.

The future principal payments are as follows:

 

2014		$	223,729
2015			223,729
2016			223,729
2017			223,729
2018			93,220
		$	988,136

Note 4—Commitments and Contingencies

 

(A)

Franchise Agreement Commitments:

The Company is the franchisee for the eight Wendy’s restaurants it owns and operates. The franchise agreements obligate the Company to pay to Wendy’s International a monthly royalty equal to 4% of the gross sales of each restaurant, or $250, whichever is greater. The Company must also pay to Wendy’s National Advertising Program 3% of the gross sales and spend not less than .75% of the gross sales of each restaurant for local and regional advertising.

 

(B)

Minimum Operating Lease Commitments:

The lease for the restaurant located at 4113 Rivers Ave in North Charleston has a primary term that expires on March 31, 2025 and includes two five- year renewal options. The current annual rent for the lease is $105,662 through March 31, 2014. At that time and on each April 1 thereafter, annual rent will be increased by the previous year’s annual rent multiplied by 1%.

The lease for the restaurant located at 194 Canon Street in Charleston had a primary term that expired on September 14, 2004. The current term expires on September 14, 2014 and includes two remaining five-year renewal options. The annual rent is $131,560 for all terms of the lease. In addition the Company is required to pay percentage rent equal to 5% of gross sales in excess of $1,087,872.

The lease for the restaurant located at 343 Folly Road in Charleston has a primary term that expires on November 6, 2021 and includes two five-year renewal options. The annual rent is $70,200 for all terms of the lease. In addition the Company is required to pay percentage rent equal to 7% of gross sales in excess of $589,488.

 

See independent accountants’ review report.

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VRONA & VAN SCHUYLER CPAs, PLLC

CERTIFIED PUBLIC ACCOUNTANTS

 

Wendcharles I, LLC

Notes to the Financial Statements

December 29, 2013 and December 30, 2012

 

Note 4—Commitments and Contingencies—(Continued):

 

(B)

Minimum Operating Lease Commitments—continued:

The lease for the restaurant located at 361 Hwy 17 Bypass in Mt Pleasant has a primary term that expires on November 6, 2021 and includes two five- year renewal options. The annual rent is $55,333 for all terms of the lease. In addition the Company is required to pay percentage rent equal to 7% of gross sales in excess of $750,000. In 2013 part of the land was condemned and the Company received $181,061 in proceeds. The lease was amended to reflect this change. The Company recognized a gain of $90,508.

The lease for the restaurant located at 935 Chuck Dawley Blvd in Mt Pleasant had a primary term that expired on September 9, 1996. The current term expires on September 9, 2016. The annual rent is $97,020 for the remainder of the current term. In addition the Company is required to pay percentage rent equal to 6% of gross sales in excess of base rent.

The lease for the restaurant located at 9145 University Blvd in North Charleston has a primary term that expires on March 31, 2025 and includes two five-year renewal options. The current annual rent for the lease is $108, 379 through March 31, 2014. At that time and on each April 1 thereafter, annual rent will be increased by the previous year’s annual rent multiplied by 1%.

The lease for the restaurant located at 596 Long Point Road in Mt Pleasant has a primary term that expires on March 31, 2025 and includes two five- year renewal options. The current annual rent for the lease is $99,039 through March 31, 2014. At that time and on each April 1 thereafter, annual rent will be increased by the previous year’s annual rent multiplied by 1%

The lease for the restaurant located at 5275 International Blvd in North Charleston has a primary term that expires on April 30, 2027 and includes four five-year renewal options. The current annual rent for the lease is $129,150 through June 30, 2018. At that time and on each five year anniversary thereafter, annual rent will be increased by the previous year’s annual rent multiplied by 5%.

The Company is required to pay all realty taxes, insurance, routine maintenance and common charges for the above leases.

Rent expense was $947, 544 in 2013 and $1, 096, 594 in 2012 including percentage including percentage rent of $94,089 in 2013 and $89,185 in 2012.

Future annual minimum rentals are as follows:

 

2014		$	757,606
2015			667,914
2016			641,161
2017			577,250
2018			583,704
Thereafter			3,624,818
		$	6,852,453

 

See independent accountants’ review report.

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VRONA & VAN SCHUYLER CPAs, PLLC

CERTIFIED PUBLIC ACCOUNTANTS

 

Wendcharles I, LLC

Notes to the Financial Statements

December 29, 2013 and December 30, 2012

 

Note 4—Commitments and Contingencies—(Continued):

 

(C)

Financial and Operational Advisory Services Agreement:

The Company has a financial and operational advisory services agreement with three of its corporate officers. The agreement provides for these officers to: Consult with and advise the Company on applicable financial and/or operational matters and if required by the Company’s debt, lease or franchise agreements, to which they are signatories, to remain ready, willing and able to maintain such status for the benefit of the Company, except where such guarantees are not needed; and remain able to provide such additional personal guarantees as, within their sole discretion, may reasonably be necessary to maintain the business of the Company. The initial term expires December 2011, and is automatically renewable annually thereafter, as long as the Company remains in business. The agreement also provides for the reimbursement of reasonable expenses incurred by the individuals in fulfilling their duties. The aggregate annual fee under this agreement is $42,000. (See Note 6A).

Note 5—Capitalization and Operating Agreement

 

(A)

Capitalization:

The Company’s initial capitalization consisted of 800 units, of which 42 and 32 were sold to two managing members at $100 per unit, or $ 7,400 in the aggregate, and 80 units were sold to the third managing member at $125 per unit, or $10,000 in the aggregate. Of the remaining 646 units, 67 were sold at $100 per unit, or $6,700 in the aggregate, and 579 units were sold at per unit contributions of $4,700 totaling $2,721,300. All contributions totaled $2,745,400. (See Note 5B).

 

(B)

Operating Agreement:

All purchasers of membership interests are parties to the Company’s operating agreement which provides for the capitalization and operation of the Company, distributions to members and transfers of interests. Members’ consents representing 75% of all membership interests are required for the following actions: Change in the operating agreement; voluntary dissolution; sale or exchange of substantially all assets; merger or consolidation; incurrence of debt or refinancing other than in the ordinary course of business or in connection with entering new or unrelated businesses; and removal of a manager, for cause. Members are not required to make up negative capital accounts. Distributions either from cash flow generated by operations or capital transactions (as defined) other than capital contributions are made at the sole discretion of the managers, acting unanimously. Managers are elected by the members. Outside liens against membership interests are prohibited. For permitted transfers of membership interests, book value is equal to assets less liabilities using the income tax method/accrual basis of accounting.

 

See independent accountants’ review report.

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VRONA & VAN SCHUYLER CPAs, PLLC

CERTIFIED PUBLIC ACCOUNTANTS

 

Wendcharles I, LLC

Notes to the Financial Statements

December 29, 2013 and December 30, 2012

 

Note 5—Capitalization and Operating Agreement—(Continued):

 

(B)

Operating Agreement:

Members wishing to sell their interests shall submit their request in writing, together with appropriate documentation setting forth the terms of such sale, to the managing members, who within thirty days and at their sole discretion, shall approve or disapprove of such sale. If not approved, the managing members within fourteen additional days may elect to have the Company purchase the offered units at the stated terms. Such action by the managing members is to be by simple majority. If the managing members determine that the offered interests are not to be redeemed by the Company, then the interests shall be offered to the remaining members of the Company, pro-rata at the same offered terms, who will have 14 additional days to purchase the offered shares. If the interests are not purchased by the members, then they may be sold to the third-party purchaser at the offered terms, but the purchaser must become bound by the terms of the operating agreement. Membership interests may also be transferred to family members or trusts or by reason of death or incompetence.

In the event of a termination of a member’s interest by death, retirement, resignation, expulsion, bankruptcy, incompetence, or in the case of a member that is not a natural person—dissolution, the Company must be dissolved unless it is continued by the consent of all the remaining members. Non-consenting members are deemed to offer and authorized representatives or trustees of deceased or bankrupt members may offer the applicable membership interest, first to the Company, and then to the consenting (continuing) members. In such case, the offered interests must be purchased by either the Company or one or more of the consenting members. Such purchases, unless made by the Company, are to be made pro-rata to the existing interests of purchasing members, unless they agree otherwise or there is only one purchasing member.

In any event, all offered interests of non-consenting members or by the estate, trustee, etc. of deceased or bankrupt members, etc. must be purchased by the Company or one or more consenting members or the Company must be dissolved and liquidated.

Note 6—Related Party Transactions

 

(A)

Financial and Operational Advisory Services:

The Company paid two of its three managing members and a third individual a total of $42,000 in 2013 and $42,000 in 2012 pursuant to a financial and operational advisory services agreement. (See Note 4C).

 

(B)

Redemption of Membership Interest:

In October 2009 the Company redeemed one member’s .125% membership interest for $2,000.

 

See independent accountants’ review report.

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VRONA & VAN SCHUYLER CPAs, PLLC

CERTIFIED PUBLIC ACCOUNTANTS

 

Wendcharles I, LLC

Notes to the Financial Statements

December 29, 2013 and December 30, 2012

 

Note 6—Related Party Transactions—(Continued):

 

(C)

Note Payable:

In March 2010 the Company borrowed $250,000 from Wen-Restaurants Associates L.P. Both Companies have common owners but are not under common control.

Note 7—Pension Plan

The Company maintains a qualified cash or deferred compensation plan under section 401(K) of the Internal Revenue Code. Under the plan, employees may elect to defer up to (15%) of their salary, subject to Internal Revenue Service limits. A discretionary matching contribution may be made by the Company and added to each participant’s account. Company contributions for the plan amounted to $0 for 2013 and $0 for 2012.

Note 8—Subsequent Event

Subsequent events have been evaluated through the date the financial statements were issued, as reflected on the independent accountants’ review report.

 

See independent accountants’ review report.