Attached files
Exhibit 99.1
CSC WARNER ROBINS, LLC
STATEMENT OF REVENUES AND CERTAIN EXPENSES
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019
(UNAUDITED)
AND FOR THE YEAR ENDED DECEMBER 31, 2018
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INDEPENDENT AUDITOR’S REPORT
To the Members of:
CSC Warner Robins, LLC
We have audited the accompanying statement of revenue and certain
expenses of CSC Warner Robins, LLC (the “Company”) for
the year ended December 31, 2018 and the related notes to the
statement of revenue and certain expenses.
Management’s responsibility for Statement of Revenue and
Certain Expenses
Management is responsible for the preparation and fair presentation
of the statement or revenue and certain expenses in conformity with
U.S. generally accepted accounting principles. This includes the
design, implementation, and maintenance of internal control
relevant to the preparation and fair presentation of the statement
of revenue and certain expenses that are free from material
misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on the statement of
revenue and certain expenses based on our audit. We conducted our
audit in accordance with auditing standards generally accepted in
the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the
statement of revenue and certain expenses is free from material
misstatement.
An audit involves performing procedures to obtain audit evidence
about the amounts and disclosures in the statement of revenue and
certain expenses. The procedures selected depend on the
auditor’s judgement, including the assessment of the risks of
material misstatement of the statement of revenue and certain
expenses, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the
entity’s preparation and fair presentation of the statement
of revenue and certain expenses in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the entity’s
internal control. Accordingly, we express no such opinion. An audit
also includes evaluating the appropriateness of accounting policies
used and the reasonableness of significant accounting estimates
made by management, as well as evaluating the overall presentation
of the statement of revenue and certain expenses.
We believe that our audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit
opinion.
Opinion
In our
opinion, the statement of revenue and certain expenses referred to
above presents fairly, in all material respects, the statement of
revenue and certain expenses described on Note 1 of the
Company’s statement of revenue and certain expenses for the
year ended in conformity with generally accepted accounting
principles.
Emphasis of Matter
We draw
attention to Note 1 to the statement of revenue and certain expenses,
which describes that the accompanying statement of revenue and
certain expenses was prepared for the purposes of complying with
the rules and regulations of the Securities and Exchange Commission
and is not intended to be a complete presentation of the Company’s revenue and expenses.
Our opinion is not modified with respect to this
matter.
/s/
Liggett & Webb, P.A.
LIGGETT
& WEBB, P.A.
Certified Public Accountants
Boynton
Beach, Florida
January
9, 2020
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CSC WARNER ROBINS, LLC
STATEMENT OF REVENUES AND CERTAIN EXPENSES
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019
(UNAUDITED)
AND FOR THE YEAR ENDED DECEMBER 31, 2018
|
|
For
the
Nine
Months Ended
September
30, 2019
|
For
the
Year
Ended December 31, 2018
|
|
|
(unaudited)
|
|
|
REVENUE:
|
|
|
|
Rental
and Related Income
|
$384,714
|
505,695
|
|
Total
Revenues
|
384,714
|
505,695
|
|
|
|
|
|
CERTAIN
EXPENSES:
|
|
|
|
Repairs
and Maintenance
|
7,068
|
9,550
|
|
Insurance
|
11,532
|
14,352
|
|
Utilities
|
40,120
|
46,320
|
|
Real
Estate Taxes
|
19,821
|
26,674
|
|
Salaries
and Wages
|
40,972
|
65,833
|
|
Bad
Debt
|
13,994
|
4,030
|
|
General
and Administrative Expense
|
47,741
|
65,008
|
|
Total
Certain Expenses
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181,248
|
231,767
|
|
|
|
|
|
REVENUE
IN EXCESS OF CERTAIN EXPENSES
|
$203,466
|
$273,928
|
See accompanying notes to statement of revenue and certain
expenses
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CSC WARNER ROBINS, LLC
NOTES TO STATEMENT OF REVENUES AND CERTAIN
EXPENSES
NOTE 1
– SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES AND
ORGANIZATION
(A)
Organization and Basis of
Presentation
CSC Warner Robins, LLC (the “Company”) was formed as a
limited liability company under the laws of the State of
Georgia.
The accompanying statement of revenues and certain expenses has
been prepared for the purpose of complying
with Rule 3-14 of Regulation
S-X promulgated under the
Securities Act of 1933, as amended, and accordingly, is not representative of the
actual results of operations of the properties for the periods
presented, due to the exclusion of the following revenues and
expenses which may not be comparable to the proposed future
operations:
●
Depreciation and
amortization
●
Interest income and
expense
Except as noted above, management is not aware of any material
factors relating to the properties that would cause the reported
financial information not to be indicative of future operating
results. In the opinion of management, all adjustments (consisting
solely of normal recurring adjustments) necessary for the fair
presentation of this statement of revenues and certain expenses
have been included.
(B) Use of Estimates
In preparing financial statements in conformity with generally
accepted accounting principles, management is required to make
estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosure of contingent assets and
liabilities at the date of the financial statements and revenues
and expenses during the reported period. Actual results could
differ from those estimates.
(C) Business Segments
The Company operates in one segment and therefore segment
information is not presented.
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(D) Operating Expenses
Operating expenses represent the direct expenses of operating the
properties and consist primarily of real estate taxes, payroll,
repairs and maintenance, utilities, insurance and other operating
expenses that are expected to continue in the proposed future
operations of the properties.
(E) Revenue Recognition
The Company follows Topic 606 of the FASB Accounting Standards
Codification for revenue recognition and ASU 2014-09. On January 1,
2018, the Company adopted ASU 2014-09, which is a comprehensive new
revenue recognition model that requires revenue to be recognized in
a manner to depict the transfer of goods or services to a customer
at an amount that reflects the consideration expected to be
received in exchange for those goods or services. The Company
considers revenue realized or realizable and earned when all the
five following criteria are met: (1) identify the contract with a
customer, (2) identify the performance obligations in the contract,
(3) determine the transaction price, (4) allocate the transaction
price to the performance obligations in the contract, and (5)
recognize revenue when (or as) the entity satisfies a performance
obligation. Results for reporting periods beginning after January
1, 2018 are presented under ASU 2014-09, while prior period amounts
are not adjusted and continue to be reported under the previous
accounting standards. There was no impact to revenues as a result
of applying ASU 2014-09 for the period ended September 30, 2019,
and there have not been any significant changes to our business
processes, systems, or internal controls as a result of
implementing the standard. The Company recognizes rental income
revenues on a monthly basis based on the terms of the lease
agreement which are for either the land or a combination of both,
the mobile home and land. Home sales revenues are recognized upon
the sale of a home with an executed sales agreement. The Company
has deferred revenues from home lease purchase options and records
those option fees as deferred revenues and then records them as
revenues when (1) the lease purchase option term is completed and
title has been transferred, or (2) the leaseholder defaults on the
lease terms resulting in a termination of the agreement which
allows us to keep any payments as liquidated damages.
(F) Recent Accounting Pronouncements
In June 2016, the FASB issued ASU No. 2016-13, “Financial
Instruments – Credit Losses (Topic 326): Measurement of
Credit Losses on Financial Instruments.” ASU 2016-13 requires
that entities use a new forward looking “expected loss”
model that generally will result in the earlier recognition of
allowance for credit losses. The measurement of expected credit
losses is based upon historical experience, current conditions, and
reasonable and supportable forecasts that affect the collectability
of the reported amount. ASU No. 2016-13 is effective for annual
reporting periods, including interim reporting periods within those
periods, beginning after December 15, 2019. The Company is
currently evaluating the potential impact this standard may have on
the financial statements.
In February 2016, the FASB issued ASU 2016-02,
“Leases.” ASU 2016-02 amends the existing accounting
standards for lease accounting, including requiring lessees to
recognize most leases on their balance sheets and making targeted
changes to lessor accounting. The standard requires a modified
retrospective transition approach for all leases existing at, or
entered into after, the date of initial application, with an option
to use certain transition relief. ASU 2016-02 will be effective for
annual reporting periods beginning after December 15, 2019. Early
adoption is permitted. The Company has evaluated the potential
impact this standard may have on the financial statements and
determined that it had no impact on the financial
statements.
In June 2018, the FASB issued ASU 2018-07 “Compensation
– Stock Compensation (Topic 718): Improvements to Nonemployee
Share-Based Payment Accounting.” This ASU relates to the
accounting for non-employee share-based payments. The amendment in
this Update expands the scope of Topic 718 to include all
share-based payment transactions in which a grantor acquired goods
or services to be used or consumed in a grantor’s own
operations by issuing share-based payment awards. The ASU excludes
share-based payment awards that relate to (1) financing to the
issuer or (2) awards granted in conjunction with selling goods or
services to customers as part of a contract accounted for under
Topic 606, “Revenue from Contracts from Customers.” The
share-based payments are to be measured at grant-date fair value of
the equity instruments that the entity is obligated to issue when
the good or service has been delivered or rendered and all other
conditions necessary to earn the right to benefit from the equity
instruments have been satisfied. This standard will be effective
for public business entities for fiscal years beginning after
December 15, 2018, including interim periods within that fiscal
year. For all other entities, the amendments are effective for
fiscal years beginning after December 15, 2019, and interim periods
within fiscal years beginning after December 15, 2020. Early
adoption is permitted, but no earlier than an entity’s
adoption of Topic 606. The Company is currently reviewing the
provisions of this ASU to determine if there will be any impact on
the results of operations, cash flows or financial
condition.
Management does not believe that any other recently issued, but not
yet effective accounting pronouncements, if adopted, would have a
material effect on the accompanying financial
statements.
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NOTE 2
– COMMITMENTS
AND CONTINGENCIES
From time to time, the Company may become involved in various
lawsuits and legal proceedings, which arise in the ordinary course
of business. However, litigation is subject to inherent
uncertainties, and an adverse result in these or other matters may
arise that may harm its business. The Company is currently not
aware of any such legal proceedings or claims that they believe
will have, individually or in the aggregate, a material adverse
effect on its business, financial condition or operating
results.
NOTE 3
– CONCENTRATION OF
RISK
The Company’s manufactured housing community is located in
Georgia. These concentrations of assets are subject to the risks of
real property ownership and local and national economic growth
trends.
NOTE 4 – INCOME TAXES
The Company has elected to be taxed as a partnership for federal
income tax purposes. Accordingly, the Company will assign to its
members a distributive share of all income, expense, depreciation,
and other items, and no provision for income taxes has been
included in the accompanying financial statements.
NOTE 5
– SUBSEQUENT
EVENTS
On
August 5, 2019, the Company entered into a purchase agreement
(“Purchase Agreement”) with MHP Pursuits LLC, pursuant
to which MHP Pursuits LLC agreed to purchase all of the assets of
the Company for $5.3 million. On November 14, 2019, closing of the
Purchase Agreement was completed.
In
preparing these financial statements, the Company has evaluated
events and transactions for potential recognition or disclosure
through January 9, 2020, the date the financial statements were
issued.
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