Statement of Changes In Stockholders' Equity
............ 6
Statement of Cash Flows....................7
Notes to Financial Statements.................8 - 13
Supplementary
Information
Costs of Contracts......................14
General and Administrative Expenses ...............15
Contracts in Progress....................16
Completed Contracts.....................17
INDEPENDENT
ACCOUNTANT'S REPORT
To
the Board of Directors
COMPANY,
Inc.
CITY,
STATE, ZIP
We
have reviewed the accompanyingbalance
sheets of COMPANY, Inc., a corporation, as of December 31, 2006 and 2005 and
the related statements of operations, retained earnings, and cash flows for the
years then ended, in accordance with Statements on Standards for Accounting and
Review Services issued by the American Institute of Certified Public
Accountants.All information included in
these financial statements is the representation of the management of COMPANY,
Inc.
A
review consists principally of inquiries of Company personnel and analytical
procedures applied to financial data.It
is substantially less in scope than an audit in accordance with generally
accepted auditing standards, the objective of which is the expression of an
opinion regarding the financial statements taken as a whole.Accordingly, we do not express such an opinion.
Based
on our review, 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 generally accepted accounting principles.
Our
review was made for the purpose of expressing limited assurance that there are
no material modifications that should be made to the financial statements in
order for them to be in conformity with generally accepted accounting
principles.The information included in
the accompanying supplementary schedules is presented only for supplementary
analysis purposes.Such information has
been subjected to the inquiry and analytical procedures applied in the review
of the basic financial statements, and we are not aware of any material
modifications that should be made thereto.
Certified
Public Accountants
ACCOUNTING
FIRM.
March
7, 2008
COMPANY,
INC.
STATEMENT OF CHANGES IN
STOCKHOLDERS' EQUITY
YEARS
ENDED DECEMBER 31, 2006 AND 2005
TOTAL
STOCK-
COMMON STOCKPAID-INRETAINEDHOLDER'S
SHARESAMOUNTCAPITALEARNINGS EQUITY
BALANCE--
December 31, 20040$0$0$
0$ 0
Net
Income For
Year Ended
December 31, 200500 000
BALANCE--
December 31, 20050$0$0$
0$ 0
Net
Income For
Year Ended
December 31, 200600
BALANCE--
December 31, 20060$0$0$ 0$ 0
See
Accountant's Review Report and Notes to Financial Statements.
NOTE
1 - NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Nature
of Business - The Company is in the business of electrical contracting,
which includes the installation, removal and demolition of electrical systems.
Revenue
and Cost Recognition - Revenue from construction contracts
is recognized on the percentage-of-completion method, measured by the
proportion of costs incurred to date to estimated total costs on each job.This method is used because management
considers costs incurred to be the best available measure of progress on
contracts in process.
Construction
costs of projects under contract include all direct material and labor costs
and those indirect costs related to contract performance.Selling, general, and administrative costs
are charged to expense as incurred.Provisions for estimated losses on the uncompleted contracts are made in
the period in which such losses are determined.Changes in estimated profitability are recognized in the period in which
the revisions are determined.The costs
of construction contracts are charged to earnings on the
percentage-of-completion method used to recognize revenues.
Use
of Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect certain reported amounts and
disclosures.Accordingly, actual results
could differ from those estimates.
Inventory -
Inventory consists of materials and supplies that have not been charged to
specific contracts and are stated at the lower of cost, determined by the
first-in, first-out method, or market.Maintenance, operating and office supplies are expensed as purchased.
Property
and Equipment - Property and equipment are recorded at cost.Depreciation is computed using straight-line
and accelerated methods over the estimated useful lives of the assets.Costs of maintenance and repairs are charged
to expense when incurred.
Bad
Debts - The Company has adopted the direct write-off method of
recognizing bad debts.Accounts are,
therefore, written-off in full in the period in which they become
uncollectible.Based upon the
corporation's favorable collection experience, an allowance for doubtful
accounts is not considered necessary.
Income
Taxes - Income taxes are provided for the tax effects of
transactions reported in the financial statements and consist of taxes
currently due plus deferred taxes related primarily to differences between the
bases of certain assets and liabilities for financial and tax reporting.The deferred tax represents the future tax
return consequences of those differences, which will either be taxable when the
assets and liabilities are recovered or settled.
Cash
and Cash Equivalents - For the purpose of the statement of
cash flows, cash and cash equivalents include money market accounts and any
highly liquid debt instruments purchased with a maturity of three months or
less.
Depreciation -
Depreciation is computed by using the straight-line method for financial
reporting purposes and the modified accelerated cost recovery system for
federal income tax purposes.
See
Accountants Review Report.
NOTE
2 - CONTRACTS RECEIVABLE
Contract
receivables consist of:
20062005
Billed
Completed Contracts$0$0
Contracts in Progress00
Retainages00
$0$0
Receivables
from one customer in the amount of $1,000,000 represents 41% and $800,000 from
a different customer represents 82% of total contract receivables for December
31, 2006 and 2005, respectively.
NOTE
3 - CONTRACTS IN PROGRESS
Costs
incurred to date, estimated earnings and the related progress billings to date
on contracts in progress are as follows at:
20062005
Costs
Incurred to Date$0$0
Estimated
Earnings00
Revenue
Recognized00
Less:Billings to Date (0)(0)
$0$0
Included
in the accompanying balance
sheets under the following captions:
Costs
and Estimated Earnings
in Excess of Billings on
Uncompleted Contracts$0$0
Billings
in Excess of Costs
and Earnings on Uncompleted
Contracts(0)(0)
$0$0
See Accountant's Review Report.
NOTE
4 - BACKLOG
The
following schedule summarizes changes in backlog on contracts during the period
ended December 31, 2006.Backlog
represents the amount of revenue the Company expects to realize from work to be
performed on uncompleted contracts in progress at year end.
Backlog
Balance at December 31, 2005$0
New
Contracts During the Period0
Less:
Contract Revenue Earned During the Year(0)
Backlog
Balance at December 31, 2006$0
NOTE
5 - NOTE RECEIVABLE - STOCKHOLDERS
The company had the following short term
officer receivable balances at December 31:
20062005
PERSON
1$0$0
PERSON
200
PERSON
300
Total$0$0
NOTE
6 - PROPERTY AND EQUIPMENT
Cost
of property and equipment and depreciable lives are summarized as follows:
Depreciable
20062005Life-Years
Leasehold
Improvements$0$039
Furniture
and Fixtures005 -
10
Tools
and Equipment005 - 10
Vehicles003
- 7
Total Cost of Property 00
Accumulated
Depreciation(0)(0)
Net Carrying Amount$0$0
Depreciation
expenses aggregated $0 in 2006 and $0 in 2005.
See Accountant's Review Report.
NOTE
7 - CASH SURRENDER VALUE, LIFE INSURANCE
The
Company is the beneficiary of life insurance policies as follows at December
31, 2006:
InsuranceCash Surrender Value
Amount 20062005
PERSON
1$0$0$0
PERSON
2000
PERSON
3000
PERSON
4000
Total$0$0$0
NOTE
8 - BANK LINE OF CREDIT
A
revolving line of credit, which bears interest at the bank's prime rate, 4.5%
at December 31, 2006, is provided to Company, Inc. under the terms of a credit
agreement dated June 1, 2006 that expires May 1, 2007.The terms of the agreement allow the
corporation to borrow up to $700,000 for operating capital, restricted by
certain availability calculations.At
December 31, 2006, $500,000 was outstanding under the line of credit.The line of credit is secured by contracts
receivable, fixed assets and inventory, as well as the personal guarantee of
the Stockholders.
NOTE
9 - LONG-TERM DEBT
Long-term
notes consist of the following:
20062005
Note
Payable – PERSON 1, interest at
9%,
payable in minimum monthly installments
of
$4,200 beginning Octobe 29, 1998 until
the
entire principal balance as well as accrued
interest
is paid in full, no later than 10 years
from
the loan date.$0$0
Note
Payable – BIG BANK, interest at
Prime
Rate, payable in monthly installments
of
$6,299beginning January 1, 2004 until the
entire
principle as well as accrued interest is
paid
in full, no later than December 4, 2005.256,7800
Less:Current Portion(0)(0)
Long-term
Debt$0$0
See
Accountant's Review Report.
NOTE
9 - LONG - TERM DEBT (Continued...)
Interest
expense totaled $31,899 for 2006 and $21,455 for 2005.Principal Maturities are as follows for the
next three years ending December 31:
2002$0
20030
20040
$0
NOTE
10 - LEASE AGREEMENTS
The
Company subleases approximately 5,000 square feet of warehouse space and 500
square feet of office space to a tenant to be used for building projects.The lease expired on October 31, 2005A new lease agreement is in progress and
monthly lease payments of $1,300 are being paid on a month-to-month basis.
The
Company subleases approximately 3,000 square feet of warehouse space to a
tenant to be used as a wood working shop.The lease is dated July 25, 1998 and expired on July 31, 2005.A new lease agreement is in progress and
monthly lease payments of $2,000 are being paid on a month-to-month basis.
NOTE
11 - INCOME TAXES
The
provisions for income taxes consist of the following components:
20062005
Current
- Federal$0$0
- State00
Deferred
- Federal00
Total
Income Tax Expense$0$0
Deferred
taxes are recognized for temporary differences between the basis of assets and
liabilities for financial statement and income tax purposes.The differences relate primarily to
depreciable assets using accelerated depreciation methods for income tax
purposes.
The
Company=s
provision for income taxes differs from applying the statutory U.S. federal
income tax rate to income before taxes.The primary differences result from providing for state income taxes and
from deducting certain expenses for financial statement purposes but not for
federal income tax purposes.
See Accountant's Review Report.
NOTE
12 - PENSION EXPENSE
Certain
employees are covered by a union-sponsored, collectively bargained
Multi-Employer Pension Plan.The Company
contributed and charged to expense $318,681 and $458,084 for 2006 and 2005,
respectively.These contributions are
determined in accordance with the provisions of negotiated labor contracts and
generally are based on the number of hours worked.At December 31, 2006, the Company had no
liability for unfunded vested benefits of this plan.
NOTE
13 - PROFIT SHARING PLAN & TRUST
The
Company has adopted as of January 1, 1999,a profit sharing plan and trust which covers all employees who meet the
plan=s
eligibility and participation requirements.Contributions are subject to the discretion of the Board of Directors and are distributed based
on compensation, not to exceed annual dollar limits set by law.Contributions are held and invested by the
plan=s
Trustees and accounts are credited annually with a share of the investment
earnings or losses of the trust fund.The Company contributed $40,000 and $25,000 in 2001 and 2000,
respectively.
NOTE
14 - RELATED PARTIES
The
Company leases its office and warehouse facilities from a company related by
common ownership.The rental agreement
is on an annual basis, with monthly rents of $12,317.Rents of $147,804 and $147,804 were paid
during 2006 and 2005, respectively.
NOTE
14 - SUBSEQUENT EVENTS
On
February 1, 2007, the Company received $800,000 from a customer included in
contracts receivable at December 31, 2006 (see note 2).On February 4, 2007 the Company paid $350,000
on the bank line of credit (see note 8).
See
Accountant's Review Report.
20062005
Cash Flows From Operating Activities:
Net Income $0$0
Adjustments to Reconcile Net Income to Net Cash
Provided (Used) by Operating Assets and
Liabilities:
Depreciation00
Gain/Loss on Fixed Asset Disposals0 0
Changes in Operating Assets and Liabilities
Contracts Receivable(0)(0)
Cost and Estimated
Earnings in Excess
of Billings on Uncompleted
Contracts(0)(0)
Inventory(0)0
Prepaid Expense(0)0
Accounts Payable00
Billings in Excess
of Cost and Estimated
Earnings on Uncompleted Contracts0(0)
Accrued
Expenses00
Net Cash Provided (Used) by Operating Activities(0)(0)
Cash Flows From Investing Activities:
Capital Expenditures(0)(0)
Proceeds From Sale of Assets00
Loans to Shareholders(0)0
Cash Surrender Value of Officer's Life Insurance(0)(0)
Net Cash Provided (Used) By Investing Activities(0)(0)
Cash Flows From Financing Activities:
Proceeds From Borrowing 00
Principal Payments on Long Term Debt(0)(0)
Net Cash Provided (Used) By Financing Activities00
Net Increase (Decrease) In Cash And Equivalents0(0)
Cash And Equivalents
Beginning of Year00
End of Year$0$0
Supplemental Disclosure of Cash Flow:
Cash paid during year for:
Interest$0$0
Income Taxes$0$0
See Accountants Review Report and Notes to Financial
Statements.
