08/29/2024 | Press release | Distributed by Public on 08/29/2024 14:01
AMPLEX ELECTRIC, INC.
LUCKEY, OHIO
FINANCIAL STATEMENTS
FOR THE YEARS ENDED OCTOBER 31, 2023 AND 2022
AND
REPORT OF CERTIFIED PUBLIC ACCOUNTANTS
Bolinger, Segars, Gilbert & Moss, L.L.P.
CERTIFIED PUBLIC ACCOUNTANTS
LUBBOCK, TEXAS
AMPLEX ELECTRIC, INC.
LUCKEY, OHIO
FINANCIAL STATEMENTS
FOR THE YEARS ENDED OCTOBER 31, 2023 AND 2022
AND
REPORT OF CERTIFIED PUBLIC ACCOUNTANTS
BOLINGER, SEGARS, GILBERT & MOSS, L.L.P.
CERTIFIED PUBLIC ACCOUNTANTS
AMPLEX ELECTRIC, INC.
LUCKEY, OHIO
FINANCIAL STATEMENTS
FOR THE YEARS ENDED OCTOBER 31, 2023 AND 2022
TABLE OF CONTENTS
Statement Identification |
Page No. |
|
Independent Auditor's Report |
1 |
|
Financial Statements |
||
Balance Sheets |
Exhibit A |
3 |
Statements of Income |
Exhibit B |
4 |
Statements of Stockholders' Equity |
Exhibit C |
5 |
Statements of Cash Flows |
Exhibit D |
6 |
Notes to Financial Statements |
7 |
BOLINGER, SEGARS, GILBERT & MOSS, L.L.P.
CERTIFIED PUBLIC ACCOUNTANTS
Bolinger, Segars, Gilbert & Moss, L.L.P.
CERTIFIED PUBLIC ACCOUNTANTS
PHONE: (806) 747-3806
FAX: (806) 747-3815)
8215 NASHVILLE AVENUE
LUBBOCK, TEXAS 79423-1954
Independent Auditor's Report
Board of Directors
Amplex Electric, Inc.
Luckey, Ohio
Opinion
We have audited the accompanying financial statements of Amplex Electric, Inc., which comprise the balance sheets as of October 31, 2023 and 2022 and the related statements of income, stockholders' equity, and cash flows for the years then ended, and the related notes to the financial statements.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Amplex Electric, Inc. as of October 31, 2023 and 2022, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of Amplex Electric, Inc. (the Company) and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with GAAS; this includes the design, implementation, and maintenance of internal control relevant to the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern within one year after the date that the financial statements are available to be issued.
1
BOLINGER, SEGARS, GILBERT & MOSS, L.L.P.
CERTIFIED PUBLIC ACCOUNTANTS
Auditor's Responsibility for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users made on the basis of these financial statements.
In performing an audit in accordance with GAAS, we:
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit.
Certified Public Accountants |
Lubbock, Texas
February 16, 2024
2
BOLINGER, SEGARS, GILBERT & MOSS, L.L.P.
CERTIFIED PUBLIC ACCOUNTANTS
AMPLEX ELECTRIC, INC.
Exhibit A
BALANCE SHEETS
OCTOBER 31, 2023 AND 2022
ASSETS |
||||
October 31, |
||||
2023 |
2022 |
|||
CURRENT ASSETS |
||||
Cash and Cash Equivalents |
$ |
369,721 |
$ |
473,676 |
Accounts Receivable |
||||
Due from Customers (Less allowance for uncollectible |
132,663 |
104,891 |
||
Accounts Receivable - Affiliate |
427,655 |
150,224 |
||
Materials and Supplies |
553,545 |
528,738 |
||
Current Portion of Prepaid Fiber Lease |
8,864 |
8,864 |
||
Prepayments |
414,770 |
131,038 |
||
$ |
1,907,218 |
$ |
1,397,431 |
|
OTHER NONCURRENT ASSETS |
||||
Investments in Equity Securities |
$ |
- |
$ |
306,163 |
Prepaid Fiber Lease, Less Current Portion |
19,206 |
28,070 |
||
Intangibles, Net of Amortization |
694,400 |
729,992 |
||
$ |
713,606 |
$ |
1,064,225 |
|
PROPERTY AND EQUIPMENT |
||||
Plant In Service |
$ |
21,039,423 |
$ |
15,781,988 |
Plant Under Construction |
719,936 |
397,934 |
||
$ |
21,759,359 |
$ |
16,179,922 |
|
Less: Accumulated Depreciation |
7,351,112 |
5,772,658 |
||
$ |
14,408,247 |
$ |
10,407,264 |
|
DEFERRED CHARGES |
$ |
19,589 |
$ |
17,164 |
TOTAL ASSETS |
$ |
17,048,660 |
$ |
12,886,084 |
LIABILITIES AND STOCKHOLDERS' EQUITY |
||||
CURRENT LIABILITIES |
||||
Current Portion of Long-Term Debt |
$ |
535,547 |
$ |
333,943 |
Accounts Payable |
1,213,749 |
622,818 |
||
Other Current Liabilities |
6,795 |
13,442 |
||
Deferred Service Revenues |
475,152 |
438,156 |
||
Compensated Absences |
108,423 |
74,497 |
||
Accrued Interest Payable |
38,525 |
24,553 |
||
$ |
2,378,191 |
$ |
1,507,409 |
|
NONCURRENT LIABILITIES |
||||
Long-Term Debt, Less Current Portion |
$ |
6,627,108 |
$ |
4,582,804 |
Unamortized Debt Issuance Costs |
(134,991 |
) |
(139,241 |
) |
Deferred Income Taxes |
1,604,789 |
1,353,672 |
||
$ |
8,096,906 |
$ |
5,797,235 |
|
STOCKHOLDERS' EQUITY |
||||
Common Stock, 25,000 Shares Authorized, 21,000 |
$ |
50,000 |
$ |
50,000 |
Retained Earnings |
6,523,563 |
5,531,440 |
||
$ |
6,573,563 |
$ |
5,581,440 |
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$ |
17,048,660 |
$ |
12,886,084 |
See accompanying notes to financial statements.
3
BOLINGER, SEGARS, GILBERT & MOSS, L.L.P.
CERTIFIED PUBLIC ACCOUNTANTS
AMPLEX ELECTRIC, INC.
Exhibit B
STATEMENTS OF INCOME
FOR THE YEARS ENDED OCTOBER 31, 2023 AND 2022
October 31, |
|||||
2023 |
2022 |
||||
OPERATING REVENUES |
|||||
Wireless Internet Services |
$ |
7,299,416 |
$ |
7,180,643 |
|
Fiber Internet Services |
2,045,394 |
1,315,378 |
|||
VoIP Services |
534,791 |
432,018 |
|||
Streaming Video Services |
555,682 |
354,751 |
|||
Miscellaneous Income |
356,780 |
191,005 |
|||
Uncollectible Recoveries (Revenues) |
1,047 |
(300 |
) |
||
Total Operating Revenues |
$ |
10,793,110 |
$ |
9,473,495 |
|
OPERATING EXPENSES |
|||||
Cost of VoIP |
$ |
83,325 |
$ |
76,156 |
|
Cost of Internet Services |
663,478 |
563,730 |
|||
Cost of Streaming Video |
483,104 |
304,501 |
|||
Plant Specific Operations |
1,465,057 |
1,504,147 |
|||
Plant Nonspecific Operations |
956,182 |
612,686 |
|||
Depreciation and Amortization |
1,620,197 |
1,207,045 |
|||
Customer Operations |
639,617 |
567,239 |
|||
Corporate Operations |
3,090,847 |
2,909,060 |
|||
General Taxes |
155,520 |
144,846 |
|||
Total Operating Expenses |
$ |
9,157,327 |
$ |
7,889,410 |
|
OPERATING INCOME |
$ |
1,635,783 |
$ |
1,584,085 |
|
OTHER INCOME (EXPENSE) |
|||||
Interest and Dividend Income |
$ |
11,831 |
$ |
2,326 |
|
Unrealized Gains (Losses) on Equity Securities |
(1,301 |
) |
|||
Gain on Sale of Assets |
28,186 |
8,950 |
|||
Amortization of Debt Issuance Cost |
(14,036 |
) |
(10,421 |
) |
|
Interest Expense |
(417,483 |
) |
(127,999 |
) |
|
Other, Net |
(1,041 |
) |
10,422 |
||
$ |
(392,543 |
) |
$ |
(118,023 |
) |
NET INCOME BEFORE INCOME TAXES |
$ |
1,243,240 |
$ |
1,466,062 |
|
Income Tax Expense |
251,117 |
307,127 |
|||
NET INCOME |
$ |
992,123 |
$ |
1,158,935 |
See accompanying notes to financial statements.
4
BOLINGER, SEGARS, GILBERT & MOSS, L.L.P.
CERTIFIED PUBLIC ACCOUNTANTS
AMPLEX ELECTRIC, INC.
Exhibit C
STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED OCTOBER 31, 2023 AND 2022
Common Stock |
Retained |
||||||
Shares |
Cost |
Earnings |
Total |
||||
Balance, November 1, 2021 |
21,000 |
$ |
50,000 |
$ |
4,372,505 |
$ |
4,422,505 |
Net Income |
1,158,935 |
1,158,935 |
|||||
Balance, October 31, 2022 |
21,000 |
$ |
50,000 |
$ |
5,531,440 |
$ |
5,581,440 |
Net Income |
992,123 |
992,123 |
|||||
Balance, October 31, 2023 |
21,000 |
$ |
50,000 |
$ |
6,523,563 |
$ |
6,573,563 |
See accompanying notes to financial statements.
5
BOLINGER, SEGARS, GILBERT & MOSS, L.L.P.
CERTIFIED PUBLIC ACCOUNTANTS
AMPLEX ELECTRIC, INC.
Exhibit D
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED OCTOBER 31, 2023 AND 2022
October 31, |
||||||
2023 |
2022 |
|||||
CASH FLOWS FROM OPERATING ACTIVITIES |
||||||
Net Income |
$ |
992,123 |
$ |
1,158,935 |
||
Adjustments to Reconcile Net Income to Net Cash from Operating Activities: |
||||||
Depreciation |
1,584,605 |
1,171,452 |
||||
Amortization of Intangibles |
35,592 |
35,593 |
||||
Amortization of Debt Issuance Costs |
14,036 |
10,421 |
||||
Deferred Income Taxes |
251,117 |
307,127 |
||||
Gain on Sale of Assets |
(28,186 |
) |
(8,950 |
) |
||
Unrealized Loss on Equity Securities |
1,301 |
|||||
Receivables |
(305,203 |
) |
(71,688 |
) |
||
Materials and Supplies |
(24,807 |
) |
(124,265 |
) |
||
Prepayments |
(283,732 |
) |
11,087 |
|||
Prepaid Fiber Lease |
8,864 |
8,864 |
||||
Accounts Payable |
590,931 |
(43,727 |
) |
|||
Deferred Service Revenues |
36,996 |
(33,208 |
) |
|||
Deferred Charges |
(2,425 |
) |
(17,164 |
) |
||
Other Current Liabilities |
41,251 |
36,757 |
||||
Net Cash from Operating Activities |
$ |
2,911,162 |
$ |
2,442,535 |
||
CASH FLOWS FROM INVESTING ACTIVITIES |
||||||
Additions to Telecommunications Plant |
$ |
(5,557,402 |
) |
$ |
(5,206,151 |
) |
Sales of Equity Securities |
301,163 |
|||||
Purchases of Equity Securities |
(300,250 |
) |
||||
Net Cash from Investing Activities |
$ |
(5,256,239 |
) |
$ |
(5,506,401 |
) |
CASH FLOWS FROM FINANCING ACTIVITIES |
||||||
Proceeds from Long-Term Borrowing |
$ |
2,413,605 |
$ |
3,043,897 |
||
Debt Issuance Costs |
(9,786 |
) |
(79,385 |
) |
||
Repayment of Long-Term Debt |
(167,697 |
) |
(130,951 |
) |
||
Net Cash from Financing Activities |
$ |
2,236,122 |
$ |
2,833,561 |
||
NET CHANGE IN CASH AND CASH EQUIVALENTS |
$ |
(108,955 |
) |
$ |
(230,305 |
) |
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR |
473,676 |
703,981 |
||||
CASH AND CASH EQUIVALENTS - END OF YEAR |
$ |
369,721 |
$ |
473,676 |
||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION |
||||||
Cash Paid During the Year for: |
||||||
Interest |
$ |
417,483 |
$ |
127,999 |
||
Income Taxes |
$ |
0 |
$ |
0 |
See accompanying notes to financial statements.
6
BOLINGER, SEGARS, GILBERT & MOSS, L.L.P.
CERTIFIED PUBLIC ACCOUNTANTS
AMPLEX ELECTRIC, INC.
NOTES TO FINANCIAL STATEMENTS
Nature of Operations
Amplex Electric, Inc. (the Company) is a provider of broadband internet, voice over internet protocol (VOIP), and video services within a service area located primarily in Northwest and Northcentral Ohio.
System of Accounts
The accounting records of the Company conform to the Uniform System of Accounts prescribed by the Federal Communications Commission for telephone companies.
Revenue Recognition
Monthly service plan revenues derived from VOIP and internet service are billed for services to be provided in the future. The portion of the revenues identified as out of period are deferred as service revenues at the end of each month.
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, Topic 606, which provides a new framework for the recognition of revenue.
All revenues are accounted for under ASC 606 because all operating revenues are considered to be contracts with customers.
Generally, revenues that are derived from customers are cancellable on a short-term basis and are billed monthly and recognized as revenue in the month that the performance obligation is fulfilled.
Sales of equipment and other services that are provided are considered to be a separate performance obligation. When equipment and installation is a distinct performance obligation, the Company records the sale of the equipment when the customer takes possession of the products and services are accepted by the customer.
Revenue recognized from fixed term contracts that bundle services or equipment is allocated based on the standalone selling price of all required performance obligations of the contract and any discounts are recognized over the contract term. Promotional discounts relating to bundled services are attributed to each required component of the bundled services. There were no material costs to acquire customer contracts that would be required to be deferred and amortized over the contract period.
Deferred service revenues represent amounts billed to customers for internet services not performed as of the years ended October 31, 2023 and 2022.
Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue.
7
BOLINGER, SEGARS, GILBERT & MOSS, L.L.P.
CERTIFIED PUBLIC ACCOUNTANTS
AMPLEX ELECTRIC, INC.
NOTES TO FINANCIAL STATEMENTS
Use of Estimates in the Preparation of Financial Statements
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 and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers cash and working funds to be cash and cash equivalents.
Concentrations of Credit Risk
Although the Company maintains their deposits in federally insured institutions, deposits may at times exceed insured amounts. Deposit accounts are insured up to $250,000.
Investments
The Company has adopted FASB ASU 2016-01, Financial Instruments: Recognition and Measurement of Financial Assets and Financial Liabilities, Topic 321, which provides guidance for the initial and subsequent recognition of financial assets.
Topic 321 eliminates the distinction between trading and available for sale equity securities. Equity investments are valued at fair value with unrealized gains or losses recognized in net income. Prior amounts that were classified in Other Comprehensive Income are presented as a cumulative effect of the adoption of ASC 321 and are recorded in retained earnings.
Investment levels are based on inputs used to calculate fair market value of investments. Those inputs are defined for each level as follows:
Level 1 - Inputs include quoted prices in active markets for identical assets.
Level 2 - Inputs include available indirect information, such as quoted prices for similar assets in active markets, or quoted prices for identical or similar assets in markets that are not active.
Level 3 - Inputs are subjective and generally based on the entity's own assumptions on how knowledgeable parties would price assets and are developed using the best information available in the circumstances.
Securities transactions are recognized on the trade date (the date the order to buy or sell is executed). Income from investments is recorded as earned on an accrual basis.
Materials and Supplies
Materials and supplies are stated at the lower of cost or net realizable value.
Advertising Costs
The Company's policy is to directly expense all nondirect-response advertising costs as incurred. The total advertising costs for the years ended October 31, 2023 and 2022 were $159,531 and $130,036, respectively.
8
BOLINGER, SEGARS, GILBERT & MOSS, L.L.P.
CERTIFIED PUBLIC ACCOUNTANTS
AMPLEX ELECTRIC, INC.
NOTES TO FINANCIAL STATEMENTS
Trade Accounts Receivable
In the normal course of business, the Company recognizes accounts receivable for services billed. Accounts receivable are ordinarily due 30 days after the issuance of the invoice. Accounts past due more than 45 days are considered delinquent. No interest is accrued on delinquent outstanding balances. The Company provides an allowance for doubtful accounts, which is based upon a review of outstanding receivables, historical collection information and existing economic conditions.
Intangible Assets
Intangible assets with finite lives are being amortized on the straight-line basis over five years. Such assets are periodically evaluated as to the recoverability of carrying values.
Reclassifications
Certain amounts in the prior year financial statements have been reclassified for comparative purpose to conform to the presentation in the current year's financial statements.
The cost and fair value of equity securities as of October 31, 2022 are as follows:
October 31, 2022 |
|||||||
Cost |
Unrealized Gain |
Fair Value |
Investment Level |
||||
Marketable Securities |
|||||||
Multisector Bond Mutual Funds |
$ |
303,179 |
$ |
2,984 |
$ |
306,163 |
1 |
Unrealized holding gains and losses on such securities are included as a component of non-operating income. During the year ended October 31, 2023 the Company converted all investments into cash and cash equivalents.
Prepaid fiber leases consist of Indefeasible Right of Use (IRU) for portions of dark fiber with a telecommunications carrier. The Company made payment to the carrier and recognizes the expense over a period equal to the term of the IRU agreement. Prepaid fiber lease expenses as of October 31, 2023 are expected to be recognized as follows:
2024 |
$ |
8,864 |
2025 |
8,864 |
|
2026 |
8,864 |
|
2027 |
1,478 |
|
$ |
28,070 |
9
BOLINGER, SEGARS, GILBERT & MOSS, L.L.P.
CERTIFIED PUBLIC ACCOUNTANTS
AMPLEX ELECTRIC, INC.
NOTES TO FINANCIAL STATEMENTS
The carrying basis and accumulated amortization of recognized intangible assets at October 31, 2023 and 2022, were:
October 31, |
||||
2023 |
2022 |
|||
Amortized Intangible Assets |
||||
Internal Use Software |
$ |
177,962 |
$ |
177,962 |
Accumulated Amortization |
(109,542 |
) |
(73,950 |
) |
$ |
68,420 |
$ |
104,012 |
|
Unamortized Intangible Assets |
||||
ARIN allocated IPv4 Licenses |
$ |
46,080 |
$ |
46,080 |
FCC CBRS Licenses |
579,900 |
579,900 |
||
$ |
625,980 |
$ |
625,980 |
|
Total |
$ |
694,400 |
$ |
729,992 |
The Company's future cash flows are not materially impacted by its ability to extend or renew agreements related to its amortizable intangible assets.
Amortization expense for the years ended October 31, 2023 and 2022, was $35,592 and $35,593, respectively. Estimated amortization expense for each of the following two years is:
2024 |
$ |
35,592 |
2025 |
32,828 |
Plant in service is stated at original cost. Upon sale or retirement of an asset, the related costs and accumulated depreciation are removed from the accounts, and any gain or loss is recognized and included in gain (loss) on disposal of assets. The cost of maintenance and repairs is charged to operating expenses. The Company provides for depreciation on a straight-line basis at annual rates which will depreciate the property and equipment over its estimated useful life. Following are the major classes of property and equipment in service as of October 31, 2023 and 2022:
Original Cost |
Accumulated Depreciation |
||||||||
October 31, |
Depreciable |
October 31, |
|||||||
2023 |
2022 |
Life in Years |
2023 |
2022 |
|||||
Vehicles and Work Equipment |
$ |
1,361,184 |
$ |
1,228,233 |
5 - 7 |
$ |
1,138,960 |
$ |
975,599 |
Construction Equipment |
312,219 |
301,686 |
5 - 10 |
116,138 |
68,310 |
||||
Leasehold Improvements |
176,613 |
175,953 |
15 |
35,863 |
23,123 |
||||
Furniture and Fixtures |
316,282 |
244,834 |
5 |
199,992 |
160,458 |
||||
Network Equipment |
4,849,570 |
4,391,578 |
5 - 7 |
3,142,085 |
2,329,500 |
||||
Fiber Plant |
11,444,284 |
7,171,367 |
15 - 30 |
706,930 |
381,957 |
||||
Customer Premise Equipment |
2,528,971 |
2,221,827 |
4 - 5 |
1,991,017 |
1,820,918 |
||||
Video Equipment |
14,985 |
14,985 |
5 - 7 |
6,411 |
4,091 |
||||
Towers |
35,315 |
31,525 |
5 - 10 |
13,716 |
8,702 |
||||
$ |
21,039,423 |
$ |
15,781,988 |
$ |
7,351,112 |
$ |
5,772,658 |
The Company recognized depreciation expense of $1,584,605 and $1,171,452 for the years ended October 31, 2023 and 2022, respectively.
10
BOLINGER, SEGARS, GILBERT & MOSS, L.L.P.
CERTIFIED PUBLIC ACCOUNTANTS
AMPLEX ELECTRIC, INC.
NOTES TO FINANCIAL STATEMENTS
The Company uses the asset and liability method of accounting for income taxes. The objective of the asset and liability method is to establish deferred tax assets and liabilities for the temporary difference between the financial reporting basis and the tax basis of the Company's assets and liabilities at enacted tax rates expected to be in effect when such amounts are realized or settled. Income taxes are provided for tax effects of transactions reported in the financial statements and consist of taxes currently due, plus deferred taxes related primarily to accelerated depreciation and net operating loss (NOL) carryovers. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will result in a tax expense or benefit when recognized.
Any net operating losses incurred and not utilized are either carried back to offset prior taxable income or carried forward to offset future taxable income, depending on the taxing jurisdiction. Generally, federal net operating losses may be carried forward to offset future taxable income for a period not exceeding 20 years; however, beginning in 2018, net operating losses that are incurred may be carried forward indefinitely. At October 31, 2023, the Company has federal net operating loss carryovers of $1,336,357 available for carryover. In accordance with ASU No. 2015-17 Income Taxes, the Company classifies all deferred taxes as noncurrent. The net deferred tax liability in the accompanying balance sheet include the following components at October 31, 2023 and 2022:
October 31, |
||||
2023 |
2022 |
|||
Deferred Income Taxes |
||||
Deferred Federal Tax Assets |
$ |
30,476 |
$ |
20,494 |
Deferred Tax Assets - NOL |
1,246,712 |
280,608 |
||
Deferred Federal Tax Liabilities |
(2,881,977) |
(1,654,774) |
||
$ |
(1,604,789) |
$ |
(1,353,672) |
Income taxes reflected in the statements of income consist of the following:
October 31, |
||||
2023 |
2022 |
|||
Federal Income Taxes |
||||
Deferred Tax Expense |
$ |
251,117 |
$ |
307,127 |
Income Tax Expense |
$ |
251,117 |
$ |
307,127 |
During the years ended October 31, 2023 and 2022, the cash paid for income taxes was $0 and $0, respectively.
The Company adheres to the "uncertain tax positions" provisions of accounting principles generally accepted in the United States of America. The Company determined that it is more likely than not that its tax positions will be sustained upon examination by the Internal Revenue Service (IRS) or other State taxing authority and that all tax benefits are likely to be realized upon settlement with taxing authorities.
The Company files income tax returns in the U.S. federal jurisdiction and in the State of Ohio. The Company is no longer subject to U.S. federal and state income tax examinations by federal and state taxing authorities for years before 2019 and 2018.
11
BOLINGER, SEGARS, GILBERT & MOSS, L.L.P.
CERTIFIED PUBLIC ACCOUNTANTS
AMPLEX ELECTRIC, INC.
NOTES TO FINANCIAL STATEMENTS
Long-term debt consists of:
October 31, |
||||
2023 |
2022 |
|||
Various Vehicle Notes, 3.75% to 4.99% |
$ |
179,850 |
$ |
604,245 |
Live Oak Bank Commercial Note, 7.25% |
5,000,000 |
2,416,624 |
||
Live Oak Bank Commercial Note, 5.00% |
1,721,261 |
1,789,869 |
||
Live Oak Bank Commercial Note, 5.00% |
114,536 |
|||
Huntington Bank Commercial Note, 3.75% |
147,008 |
106,009 |
||
$ |
7,162,655 |
$ |
4,916,747 |
|
Less Current Portion |
535,547 |
333,943 |
||
$ |
6,627,108 |
$ |
4,582,804 |
As of October 31, 2023 the annual requirements for principal payments on long-term debt for the next five years are as follows:
2024 |
$ |
535,547 |
2025 |
527,852 |
|
2026 |
638,966 |
|
2027 |
550,492 |
|
2028 |
554,690 |
|
Thereafter |
4,355,107 |
|
$ |
7,162,654 |
The Company has entered into a commercial lending agreement with Live Oak Banking Company under the Small Business Administration (SBA) loan program. The note is for $2,825,000 and holds a variable interest rate of prime plus 1.75%. The loan is to be repaid over a period of 15 years, consisting of 30 monthly installment payments covering interest only and 150 monthly installment payments covering principal and interest. The payments will be completed in June 2034.
The Company has guaranteed the loan, along with its related party, Redbug Properties, LLC (Redbug Properties). The loan funds are to be used for upgrade and expansion of the existing telecommunications network and refinancing of the current land and building loan held by the related party, Redbug Properties. Loan funds, and the related liabilities, are recorded on the Company which holds the physical assets related to the borrowing.
Substantially all assets of the Company are pledged as security for the long-term debt under certain loan agreements with the Live Oak Banking Company.
During the years ended October 31, 2023 and 2022, the cash paid for interest on notes payable was $417,483 and $127,999, respectively.
The Company rents its office facilities and certain transmission space from a company owned by the Company's majority shareholders. The Company is on an annual rental agreement. During the years ended October 31, 2023 and 2022 amounts paid for rent were $150,000 and $157,650, respectively.
12
BOLINGER, SEGARS, GILBERT & MOSS, L.L.P.
CERTIFIED PUBLIC ACCOUNTANTS
AMPLEX ELECTRIC, INC.
NOTES TO FINANCIAL STATEMENTS
The Company has entered into a debt agreement with Live Oak Bank to borrow funds. The Company has guaranteed the loan, along with its related party, Redbug Properties. The Company received funds in the amount of $958,208 on this loan that relate to refinancing of debt held by Redbug Properties. The loan funds, and the related liabilities were transferred to Redbug Properties, which holds the physical assets related to the debt refinanced.
Amounts receivable from and payable to affiliated companies as of October 31, 2023 and 2022, are as follows:
October 31, |
||||
2023 |
2022 |
|||
Accounts Receivable from Red Bug, LLC |
$ |
294,722 |
$ |
121,427 |
Accounts Receivable from Red Bug Properties, LLC |
132,933 |
28,797 |
||
Net Accounts Receivable - Affiliates |
$ |
427,655 |
$ |
150,224 |
As of October 31, 2023, there were no claims, assessments, or pending litigation of a material nature against the Company.
During 2023, the Company received approval for funding through RUS ReConnect Program for a total amount of $21,341,792 in order to serve certain census blocks in rural Northwest Ohio. The Company is required to provide service in these areas for 28 years, which is the composite economic life of the assets funded by the ReConnect loan.
During October 2023, the Company entered into a commercial lending agreement with Live Oak Banking Company. The note is for $900,000 and holds a variable interest rate of prime plus 1.05%. The loan is to be repaid over a period of 7 years, consisting of 24 monthly installment payments covering interest only and 60 monthly installment payments covering principal and interest. The payments began on December 2023 and will be completed in October 2030.
The Company's management has evaluated the subsequent events through February 16, 2024, the date the financial statements were available for issue.
13
BOLINGER, SEGARS, GILBERT & MOSS, L.L.P.
CERTIFIED PUBLIC ACCOUNTANTS