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Home My WebLink AboutCrowder Gulf - Confidential Confidential Financial Statements I CKy o Sunny Dslle Beac[i, FL I RFP 18-04-02 Emergency Pre-Event Debris Removal Services I Thursday, May 10, 2018 @ 2:30 pm I 1 _ . - , , , -- • : .,,- • - - .7-z-- --t.,--- - - -4,:--.: - t 1- -r--." `'..,,,_,----- ' - c, -1-A . 1 • •- ,..-.. • i -=-'-- 1 ,` 1 i..'.-.f-r'4-It':-Z'..-.1,.-,1!_,-,_r.e,7_.''.'".'1.'40,07.;-1:''1,'..11-':,'''.)''-\.h,'r''ka-',,,"f 7%Ie'1..r•S.4-k.r."lS'.-.T.-.4I,1.%e.,:,.-i„v,•Ak-J.''7.:',,•AEe.1'i:tl,.3i‘:'Ml4•'l.'t"..:../'l....b1,iA&a;r-1c-.es1t-:ri.'.%.'`r5,..,.-,i,i.•.p-7e,'.';-:_S%?It,7A7,:-:i4..,-,:-t.' ;,•' i —7 IAr1 ** --,-•0-4''.rIF-'iAl1IiVi, -‘/-_-.I=I I--M-- -,,.v.',-.71 (--- .s' --.--.1-7...0i.. 1_1,E--f':;s.,",D..f:'..h.1_T':54-11,t-,•_o-f-'-,-'..t(oi-qr1\-•\Pt-7,_I -'II 1iI,I % ..--4,E,Z.11:6.7''4`...t 0. ,..,,...4' , 1 4V-74 - - --- — • '' ' V , i _ -- :_,, [ ,-- . . ,.. ,,,, :, , ....„ k :, 1:11 ---------- . ...c., -,------,- . .i.-.. _ , , ,___ -,., • ' ‘ 4 . ,---- , - .0r-i...... - ---- ----''. 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Theodore, Alabama 36582 As part of this effort, our proposal is on 800-992-6207 Phone recycled paper. 251-459-7433 Fax jramsaycrowderqulf.com www.crowderqulf.com I I . .:.,e17-777.- 7_:,,...7' . c. . ,.. :::„.--, ,-• . . .,.....,„,-i.:....," •.:',_- „,,,......, ;',z., .4y :,,,:t.,-..-r i*-i---''-i.:,,,...,_ „ 1*. t-'-:-.7--;.-1..7 ,'_! 1. ,-_,,- . : ''7- I r . $ 1 —...:..a:_.47,- ,.,.--i.....:.=-_:,..._ 1 4‘ 1 Ira.A'\ -;i - I w-• - -i"''-b 1 4ifill ;•.1.-•-1 Ns- i / 1 , .4 ->iv•reil';:,....,: , 1:..3"1"- I - . __,... 2. .0 •-• --w„:".....i4,1a& qp., "....----. I , 1 :'' -. I ' -""2"--% •IP -- N'' ii" ••.;,».,11;t7,..1901.01- . i I .• . - ' . ,..0",41.... 1 I •-.•t,-----..,'"-'---i -.4t13,-.:. 1.,;,L f!:..; ,. ,12+0 .,-____:-,--- ,.... 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'--;i:‘,=-.,a,-4.1,:v;:z.,,V4=,--:. ---:-,.',..',,i -.4',U:10aNz--.7,-AY4' :.'''''. 1.R, -)F.,;-,-- -4,-**--:,,--1, I I 1 'k , .., --- , [ , ,.k ti•:.. 441,S._, .7. ..1./i \ a-:. . 1 4,9:-• -:„,'..1-:•;* I c i I ) \1 ' 1 . 1 I 1 CROWDERGULF, LLC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION \> DECEMBER 31, 2017 AND 20 6/ 1 66111S1111 1 1 1 Warreettn CPAs AND ADVISORS 1 I CROWDERGULF, LLC TABLE OF CONTENTS DECEMBER 31, 2017 AND 2016 1 INDEPENDENT AUDITORS' REPORT FINANCIAL STATEMENTS Balance Sheets 3 Statements of Operations 1\/4 Statements of Changes in Members' Capital 5 Statements of Cash Flows 6 /S\ Notes to the Financial Statements 7 SUPPLEMENTARY INFORMATION Schedule of Aged Receivables 14 1 001 I I Si 111 1 1 1 1 1 r • Warren 1725 North McKenzie St Foley,AL 36535 Ave rett 251.943.8571 CPAs AND ADVISORS warrenaverett.com 1 INDEPENDENT AUDITORS' REPORT To the Members CrowderGulf, LLC We have audited the accompanying financial statements of CrowderGulf, LLC, whi prise the balance sheets as of December 31, 2017 and 2016, and the related statems'of operations, changes in members' capital, and cash flows for the years then ended?an t e related notes to the financial statements. Management's Responsibility for the Financial Statement\ Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in theUnited States of America; this includes the design, implementation, and maintenance of i 1r�ter-raal control relevant to the preparation and fair presentation of financial statements that are'free from material misstatement, whether due to error or fraud. Auditors' Responsibility Our responsibility is to express an opini hese�na/ncial statements based on our audits. We conducted our audits in accordance wif'h auditing\standards generally accepted in the United States of America. Those standards re uthat we plan and perform the audit to obtain reasonable assurance about whether the finanncia state ents are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financials 9rstents. Theprocedures selected depend on the auditors' judgment, including the assessme�i�t of�tiaeg.isks of material misstatement of the financial statements, whether due to fraud or error. In`nnaking\\those risk assessments, the auditor considers internal control relevant to the etitys-s-preparation and fair presentation of the financial statements in order to design audit proce es-that_are appropriate in the circumstances, but not for the purpose of expressing,arioprnionotp the effectiveness of the entity's internal control. Accordingly, we express no such opinnion. A audivalso includes evaluating the appropriateness of accounting policies used and the (reasonableness of significant accounting estimates made by management, as well as evaluating\tbe overallpresentation of the financial statements. W'a believe-that the audit evidence we have obtained is sufficient and appropriate to provide a basis Re our audit opinion. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of CrowderGulf, LLC as of December 31, 2017 and 2016, and the results of its operations and cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. 1 1 1 1 Report on Supplementary Information Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The Schedule of Aged Receivables is presented for purposes of additional analysis and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepared the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted\in the Un,qd States of America. In our opinion, the information is fairly stated in all material ,es•ectselationto the financial statements taken as a whole. 0.0, .6Ae.td 1-,ZG /S\ Foley, Alabama March 28, 2018 <\* 2 I CROWDERGULF, LLC BALANCE SHEETS DECEMBER 31, 2017 AND 2016 IASSETS 2017 2016 ICURRENT ASSETS Cash and cash equivalents $ 3,713,012I � 6,090,390 Trade receivables 139,942,262 \61,888,325 Related party receivables 225,95 �2 16?70 Notes receivable, current portion 408,36-� 443,708 I Prepaid insurance Deposits /> 12 28,677, 711 12,771 Total current assetsI T 4,302,3 63\ 68,680,641 OTHER ASSETS Notes receivable, long term 278;950 34,279 IRestricted cash 472,338 324,804 Total other assets 751,288 359,083 IPROPERTY AND EQUIPMENT Land 50,000 50,000 Building and improvements 341,624 341,624 IEquipment and machineryQ48,084,097 2,986,040 Construction in progress - 300,089 I 8,475,721 3,677,753 Less: accumulated depreciation (3,204,874) (2,893,269) I Property and equipment, nets 5,270,847 784,484 TOTAL ASSETS $ 150,324,498 $ 69,824,208 I -1ABILITIES AND MEMBERS' CAPITAL CURRENT LIABILITIES IAccourit�p\ayable J $ 13,060,762 $ 5,638,739 Su`b-contractorainage 15,482,664 4,310,039 ICAccrued\e;penses 6,413,230 2,477,474 Line of cr dit 51,700,000 12,750,000 Ne-payable, related party - 5,000,000 ITotal current liabilities 86,656,656 30,176,252 MEMBERS' CAPITAL 63,667,842 39,647,956 1 TOTAL LIABILITIES AND MEMBERS' CAPITAL $ 150,324,498 $ 69,824,208 ISee notes to the financial statements. 3 i I CROWDERGULF, LLC STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016 I 2017 2016 1 DISASTER RESPONSE AND OTHER REVENUE $225,782,312 $ 82,999,615 DIRECT COSTS 199,806,467 59,184,609 GROSSI INCOME 25 7 ,9 5, 4 2 8 5 3,8{006 IOPERATING EXPENSES Advertising 58 \999 37,840 I Insurance 21,85� 20,084 Office expense 29640 82,980 Other operating expenses 21'81076 175,691 IProfessional fees 56,945 83,300 Salaries and wages 791,778 744,304 I Taxes and licenses 285,168 114,359 Telephone and utilities 57,842 49,244 Travel, conferences and seminars 14,940 8,679 ITotal operating expenses 1,635,043 1,316,481 INCOME FROM OPERATIONS 24,340,802 22,498,525 IOTHER INCOME (LOSS) Recovery of bad debt - 1,119,168 IInterest expense (360,660) (64,484) Other income, ne 420,219 140,684 Total other income. ne 59,559 1,195,368 NET INCOME "\ $ 24,400,361 $ 23,693,893 1 ICy. I I See notes to the financial statements. 4 1 CROWDERGULF, LLC STATEMENTS OF MEMBERS' CAPITAL FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016 1 2017 2016 MEMBERS' CAPITAL, BEGINNING OF YEAR $ 39,647,956 $ 24,984,536 MEMBERS' CONTRIBUTIONS - 60,000 MEMBERS' DISTRIBUTIONS (380,475-) (40•'f 605) v INTEREST REDEMPTION - (8,688,868) NET INCOME /\24,400,361\ 23,693,893 MEMBERS' CAPITAL, END OF YEAR 63,66V842`842 39,647,956 <I(\ <1(/1 001111 I See notes to the financial statements. 5 I CROWDERGULF, LLC ISTATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016 I2017 2016 CASH FLOWS FROM OPERATING ACTIVITIES INet income $ 24,400,361 $ 23,693,893 Adjustments to reconcile net income to net cash I used in operating activities: Depreciation 340,(29 180(2.53. Gain on sale of assets (17,339) 701) (Increase) decrease in assets: , \\ / Trade receivables (78;05 37N)V (60,752,169) Related party receivables (9`181) 536 I Notes receivable (209,33,, (246,713) Prepaid insurance 28,677 22,084 Deposits - 37,851 I Increase (decrease) in liabilities: Accounts payable 7,422,023 5,629,137 Subcontractor retainage11,172,625 4,213,404 Accrued expenses 3,935,756 2,368,121 Net cash used in operating activities (30,990,216) (24,890,804) I CASH FLOWS FROM INVESTING ACTIYITES Purchases of property and equipment (4,859,153) (311,562) Proceeds from sale of property a ' equipment 50,000 40,750 INet cash used in investing ct V ties (4,809,153) (270,812) CASH FLOWS FROM FINANCINGJACTIVITES I Proceeds from line of�redit\ 38,950,000 12,750,000 Payments on note payable. related party (5,000,000) 5,000,000 Interest redemption- v - (8,688,868) I Member contributions - 60,000 Member,d�st b\\ns (380,475) (401,605) Net cash l( by\finnaancing activities 33,569,525 8,719,527 DECREASE IN CASH, CASH EQUIVALENTS, AND /RESTRICTED-CASH (2,229,844) (16,442,089) CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF YEAR 6,415,194 22,857,283 I CASH;CASH EQUIVALENTS, AND RESTRICTED CASH, END OF YEAR $ 4,185,350 $ 6,415,194 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION CASH PAID DURING THE YEAR FOR: Interest $ 297,138 $ 962 ISee notes to the financial statements. 6 I CROWDERGULF, LLC I NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2017 AND 2016 1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES I Nature of Business and Basis of Presentation CrowderGulf Joint Venture was organized on October 1, 2003 and reorganized under the Alabama law as CrowderGulf, LLC (the Company) on December 30, 2011. The liability of theatembers of the I Company is limited to the members' total capital contributions. \\ The Company provides services to customers throughout the southeast 11 4ccitates Mese services consist of disaster response, support and pre-event services, marine operations coastal Irestoration and related technical assistance to customers after majo natural/and man-made disasters. Revenue and Cost Recognition 1 \ Revenue from debris management and removal contracts is recognized on the accrual basis when debris collections are received at the appropriate dumping sit&'and ap1-oved by independent onsite inspectors. Beach reclamation service revenue is recognized or t e accr'i ah basis as such services are provided. Revenues from demolition contracts are recognized after phases of structural demolition are complete in accordance with terms of its contracts and th\specified governmental agency has Iapproved the adequacy of the demolition services / \> The Company recognizes its disaster re edict o 7evenue/u der the specific performance method, I whereby revenue is recognized o*after perform nce units (cubic yards, etc.) have been completed and approved by the customer. Final billing only occurs after the customer has approved the specific performance units wh ch are�often del'ayed. In order to properly match revenues with Irelated costs the Company reco s I lled\eceivables for these remediation services. Contract costs include all direct material and labor costs and those indirect costs related to contract Iperformance, such as indirect tabor, supplies, tools, repairs, and depreciation. Selling, general and administrative costs are chargetho expenses as incurred. Cash and Cash Eq Eq aCeet_ IThe Company considers all highly liquid investments with a maturity of six months or less when purchasedo-6e sash eguiivalents. ® In 2017, the Compa9y early adopted the requirements of ASU No. 2016-18, Statement of Cash ® Flo -0Top1Restricted Cash, to present the change during the period in the total of cash, gash equivalents;and amounts generally described as restricted cash or restricted cash equivalents I in the state n ent of cash flows. Therefore, amounts generally described as restricted cash have been included with cash and cash equivalents when reconciling the beginning-of-period and end-of- / shown on the statement of cash flows. ITrade Receivables The Company invoices governmental entities for services performed pursuant to disaster response, I support and pre-event services. The governmental entities, in turn, seek reimbursement from the Federal Emergency Management Administration (FEMA). The Company's contracts with the governmental entities set forth the rates to be paid for specified services. Actual invoices submitted to the governmental entities are subject to reviews by their representative as well as state and I federal officials before submission to FEMA for reimbursement. FEMA may adjust the reimbursements based on its assessment of the "reasonableness" of the contract charges. 7 CROWDERGULF, LLC NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2017 AND 2016 1 1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — CONTINUED Trade Receivables — Continued Due to the significance of the contract amounts, the governmental entities generally\\do noj4ay what they owe the Company for services performed prior to receiving the FEIVG4�-eimbOrsernents. Consequently, payments may be delayed and amounts ultimately received by the Co trnay be less than the amounts agreed-upon under the contracts. In the even\FEMA j eimburses the governmental entities for less than the contractually agreed-upo ^amob ts,\the governmental entities can appeal for a full reimbursement. Management anticipates that it will support the governmental�ntities .n\their efforts to fully collect the contract amounts from FEMA, including any appeals process\\w�ith FEMA, in order to satisfy their contractual obligations with the Company. In the even \uItimate amount received by the Company is less than the full contract amount, the Company>either attempt to collect the difference from the municipality or accept a lower amount. Trade receivables are carried at original invoic��un and management determines an allowance at year-end based on their estimate of future co i ctabilit and historywith these types of contracts Y� Yp and specific governmental entities. Trade receivablessarewritten off when deemed uncollectible. Recoveries of trade receivables previously written off\are recorded when received. The Company does not charge interest on trade receivables. As;of December 31, 2017 and 2016, the Company considers all receivables to be collectiblAcingly, no allowance for doubtful accounts has been recorded in the financial statements. \/-/ Property and Equipment\ Property and equipmetS�\areveo rded at their original costs. Depreciation is computed using the straight-line method overthe estima ed useful life of the related assets. The Company estimates the useful life of hea`y-eq.ui ment\machinery and vehicles to be 5 years, office equipment to be 7-10 years, and buildingsand-improvements to be 15 — 40 years. When assets are retired or otherwise disposed of-theot'\n.d he related accumulated depreciation are removed from the accounts, and any resulting gaimor loss is reflected in income for the period. The cost of routine maintenance and repairs is:charged to exp nse as incurred. Depreciation expense for the years ended December 31, 20177 and 2016was�approximately $340,000 and, $180,000, respectively. qui men \Renta//"I and Leases Th p The Compa�y rents or leases a significant amount of the equipment required to fulfill its contracts. Generally)this equipment is rented on a job-by-job basis for short periods of time and is expensed asoperating leases. As of December 31, 2017 and 2016, none of the Company's equipment rental arrangements were capital leases. Advertising Costs The Company conducts non-direct advertising. Advertising costs are expensed as incurred. Advertising costs totaled approximately $59,000 and $38,000 for the years ended December 31, 2017 and 2016, respectively. • 8 I CROWDERGULF, LLC I NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2017 AND 2016 1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — CONTINUED IIncome Taxes The Company has elected to be treated as a partnership for federal and state incomax reporting. I Under the above elections, the Company does not pay federal or state income taxen"os taxable income; instead, the members' are liable for individual income taxes based--on t a rvespe ti e shares or proportionate taxable income of the Company. Therefore, no prou�sion--o`absil for I federal or state income taxes has been included in the financial statements. Also the`Cornpany is not aware of any uncertain tax positions that would require disclosure r�accrual�i\n(accordance with generally accepted accounting principles. U Presentation of Certain Taxes The Company collects various taxes from customers and remits these amounts to applicable taxing authorities. The Company's accounting policy is to exclude these taxes from revenues and cost of Isales. Contingencies The Company is sometimes subject to litig tinI r/the threat of litigation in conducting its operations. In accordance with generally accepd,,ac tecounting principles, the Company recognizes such contingencies in the financial stat ents when iy13oth probable that a material liability has 1 been incurred and the amount can be reasonaoly estimated. Reclassifications <\ )) I Certain accounts in the priory/ear Qriancial\,statements have been reclassified for comparative purposes to conform to the presentatiot'1 ttIe,,current-year financial statements. Significant Estimates The preparation of financs tatements in accordance with accounting principles generally accepted in the United States of Anaerica\`equires management to make estimates and assumptions that affect the report =>of assets, liabilities and disclosures at the date of the financial statements an. during the reporting period. Actual results could differ from those estimates. Events Occurring Afterr•Reporting Date I The ConipFy has evaluated events and transactions that occurred between December 31, 2017 and-Marcl<28, 2018/which is the date that the financial statements were available to be issued, for poss b'le recognition or disclosure in the financial statements. 2. TRADE RECEIVABLES Trade receivables at December 31, 2017 and 2016, consist of the following: 2017 2016 Current Billed $ 103,348,649 $ 29,846,279 Unbilled 29,100,502 31,730,956 I Retainage 7,493,111 311,090 Total $ 139,942,262 $ 61.888.325 9 I I CROWDERGULF, LLC NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2017 AND 2016 1 3. NOTES RECEIVABLE I At December 31, 2017 and 2016, the Company had outstanding notes receivable due from subcontractors of $408,367 and $198,037, respectively. These notes bear interest ranging from 0% to 6% with principal maturities due through 2018. At December 31, 2017 and 2016, the Company had a note receivable from a��oje t M ag p Bent Firm of approximately $279,000. The note receivable is for funds provided on\ rofect mere the I Company is a subcontractor, to be used for payroll, equipment purchases supplies gar d-ft4el. There are no formal terms of repayment, but the Company anticipates the balanc to be collected in full. U 4. RESTRICTED CASH For the years ended December 31, 2017 and 2016, cash of $4.72 338 an $324,804, respectively, is restricted by the workers' compensation insurance—Eon p n for payments of workers' compensation insurance claims. 5. PROFIT SHARING PLAN The Company maintains a profit sharing plan covenng eertain qualified employees in accordance with the provisions of Section 401(k) of fie InternaI\Revenue Code. Under the plan, employees may elect to defer a portion of their salaty,�s itjet to I t/ernal Revenue Service limits. The Company may make a discretionary match and a1s a discretionary contribution. Contributions to the plan were approximately $71,000 and '.50000 .eears ended December 31, 2017 and 2016, respectively. I6. MEMBERS' CAPITAL In 2016, CrowderGul#,Ste-had\two classes of members' capital - Preferred and Common Interests. The reest had nho'voting rights and received an 8% annual return of the Preferred the Preferredmember's capita�ccoun. This preferred return was to be treated as a distributive share of profits. After the f8%I preferr\ed return, all distributions, profits and losses of the Company were allocated to Common\Interest members based on their respective percentage interests and capital accounts. Oplq_eom ion mom r bers shared in losses. Gulf Equipment Corporation owned 100% of the PFeferred Interests. In September 2016, Gulf Equipment Corporation's preferred interest was redeemed`foor $8,688,868. Co rnonlri)terests are divided into voting and non-voting classes. The voting interest represents I 2%of I Common Interests and is owned in equal amounts by the two previous individual members. The remaining 98% of Common Interests is non-voting and is owned in equal amounts by two limited liability entities at 21% each and in equal amounts by the two previous individual members at 28% each. These limited liability entities are ultimately owned by trusts established for the benefit of individuals related to the holders of voting Common Interests. I 10 I CROWDERGULF, LLC NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2017 AND 2016 7. RELATED PARTY TRANSACTIONS I Gulf Equipment Corporation provided accounting services to the Company with a value of approximately $60,000 for both of the years ended December 31, 2017 and 2016. This amount is included in operating expenses in the accompanying statements of operations"\Prior to the I, redemption of Gulf Equipment Corporation's preferred interest, this amount was'\treated as a contribution in the Company's books. During 2017, Gulf Equipment Corporation, a related party, provided disaster retry-subcontract I services to the Company with a value of approximately $1,500,000 o�r<tkeyear\ended December 31, 2017. Accounts payable for such services were approximately $ 3;000 a Dere fiber 31, 2017. The Company contracted with JW Legacy Group, LLC, a relat for staffingVservices related to various contracts. Costs of such services totaled a roximatel $1,600,000 and $226,000 for the years ended December 31, 2017 and 2016, respectively, andyncludedin costs of sales in the accompanying statements of operations. Accounts payable-foch services were approximately ® $193,000 at December 31, 2017. i, n I The Company periodically lends money to related paries. The.Company was owed $225,951 and $216,770 from related parties at December 31, 201,7/and 20, respectively. I In 2016, the Company borrowed $5,000 000 from�Edgayinancial II, a related party, for operational needs. The loan bears interest at a rate of 2.5% with no set repayment terms. The loan balance was paid in its entirety in 2017. \) 8. CONCENTRATIONS IThe Company maintain's��its��cas�� bank deposit accounts. At December 31, 2017, deposits totaling approximately $6.7 million�in�re`ir excess of the Federal Deposit Insurance Corporation coverage of $250,000 per 'n�st\u%he?Company has not experienced any losses in such accounts and believes it is�not exposed to any significant credit risk on cash and cash equivalents. The Company had'tw\\ernmental entities that accounted for approximately 17% and 11% of the I Company's revenues for the year ended December 31, 2017 and one governmental entity that accounted\forrapproximately 34% of the Company's revenues for the year ended December 31, 20"TTwo governmental entities accounted for approximately 12% and 10% of the current portion I (ot contracf\receivables at December 31, 2017 and three governmental entities accounted for approximately 31%, 11% and 10% of the current portion of contract receivables at December 31, 201 I I I 11 I CROWDERGULF, LLC NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2017 AND 2016 9. LINE OF CREDIT The Company has a line of credit at Regions Bank. In November 2017, the principal amount available under the line of credit was increased to $75,000,000. The line of credit interest rate is based on the 30 day LIBOR index plus a margin of 2% with no floor or ceiling limit. The line of credit is secured by the personal guarantees of John Ramsay and Lyman W. Ramsay, trade"receivables' and investment accounts of CrowderGulf, LLC and its related parties, Edna' inancial�LL�C j nd Edna Financial II, LLC, held at Regions Bank. The line of credit expires in Jul b a.. orcowings ® are limited to a percentage of eligible accounts receivable and investments as determiri d by the i agreement with the bank. The outstanding balance on the line of credit�aDecernber 31, 2017 and 2016 was $51,700,000 and $12,750,000, respectively. \\ 10. SIGNIFICANT RISKS FACTORS The Company's operations consist of disaster respons"—suppor aqd pre-event services, marine operations, coastal restoration and related technical\assistanse_contracts with a number of governmental entities located in the United States' of America, but primarily concentrated in the southeastern part of the country. Due to the de�stton caused by hurricanes and other natural disasters, the governmental entities' ability to m e,et,their finapcial obligations under the contracts is generally dependent upon funding prow ded-by l e\federegovernment. The Company may curtail or cease work under a contract if a governmmentahentity1sunable to secure such funding in a timely manner. 11. SELF-INSURANCE The Company is self-psure\fov workers' compensation claims. The self-insured limit is $25,000 Iper occurrence or per Iossfrorn a covered cause of loss. Claims exceeding $25,000 per occurrence are covered through a\pti�teesurance carrier. Coverage limits under the policy include $1,000,000 bodily, ittfury–forseach accident and $1,000,000 bodily injury by disease for each ® employee with_an aggregate $1000,000 policy limit. Liabilities are reported when it is probable that !� a loss has occur edndth amount of the loss can be reasonably estimated. /( 12.,CONTINGENCIES fihe Company is involved in a legal proceeding, arising in the normal course of business. In the opinion o)rnanagement, based upon consultation with legal counsel, the ultimate resolution of thee_proceedings will not have a material effect on the Company's financial statements. I I i 12 CROWDERGULF, LLC NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2017 AND 2016 13. SUBSEQUENT EVENTS Subsequent to year end, CrowderGulf and Gulf Equipment Corporation, a related entity, entered ® into a lease agreement with a mutual related party, Franklin Creek Investments, for the use of a Cessna aircraft. In connection with this lease agreement, CrowderGulf and Gulf Equipment Corporation entered into a service agreement with an unrelated entity, Jet Services, Inc., or maintenance of the aircraft. The terms of the agreements are for one year, with an automatic annual enewat.T� e1 s of the lease agreement includes a minimum monthly rent of $5,800 and vara �ccosts\for the use of the aircraft per flight hour. The terms of the service agreement includ/aiminimux\management fee of $6,000 per month, fixed costs of approximately $21,000 per mo.th and vartable costs for pilot training, insurance, and other miscellaneous expense. V Q4/11 0011 I'<I( 1 • 13 1 1 B 1 ` . � � V SUPPLEMENTARY INFORMATION 1 0 � CROWDERGULF, LLC SCHEDULE OF AGED RECEIVABLES DECEMBER 31, 2017 Total Contract 0-30 days 31-60 days 61-90 days Over 90 days Retainage Amount Due Apopka,FL $ 916,413 $ - $ 122,334 $ - S - $ 1,038,747 Aransas County,TX 6,753,850 7,467,057 6,724 - 14,227,631 - Bonita Springs,FL 87,608 1,438,546 - - - 1,526,154 Brazoria County 1,670,125 211,883 38,098 6 K\- 1,920,112 Brevard County 213,965 1,156,886 - 956 237,23 1,609,039 City of Baytown,TX - - 762,568 - 762,568 City of Corpus Christi,TX 286,135 2,635,853 2,916,226 - 07- 4 6,145,488 Clay County,FL 2,852,592 868,956 - 594 475{336 4,197,478 City of Dickinson,TX 82,531 451,916 - - 534,447 City of Deltona Florida 998,486 800,485 1,199,105 - 222,177 3,220,253 FL Dept of Environmental Protection 8,624,831 4,489,841 20 13,124,992 City of Friendswood 66,799 1,072,702 1405 1,153,553 Fort Myers, FL - 1,839,363 - - - 1,839,363 Hardee County 427,780 594,577 1,022,357 Hilton Head Island SC -` 84 054 3,417,752 5,001,806 City of Ingleside,TX 750,461 2,514,299 �� - - 3,264,760 City of Lakeland,FL - - 586,007 - - 586,007 Lake County • 1,626,079 3,482 1,629,561 League City,TX 16,629 552,103 568,732 Lee County 39,583 4,979 24 - - - 5,019,507 City of Miami, FL 45 7j236 89,753 536,989 Montgomery County,TX 106,013 '007 859,354 1,442,174 City of Miami Springs - C1,742,05 703,275 - - 2,445,325 Nassau County, FL 1,354,962 1096,616 2,551,478 City of Northport FL 514 853 514,853 City of Ocala FL 1,140,329 20,000 - - 1,160,329 Okeechobee County - 774,495 - - 774,495 Orange County 3,523;909 1,555,158 - 5,079,067 City of Orlando FL \- 629,416 327,915 957,331 City of Ormond Beach FL 388786 - 1,198,262 1,156 176,259 1,763,744 City of Plantation FL1,011,346 - 136,880 1,148,226 Polk County FL 1,057,735 168,872 1,639,604 2,866,211 City of Sanibel FL 859;47 93,453 - - - 952,890 Sarasota County 1,088,233 268,116 357,154 84,202 1,797,705 Sumter County.,�L 639,935 639,935 San Pat�cio,C- my TX 757,437 1,080,668 1,963,661 - - 3,801,766 City of St./Petersburg)1.. - 1,738,072 388,001 - 236,230 2,362,303 City of Sunrise FL 110,307 486,039 1,564,216 236,840 2,397,402 City of Tarpo. SR prings�F - 154,943 296,933 - 50,208 502,084 Other 3,589,807 2,777,041 2,195,201 9,485 183,364 8,754,898 1 Total billed $ 38,332,368 $ 45,392,099 $ 18,003,559 $ 1,620,623 $ 7,493,111 $ 110,841,760 Total unbilled 29,100,502 Total S 139,942,262 I See independent auditors' report. 14 I