EFTA00617787.pdf

516 Sachs Diaz & Diaz, P.L. Certified Public Accountants November Z 2015 Sin= Re: MC2 Model Management *CONFIDENTIAL** Dear Mr. Titone: Our office has compiled the information provided by Mc2 Model Management for the years 2006-April 2015, we have concluded that the lost profits - REVISED - total the sum of ($7,709,233) Seven Million Seven Hundred Nine Thousand Two Hundred Thirty Three based on the schedules attached, summarized below: 2006 ($146,846) 2007 ($321,546) 2008 ($489,774) 2009 $98,453 2010 ($16,495) 2011 $243,276 2012 $1,484,762 2013 $1,764,612 2014 $3,149,341 As of April 2015 $1,943,450 TOTAL LOST PROFIT (Actual NI — Projected NI) - REVISED $7,709,233 Please be advised that these loses are based on additional information provided by our client. This is the most reasonable information we can provide at this point. Should you have any questions, please feel free to contact our office. Very Trul For the Firm mdz/mv 1 Members of American and Florida Institutes of Certified Public Accountants 3675 SW 24•th Street Miami, Florida 33145 Telephone: (305) 446-9700 • Facsimile (305) 443-1931 EFTA00617787 a Sachs Diaz & Diaz, P.L. Certified Public Accountants MC2 Model Management, LLC Statement of Revenue and Expenses - Income Tax Basis (Actual vs. Projected) - REVISED and Accountants' Compilation Report December 31, 2006 - April 30, 2015 Members of American and Florida Institutes of Certified Public Accountants 3675 SW 24'° Street Miami, Florida 33145 Telephone: (305) 446-9700 • Facsimile (305) 443-1931 EFTA00617788 Sachs Diaz & Diaz, P.L. Certified Public Accountants Independent Accountants' Compilation Report To the Members of MO Model Management, LLC New York, NY We have compiled the accompanying statement of revenue and expenses - income tax basis (actual vs. projected) - REVISED of MC2 Model Management, LLC (a limited liability company) for the years ended December 31, 2006 thru December 31, 2014 and for the four months ended April 30, 2015. We have not audited or reviewed the accompanying statement of revenue and expenses and, accordingly, do not express an opinion or provide any assurance about whether the statement of revenue and expenses are in accordance with the income tax basis of accounting. A compilation of projected statement of revenue and expenses is limited to presenting in the form of projected information that is the representation of management and does not include evaluation of the support for the assumptions underlying the projections. We have not examined the projections and, accordingly, do not express an opinion or any other form of assurance on the accompanying projected statements or assumptions. Furthermore, there will usually be differences between the projected and actual results, because events and circumstances frequently do not occur as expected, and those differences may be material. We have no responsibility to update this report for events and circumstances occurring after the date of this report. Management is responsible for the preparation and fair presentation of the statement of revenue and expenses 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 statement of revenue and expenses. Our responsibility is to conduct the compilation in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. The objective of a compilation is to assist management in presenting financial information in the form of financial statements without undertaking to obtain or provide any assurance that there are no material modifications that should be made to the financial statements. Members of American and Florida Institutes of Certified Public Accountants 3675 SW 24m Street Miami, Florida 33145 Telephone (305) 446-9700 • Facsimile (305) 443-1931 EFTA00617789 Management has elected to omit substantially all of the disclosures ordinarily included in the financial statements prepared in accordance with the income tax basis of accounting. If the omitted disclosures were included in the financial statements, they might influence the users conclusions about the Company's assets, liabilities, members equity, revenues, and expenses. Accordingly, the statement of revenue and expenses is not designed for those who are not informed about such matters. The Company is treated as a partnership for federal income tax purposes. Consequently, federal income taxes are not payable by, or provided for, the Company. Members are taxed individually on their shares of the Company's earnings. The Company's net income or loss is allocated among the members in accordance with the regulations of the Company. November 2, 2015 Members of American and Florida Institutes of Certified Public Accountants 3675 SW 24ftb Street Miami, Florida 33145 Telephone (305) 446-9700 • Facsimile (305) 443-1931 EFTA00617790 MC2 Models Management, LLC Summary of Lost Revenues and Profits - REVISED (Schedule 1) asss am MI m am MI 2211 WM 2gli Al of April 2015 Total Actual Revenues 8,042,173 7.565.369 8.798.289 6.720.406 8.058.725 8.955.483 9.511.911 10,482.009 10.732.989 3.013./11 79,881,065 Actual Operating Expenses 6,815.060 8,295.415 8.906.608 6.988.554 7.504.089 8.566.333 8.695 274 10.405.264 10.500.716 2.916.137 79.583.450 Actual Net IncornelLoss) (772.987) (730,048) (108.319) (288,148) 654,636 999,150 818,637 76,745 232,273 _ 97A74 297,615 Projected Revenues 6.000,000 7.200,000 8.640.000 10,368.000 12.441,600 14.929,920 17.915.904 21.499.085 25.798,902 10.319.581 135,112,972 Projected Operating Expense, 8 919 739 8,251,692 9,238,093 10,537.895 11.903 459 14 287.494 15.614.505 19,657,728 22 417.2es 8.278.537 127,108,124 Projected Net Income:8.os') (919,733) (1.051.592) :i .-.. (598,093) (169.896) 538.141 642.426 2,301,399 1,841.357 3.381.614 2,041.024 8,008,848 Lost Profits (Actual Ni - Projected NI) (146.846) (321.546) (489.774) 96,453 (16.495) 243,276 1.484.762 1,764,612 3.140.341 1.943.450 7,709.233 Total Lost Revenues: 55,231,907 Total Lost Profits: 7,709,233 EFTA00617791 MC2 Model Management, LLC Statement of Revenues and Expenses - Income Tax Basis (Actual vs. Projected) - REVISED For the Year Ended December 31, 2006 Actual Projected Variance Revenues Fees S 6,040,065 S 6,000.000 (40,065) Other income 2 108 (2,108) Total revenues 6,042,173 6,000.000 (42,173) Operating expenses Accounting 13,762 16,514 2,752 Advertising and public relations 3,184 6,368 3,184 Automobile 57,666 57,666 Bank charges 17,741 21,289 3,548 Commissions 125,527 124451 (876) Delivery and freight 1,782 2,138 356 Depreciation 41,153 41,153 Dues and subscriptions 4,910 5,892 982 Insurance 85,729 84,722 (1,007) Interest 42,747 (42,747) Licenses and taxes 88,816 87,773 (1,043) Meals and entertainment 11,543 13,852 2,309 Model expense 4,189,918 4,160,673 (29,245) Office supplies and expenses 98,762 118,514 19,752 Outside services 63,715 76,458 12,743 Payroll services 6,184 6,184 Postage 3,314 3,314 Professional services 76,121 91,345 15,224 Rent 327,293 435,293 108,000 Repairs and maintenance 92,796 92,796 Salaries and wages 1,092,687 1,079,854 (12,833) Scouting 111,811 111,811 Telephone 73,552 88,262 14,710 Travel 157,489 157,489 Utilities 26 858 35 721 8 863 Total operating expenses 6,815,060 6 919 733 104 673 Net ProlitgLoss) (772,887) S 919.733 $ (146,846) Attention is directed to independent accountants' compilation report. EFTA00617792 MC2 Model Management, LLC Statement of Revenues and Expenses - Income Tax Basis (Actual vs. Projected) - REVISED For the Year Ends December 31, 2007 Actual Projected Variance Revenues Fees $ 7,565,369 $ 7,200,000 (365,369) Other income Total revenues 7,565,369 7,200,000 (365,369) Operating expenses Advertising and public relations 10,283 20,566 10,283 Bank charges 17,262 20,714 3,452 Commissions 8,034 7,646 (388) Delivery and freight 7,436 8,923 1,487 Depreciation 32,459 32,459 Dues and subscriptions 6,458 7,750 1292 Insurance 130,043 140,525 10,482 Interest 75,467 (75,467) licenses and taxes 99,042 107,026 7,984 Meals and entertainment 44,332 53,198 8,866 Model expense 5,435,614 5,173,101 (262,513) Office supplies and expenses 55,970 67,164 11,194 Payroll services 4,765 5,718 953 Postage 5,837 5,837 Printing 235 235 Professional services 51,225 61,470 10,245 Rent 486,585 594,585 108,000 Repairs and maintenance 84,587 84,587 Salaries and wages 1,176,739 1,271,593 94,854 Scouting 42,380 42,380 Supplies 40,342 40,342 Telephone 123,749 148,499 24,750 Travel 353,408 353,408 Utilities 3 163 3 865 702 Total operating expenses 8 295,415 8 251,592 (43,823) Net Prollt/(Loss) (730,046) $ Qa1,592 $ (321546) Attention is directed to independent accountants' compilation report EFTA00617793 MC2 Model Management, LLC Statement of Revenues and Expenses - Income Tax Basis (Actual vs. Projected) - REVISED For the Year Ended December 31, 2008 Actual Projected Variance Revenues Fees S 8,798,289 S 8,640,000 (158,289) Other income Total revenues 8,798,289 8,640,000 (158,289) Operating expenses Advertising and public relations 11,173 22,346 11,173 Bank charges 11,586 13,903 2,317 Delivery and freight 7,325 8,790 1,465 Depreciation 33,322 33,322 Dues and subscriptions 4,535 5,442 907 Insurance 176,267 214,513 38,246 Interest 55,252 (55,252) Licenses and taxes 98,098 119,383 21,285 Meals and entertainment 27,864 33,437 5,573 Model expense 6,202,284 6,090,699 (111,585) Office supplies and expenses 104,937 125,924 20,987 Outside services 15,690 18,828 3,138 Payroll services 6,212 7,454 1,242 Postage 5,944 5,944 Printing 3,725 3,725 Professional services 47,806 57,367 9,561 Rent 465,083 573,083 108.000 Repairs and maintenance 71,729 71,729 Salaries and wages 1,144,236 1,392,511 248,275 Scouting 61,450 61,450 Supplies 2,745 2,745 Telephone 101,627 121,952 20,325 Travel 222,629 222,629 Utilities 25 089 30 915 5,826 Total operating expenses 8 906 608 9 238 093 331,485 Net Profit/(Loss) S (108,319) S (598,093) S (489,774 Attention Is directed to independent accountants' compilation report. EFTA00617794 MC2 Model Management, LLC Statement of Revenues and Expenses - Income Tax Basis (Actual vs. Projected) - REVISED For the Year Ended December 31, 2009 Revenues Actual Projected Variance Fees $ 6,720,406 $ 10,368,000 3,647,594 Other income Total revenues 6,720,406 10,368,000 3,647,594 Operating expenses Advertising and public relations 6,080 12,160 6,080 Bank charges 9,443 11,332 1,889 Computer and internet expenses 10,099 12,119 2,020 Depreciation 18,553 18,553 Dues and subscriptions 561 673 112 Employee benefit programs 80,857 142,737 61,880 Insurance 44,434 44,434 Interest 26,709 (26,709) Licenses and taxes 71,072 125,463 54,391 Meals and entertainment 25,689 5,138 Model expense 4,910,718 7,573°6,8079 27 2.665,361 Office supplies and expenses 131,895 158,274 26,379 Outside services 137,462 164,954 27,492 Payroll services 5,710 6,852 1,142 Postage 7,509 7,509 Printing 2,821 2,821 Professional services 33,745 40,494 6,749 Rent 355,777 463,777 108,000 Repairs and maintenance 55,362 55,362 Salaries and wages 773,927 1366,213 592,286 Telephone 61,692 74,030 12,338 Travel 203,310 203,310 Utilities 15 129 19 722 4,593 Total operating expenses 6.988,554 10,537,695 3,549,141 Net Pro0t/(I.oss) S 268.148 $ (169= $ 98,453 Attention is directed to independent accountants' compilation report. EFTA00617795 MC2 Model Management, LLC Statement of Revenues and Expenses - Income Tax Basis (Actual vs. Projected) - REVISED For the Year Ended December 31, 2010 Actual Projected Variance Revenues Fees S 8,058,725 S 12,441,600 4,382,875 Other income Total revenues 8,058,725 12,441,600 4,382,875 Operating expenses Advertising and public relations 5,173 10,346 5,173 Bank charges 13,348 16,018 2,670 Computer and Internet expenses 48,666 58,399 9,733 Depreciation 11,800 11,800 Dues and subscriptions 1,654 1,985 331 Insurance 85,135 200,757 115,622 Interest 27,690 . (27,690) licenses and taxes 60,685 143,101 82,416 Meals and entertainment 36,258 43,510 7,252 Model expense 5,691,493 8,786,909 3,095,416 Office supplies and expenses 92,381 110,857 18,476 Outside services 60,517 72,620 12,103 Postage 18,693 18,693 Printing 7,362 7,362 Professional services 109,775 131,730 21,955 Rent 235,987 343,987 108,000 Repairs and maintenance 67,557 67,557 Salaries and wages 675,797 1,593,598 917,801 Supplies 35,256 42,307 7,051 Telephone 52,598 63,118 10,520 Travel 138,860 138,860 Utilities 27 404 39 946 12,542 Total operating expenses 7,504.089 11,903,459 4,399,370 Net Profit/(Loss) $ 554.636 $ 538.141 $ (16.495) Attention is directed to independent accountants' compilation report. EFTA00617796 MC2 Model Management, LLC Statement of Revenues and Expenses - Income Tax Basis (Actual vs. Projected) - REVISED For the Year Ended December 31, 2011 Actual Projected Variance Revenues Fees S 8,955,483 S 14,929,920 5,974,437 Other income Total revenues 8,955,483 14,929,920 5,974,437 Operating expenses Advertising and public relations 6,195 12,390 6,195 Bank charges 11,398 13,678 2,280 Computer and intemet expenses 43,250 51,900 8,650 Depreciation 34,129 34,129 Dues and subscriptions 17,424 20,909 3,485 Insurance 100,405 215,601 115,1% Interest 25,020 (25,020) Licenses and taxes 75,460 162,036 86,576 Meals and entertainment 32,213 38,656 6,443 Model expense 6,446,023 10,746,334 4,300,311 Office supplies and expenses 52,153 62,584 10,431 Outside services 33,567 40,280 6,713 Payroll services 6,173 7,408 1,235 Postage 9,525 9,525 Printing 8,166 8,166 Professional services 84,869 101,843 16,974 Rent 239,286 347,286 108,000 Repairs and maintenance 63,627 63,627 Salaries and wages 932,161 2,001,642 1,069,481 Scouting 173,372 173,372 Telephone 5503 67,060 11,177 Travel 99,307 99,307 Utilities 6 727 9 763 3,036 Total operating expenses 8,556.333 14 287 494 5 731 161 Net ProfIl/(Lass) 399,150 S 642.426 5 243,276 Attention is directed to independent accountants' compilation report. EFTA00617797 MC2 Model Management, LLC Statement of Revenues and Expenses - Income Tax Basis (Actual vs. Projected) - REVISED For the Year Ended December 31, 2012 Actual Projected Variance Revenues Fees S 9,511,911 S 17,915,904 8,403,993 Other income Total revenues 9,511,911 17,915,904 8,403,993 Operating expenses Accounting 43,782 52,538 8,756 Advertising and public relations 14,905 29,810 14,905 Automobile 4,122 4,122 Bank charges 10,526 12,631 2,105 Computer and Internet expenses 65,143 78,172 13,029 Delivery and freight 4,163 4,996 833 Depreciation 2,063 2,063 Dues and subscriptions 35,430 42,516 7,086 Insurance 104,442 211,341 106,899 Interest 18,016 (18,016) Licenses and taxes 89,593 181,294 91,701 Meals and entertainment 36,525 43,830 7,305 Model expense 6,194,705 11,667,870 5,473,165 Mother agency expense 56,533 67,840 11,307 Moving 2,086 2,086 Office supplies and expenses 58,458 70,150 11,692 Outside services 83,208 99,850 16,642 Payroll services 6,207 7,448 1,241 Postage 34,363 34,363 Printing 13,182 13,182 Professional services 12,806 15,367 2,561 Rent 286,002 394,002 108,000 Repairs and maintenance 68,578 68,578 Salaries and wages 1,021,527 2.067,086 1,045,559 Scouting 291,907 291,907 Software licenses and expenses 8,298 8,298 Telephone 51,113 61,336 10,223 Travel 66,363 66,363 Utilities 11 228 15 468 4,240 Total operating expenses 8,695,274 15,614,505 6,919,231 Net Profit/(Loss) S 816,637 2,301,399 S 1 484 762 Attention is directed to independent accountants' compilation report. EFTA00617798 MC2 Model Management, LLC Statement of Revenues and Expenses - Income Tax Basis (Actual vs. Projected) - REVISED For the Year Ended December 31, 2013 Actual Projected Variance Revenues Fees S 10,482,009 S 21,499,085 11,017,076 Other income Total revenues 10,482,009 21,499,085 11,017,076 Operating expenses Accounting 134,977 161,972 26,995 Advertising and public relations 16,534 33,068 16,534 Automobile 2,908 2,908 Bank charges 11,112 13,334 2,222 Computer and intemet expenses 63,934 76,721 12,787 Credit card fees 952 952 Delivery and freight 14,576 17,491 2,915 Depreciation 16,161 16,161 Dues and subscriptions 26,948 32,338 5,390 Insurance 113,716 223,871 110,155 Interest 21,679 (21,679) Licenses and taxes 91,085 179,318 88,233 Meals and entertainment 33Z4 39,905 6,651 Model expense 7,353,787 15,082,957 7,729,170 Mother agency expense 219,763 263,716 43,953 Moving expense 925 925 Office supplies and expenses 64,435 77,322 12,887 Outside services 42,328 50,794 8,466 Payroll services 12,015 14,418 2,403 Postage 8,663 8,663 Printing 5,683 5,683 Professional services 37,922 45,506 7,584 Rent 290,393 398,393 108,000 Repairs and maintenance 54,371 54,371 Salaries and wages 1,113,581 2,192,292 1,078,711 Scouting 529,933 529,933 Software licenses and expenses 15,767 15,767 Telephone 43,013 51,616 8,603 Travel 58,168 58,168 Utilities 6 681 9 166 2,485 Total operating expenses 10 405,264 19,657,728 9,252,464 Net Profit/(Loss) 76.745 S 1,841,357 S 1,764,612 Attention is directed to independent accountants' compilation report. EFTA00617799 MC2 Model Management, LLC Statement of Revenues and Expenses - Income Tax Basis (Actual vs. Projected) - REVISED For the Year Ended December 31, 2014 Actual Projected Variance Revenues Fees S 10,732,989 $ 25,798,902 15,065,913 Other income Total revenues 10,732,989 25,798,902 15,065,913 Operating expenses Accounting 37,350 44,820 7,470 Advertising and public relations 10,343 20,686 10,343 Automobile 3,359 3,359 - Bank charges 12,463 14,956 2,493 Computer and interne* expense 73,644 88,373 14,729 Delivery and freight 3,904 4,685 781 Depreciation 15,716 15,716 - Dues and subscriptions 16,262 19,514 3,252 Equipment rental 154 154 - Insurance 141,517 276,363 134,846 Interest 23,260 - (23,260) Legal settlement 5,829 5,829 Licenses and taxes 99,322 193,962 94,640 Meals and entertainment 15,810 18,972 3,162 Model expense 7,419,919 17,835,270 10,415,351 Mother agency expense 209,994 251,993 41,999 Office supplies and expenses 40,814 48,977 8,163 Outside services 22,709 27,251 4,542 Payroll services 26,275 31,530 5,255 Postage 17,624 17,624 Printing 2,998 2,998 Production expense 197,262 197,262 Professional services 73,314 87,977 14,663 Rent 303,881 411,881 108,000 Repairs and maintenance 52,419 52,419 Salaries and wages 1,111,204 2,170,023 1,058,819 Scouting 474,192 474,192 Software licenses and expenses 6,000 6,000 Telephone 31,725 38,070 6,345 Travel 37,439 37,439 Utilities 14,014 18 995 4,981 Total operating expenses 10,500,716 22,417,288 11,916,572 Net Profit/(l.4ms) $ 232,273 S 3,381,614 S 3,149341 Attention is directed to independent accountants compilation report. EFTA00617800 Statement of Revenues and Expenses MC2 Model Management, LLC Income Tax Basis (Actual vs. Projected) - REVISED For the Four Months Ended April 30, 2015 Actual Projected Variance Revenues Fees $ 2,807,633 $ 10,319,561 7,511,928 Other income 206,078 - (206,078) Total revenues 3,013,711 10,319,561 7,305,849 Operating expenses Accounting 14,250 17,100 2,850 Advertising and public relations 8,001 16,002 8,001 Bank charges 2,144 2,573 429 Computer and interne expense 25,602 30,722 5,120 Delivery and freight 611 733 122 Depreciation Insurance 41,832 97,874 56,042 Interest Licenses and taxes 34,393 80,468 46,075 Meals and entertainment 26,366 31,639 5,273 Model expense 1,917,914 6,567,327 4,649,414 Mother agency expense 132,773 159,328 26,555 Office supplies and expenses 70,088 84,106 14,018 Outside services 150 180 30 Payroll services 10,921 13,105 2,184 Postage 3,507 3,507 0 Printing 1,071 1,071 (0) Professional services 24,467 29,360 4,893 Rent 68,075 104,075 36,000 Repairs and maintenance 27,572 27,572 Salaries and wages 373,227 873,227 500,000 Scouting 98,783 98,783 (0) Software licenses and expenses 1,223 1,223 0 Telephone 6,834 8,201 1,367 Travel 18,719 18,719 0 Utilities 7,615 11,642 4,027 Total operating expenses 2916,137 8,278,537 5,362,400 Net Profit/(Loss) S 97.574 $ 2,041,023 S 1,943,449 Attention is directed to independent accountants' compilation report EFTA00617801