Unrestricted Net Assets

3 Months Ended

Mar. 31, 2014

Unrestricted Net Assets

Unrestricted Net Assets

13. Unrestricted Net Assets

The Company’s wholly-owned subsidiary, UBIUK, had undistributed losses of $1,541,500 as of March 31, 2014. Under KBEL’s line of credit agreement with RBS, distributions and other payments to MBC from KBEL are not permitted if retained earnings drop below $1,655,100. Condensed financial information of MBC, together with its other subsidiary, Releta is as follows:

Balance Sheets

	March 31, 2014			December 31, 2013
	(unaudited)
Balance Sheets
Assets
Cash and cash equivalents	$	44,100		$	113,700
Accounts receivable, net		1,627,000			1,512,300
Inventories		2,164,800			2,217,300
Other current assets		89,700			165,500
Total current assets		3,925,600			4,008,800
Investment in subsidiary		1,225,000			1,225,000
Property and equipment		10,411,300			10,519,200
Intercompany receivable		622,600			716,700
Other assets		280,800			324,500
Total assets	$	16,465,300		$	16,794,200
Liabilities
Line of credit	$	1,520,900		$	1,517,200
Accounts payable		2,392,000			2,524,500
Accrued liabilities		1,025,600			1,001,700
Note payable related party		504,500			-
Current maturities of debt and capital leases		4,319,600			4,453,300
Total current liabilities		9,762,600			9,496,700
Long-term capital leases		16,400			17,700
Subordinated convertible notes payable		3,520,400			3,497,900
Total liabilities		13,299,400			13,012,300
Stockholders’ equity
Common stock		15,100,300			15,100,300
Preferred stock		227,600			227,600
Accumulated deficit		(12,162,000	)		(11,546,000	)
Total stockholders’ equity		3,165,900			3,781,900
Total liabilities and stockholders’ equity	$	16,465,300		$	16,794,200

	Quarter ended March 31
	2014			2013
	(unaudited)			(unaudited)
Statements of Operations
Net sales	$	2,734,900		$	3,584,400
Cost of goods sold		2,358,400			2,782,600
Selling, marketing, and retail expenses		365,300			384,400
General and administrative expenses		503,400			538,700
Loss from operations		(492,200	)		(121,300	)
Other (income) and expense		(1,900	)		(34,600	)
Interest expense		125,700			98,200
Provision for taxes		-			5,000
Net loss	$	(616,000	)	$	(189,900	)

	Quarter ended March 31
	2013			2013
	(unaudited)			(unaudited)
Statements of Cash Flows
Cash flows from operating activities	$	(482,000	)	$	(118,200	)
Purchase of property and equipment		(50,400	)		(185,200	)
Net borrowing (repayment) on line of credit		3,700			(69,900	)
Borrowing on long term debt		-			539,700
Borrowing on note payable		500,000
Repayment on long term debt		(133,700	)		(123,100	)
Payment on obligation under capital lease		(1,300	)		(3,100	)
Net change in payable to UBIUK		94,100			(65,200	)
Decrease in cash		(69,600	)		(25,000	)
Cash, beginning of period		113,700			123,200
Cash, end of period	$	44,100		$	98,200