Unrestricted Net Assets

6 Months Ended

Jun. 30, 2016

Unrestricted Net Assets

Unrestricted Net Assets

14. Unrestricted Net Assets

The Company’s wholly-owned subsidiary, UBIUK, had undistributed losses of $155,000 as of June 30, 2016. 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 $1,324,200. Condensed financial information of MBC, together with its other subsidiary, Releta, is as follows:

Balance Sheets

	June 30, 2016			December 31, 2015
	(unaudited)
Balance Sheets
Assets
Cash and cash equivalents	$	102,100		$	61,300
Accounts receivable, net		1,321,700			1,121,300
Inventories		1,307,900			1,490,100
Other current assets		257,000			199,800
Total current assets		2,988,700			2,872,500
Investment in subsidiary		1,225,000			1,225,000
Property and equipment		9,067,900			9,378,500
Intercompany receivable		182,100			284,000
Other assets		194,300			175,800
Total assets	$	13,658,000		$	13,935,800
Liabilities
Line of credit	$	680,400		$	453,100
Accounts payable		2,575,000			2,640,400
Accrued liabilities		1,302,800			1,021,000
Note payable to related party		2,575,200			2,119,600
Subordinated convertible notes to related party		3,727,900			3,680,100
Current maturities of debt, leases and severance		3,246,200			3,505,900
Total current liabilities		14,107,500			13,420,100
Long-term capital leases		11,100			14,000
Severance payable		721,200			678,400
Total liabilities		14,839,800			14,112,500
Stockholders’ deficit
Common stock		15,100,300			15,100,300
Preferred stock		227,600			227,600
Accumulated deficit		(16,509,700	)		(15,504,600	)
Total stockholders’ deficit		(1,181,800	)		(176,700	)
Total liabilities and stockholders’ deficit	$	13,658,000		$	13,935,800

Statements of Operations

	Three months ended June 30						Six months ended June 30
	2016			2015			2016			2015
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
Net sales	$	2,953,000		$	3,166,500		$	5,545,300		$	5,540,200
Cost of goods sold		(2,335,800	)		(2,471,300	)		(4,560,900	)		(4,593,900	)
Sales, marketing, and retail expenses		(289,900	)		(322,300	)		(581,400	)		(675,700	)
General and administrative expenses		(620,800	)		(380,600	)		(1,180,300	)		(860,700	)
Loss from operations		(293,500	)		(7,700	)		(777,300	)		(590,100	)
Other income		8,100			40,500			11,800			43,600
Interest expense		(120,300	)		(124,500	)		(238,000	)		(247,500	)
Provision for taxes		(1,600	)		-			(1,600	)		(3,800	)
Net loss	$	(407,300	)	$	(91,700	)	$	(1,005,100	)	$	(797,800	)

Statements of Cash Flows

	Six months ended June 30
	2016			2015
	(unaudited)			(unaudited)
Cash flows from operating activities	$	(412,000	)	$	113,900
Purchase of property and equipment		(6,200	)		(70,400	)
Net borrowing (repayment) on line of credit		227,300			(378,900	)
Borrowing on note payable		400,000			500,000
Repayment on long term debt		(267,300	)		(267,400	)
Payment on obligation under capital lease		(2,900	)		(2,700	)
Net change in payable to UBIUK		101,900			163,900
Decrease in cash		40,800			58,400
Cash, beginning of period		61,300			61,500
Cash, end of period	$	102,100		$	119,900