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<!--egx--><pre>1. ORGANIZATION AND NATURE OF BUSINESS</pre><pre>Amincor, Inc. ("Amincor" or the "Company") is headquartered in New York, New</pre><pre>York. During 2011 and 2010, Amincor acquired directly or indirectly all or a</pre><pre>majority of the outstanding stock of the following companies:</pre><pre> Advanced Waste & Water Technology, Inc. ("AWWT")</pre><pre> Baker's Pride, Inc. ("BPI")</pre><pre> Environmental Quality Services, Inc. ("EQS")</pre><pre> Epic Sports International, Inc. ("ESI")</pre><pre> Masonry Supply Holding Corp. ("Masonry" or "IMSC")</pre><pre> Tulare Holdings, Inc. ("Tulare Holdings", or "Tulare")</pre><pre> Tyree Holdings Corp. ("Tyree")</pre><pre>On November 5, 2012, the Company acquired all of the assets and assumed some of</pre><pre>the liabilities of Environmental Waste Treatment, LLC ("EWT Business"). The</pre><pre>Company assigned the EWT Business to Advanced Waste & Water Technology, Inc.</pre><pre>("AWWT") a subsidiary of EHC.</pre><pre>As of June 30, 2013, the following are operating subsidiaries of Amincor:</pre><pre> Advanced Waste & Water Technology, Inc.</pre><pre> Baker's Pride, Inc.</pre><pre> Tyree Holdings Corp.</pre><pre> Amincor Other Assets, Inc. ("Other Assets")</pre><pre>AWWT</pre><pre>AWWT performs water remediation services in the Northeastern United States, and</pre><pre>is headquartered in Farmingdale, New York.</pre><pre>BPI</pre><pre>BPI manufactures bakery food products, primarily consisting of several varieties</pre><pre>of sliced and packaged private label bread in addition to fresh and frozen</pre><pre>varieties of donuts in Midwest and Eastern region of the United States. BPI is</pre><pre>headquartered and operates facilities in Burlington, Iowa.</pre><pre>On October 31, 2012, BPI's most significant customer terminated its contract</pre><pre>with the Company due to BPI's inability to meet certain pricing, cost and</pre><pre>product offering needs. As of June 30, 2013, BPI is seeking new customers and</pre><pre>has bid with its former most significant customer to resume production in the</pre><pre>fourth quarter of 2013.</pre><pre>TYREE</pre><pre>Tyree performs maintenance, repair and construction services to customers with</pre><pre>underground petroleum storage tanks and petroleum product dispensing equipment.</pre><pre>Complimenting these services, Tyree is engaged in environmental consulting, site</pre><pre>assessment, analysis and management of site remediation for owners and operators</pre><pre>of property with petroleum storage facilities. Tyree markets its services</pre><pre>throughout the Northeast and Mid-Atlantic regions of the United States to</pre><pre>national and multinational enterprises, as well as to local and national</pre><pre>governmental agencies and municipalities. The majority of Tyree's revenue is</pre><pre>derived from customers in the Northeastern United States. Tyree's headquarters</pre><pre>are located in Mt. Laurel, New Jersey.</pre><pre>OTHER ASSETS</pre><pre>Other Assets was incorporated to hold real estate, equipment and loan</pre><pre>receivables. As of June 30, 2013, all of Other Assets' real estate and equipment</pre><pre>are classified as held for sale.</pre><pre>On April 30, 2013, Other Assets sold its 360,000 square foot facility located in</pre><pre>Allentown, Pennsylvania. The property was sold for $500,000 less outstanding</pre><pre>taxes and costs due and owing on the property for net sale proceeds of $232,497.</pre><pre>DISCONTINUED OPERATIONS</pre><pre>During 2011, Amincor adopted a plan to discontinue the operations of Masonry</pre><pre>Supply Holding Corp., Tulare Holdings, Inc., and Epic Sports International, Inc.</pre><pre>On April 1, 2013, Amincor sold the business of Environmental Quality Services,</pre><pre>Inc. to a former manager of the company.</pre><pre>MASONRY</pre><pre>Masonry manufactured and distributed concrete and lightweight block to the</pre><pre>construction industry. IMSC also operated a retail home center and showroom,</pre><pre>where it sold masonry related products, hardware and building supplies to</pre><pre>customers. Masonry's headquarters, showroom and operating facility were located</pre><pre>in Pelham Manor, New York.</pre><pre>TULARE HOLDINGS</pre><pre>Tulare prepared and packaged frozen vegetables (primarily spinach), from produce</pre><pre>supplied by growers, for the food service and retail markets throughout southern</pre><pre>California and the southwestern United States. Tulare sold to retailers under a</pre><pre>private label, and to food brokers and retail food stores under the Tulare</pre><pre>Frozen Foods label. Tulare's headquarters and processing facility was located in</pre><pre>Lindsay, California.</pre><pre>ESI</pre><pre>ESI was the worldwide licensee for the Volkl and Boris Becker Tennis brands. In</pre><pre>2010, ESI became the exclusive sales representative of Volkl and Becker products</pre><pre>for Samsung C&T America, Inc. ESI sold their products domestically through</pre><pre>retailers located throughout the United States, and internationally through</pre><pre>International Distributors who would sell to retailers in their local markets</pre><pre>and on-line retailers. ESI was headquartered in New York, New York.</pre><pre>EQS</pre><pre>EQS formerly provided environmental and hazardous waste testing services in the</pre><pre>Northeastern United States, and was headquartered in Farmingdale, New York.</pre>
<!--egx--><pre>2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</pre><pre>BASIS OF PRESENTATION</pre><pre>The accompanying unaudited consolidated condensed financial statements of the</pre><pre>Company have been prepared pursuant to the rules and regulations of the</pre><pre>Securities and Exchange Commission. Certain information and note disclosures</pre><pre>normally included in annual financial statements prepared in accordance with</pre><pre>generally accepted accounting principles in the United States of America</pre><pre>("GAAP") have been condensed or omitted pursuant to those rules and regulations;</pre><pre>however, although the Company believes that the disclosures are adequate to make</pre><pre>the information not misleading. In the opinion of management, all adjustments</pre><pre>necessary for a fair statement of the results of operations and financial</pre><pre>position for the periods presented have been reflected as required by Regulation</pre><pre>S-X. The results of operations for the interim period presented is not</pre><pre>necessarily indicative of the results of operations to be expected for the year.</pre><pre>These consolidated condensed financial statements should be read in conjunction</pre><pre>with the Company's most recent Form 10-K which includes the audited consolidated</pre><pre>or combined financial statements for the three years ended December 31, 2012.</pre><pre>PRINCIPLES OF CONSOLIDATION</pre><pre>The consolidated condensed financial statements include the accounts of Amincor,</pre><pre>Inc. and all of its consolidated subsidiaries (collectively the "Company"). All</pre><pre>intercompany balances and transactions have been eliminated in consolidation.</pre><pre>USE OF ESTIMATES</pre><pre>The preparation of financial statements in conformity with GAAP requires</pre><pre>management to make estimates and assumptions that affect the reported amount of</pre><pre>assets and liabilities and the disclosure of contingent assets and liabilities</pre><pre>at the date of the financial statements, and the reported amounts of revenues</pre><pre>and expenses during the reporting periods. Significant estimates include the</pre><pre>valuation of goodwill and intangible assets, the useful lives of tangible and</pre><pre>intangible assets, depreciation and amortization of property, plant and</pre><pre>equipment, allowances for doubtful accounts and inventory obsolescence,</pre><pre>estimates related to completion of contracts and loss contingencies on</pre><pre>particular uncompleted contracts and the valuation allowance on deferred tax</pre><pre>assets. Actual results could differ from those estimates.</pre><pre>REVENUE RECOGNITION</pre><pre>BPI</pre><pre>Revenue is recognized from product sales when goods are delivered to BPI's</pre><pre>shipping dock, and are made available for pick-up by the customer, at which</pre><pre>point title and risk of loss pass to the customer. Customer sales discounts are</pre><pre>accounted for as reductions in revenues in the same period the related sales are</pre><pre>recorded.</pre><pre>TYREE</pre><pre>Maintenance and repair services for several retail petroleum customers are</pre><pre>performed under multi-year, unit price contracts ("Tyree Contracts"). Under</pre><pre>these agreements, the customer pays a set price per contracted retail location</pre><pre>per month and Tyree provides a defined scope of maintenance and repair services</pre><pre>at these locations on an on-call or as scheduled basis. Revenue earned under</pre><pre>Tyree Contracts is recognized each month at the prevailing per location unit</pre><pre>price. Revenue from other maintenance and repair services is recognized as these</pre><pre>services are rendered.</pre><pre>Tyree uses the percentage-of-completion method on construction services,</pre><pre>measured by the percentage of total costs incurred to date to estimated total</pre><pre>costs for each contract. This method is used because management considers costs</pre><pre>to date to be the best available measure of progress on these contracts.</pre><pre>Provisions for estimated losses on uncompleted contracts are made in the period</pre><pre>in which overall contract losses become probable. Changes in job performance,</pre><pre>job conditions and estimated profitability, including those arising from final</pre><pre>contract settlements, may result in revisions to costs and income. These</pre><pre>revisions are recognized in the period in which it is probable that the customer</pre><pre>will approve the variation and the amount of revenue arising from the revision</pre><pre>can be reliably measured. An amount equal to contract costs attributable to</pre><pre>claims is included in revenues when negotiations have reached an advance stage</pre><pre>such that it is probable that the customer will accept the claim and the amount</pre><pre>can be measured reliably.</pre><pre>The asset account "Costs and estimated earnings in excess of billings on</pre><pre>uncompleted contracts," represents revenues recognized in excess of amounts</pre><pre>billed.</pre><pre>The liability account, "Billings in excess of cost and estimated earnings on</pre><pre>uncompleted contracts," represents billings in excess of revenues recognized.</pre><pre>AWWT</pre><pre>AWWT provides water remediation and logistics services for its clients which</pre><pre>include any business that produces waste water. AWWT invoices clients based on</pre><pre>bills of lading which specify the quantity and type of water treated. Revenue is</pre><pre>recognized as water remediation services are performed.</pre><pre>ACCOUNTS RECEIVABLE</pre><pre>Accounts receivable are recorded net of an allowance for doubtful accounts. The</pre><pre>credit worthiness of customers is analyzed based on historical experience, as</pre><pre>well as the prevailing business and economic environment. An allowance for</pre><pre>doubtful accounts is established and determined based on management's</pre><pre>assessments of the aging of receivables, payment history, the customer's current</pre><pre>credit worthiness and the economic environment. Accounts are written off when</pre><pre>significantly past due and after exhaustive efforts at collection. Recoveries of</pre><pre>accounts receivables previously written off are recorded as income when</pre><pre>subsequently collected.</pre><pre>Tyree's accounts receivable for maintenance and repair services and construction</pre><pre>contracts are recorded at the invoiced amount and do not bear interest. Tyree,</pre><pre>BPI, EQS, and AWWT extend unsecured credit to customers in the ordinary course</pre><pre>of business but mitigate the associated risks by performing credit checks and</pre><pre>actively pursuing past due accounts. Tyree follows the practice of filing</pre><pre>statutory "mechanics" liens on construction projects where collection problems</pre><pre>are anticipated.</pre><pre>MORTGAGES RECEIVABLE</pre><pre>The mortgages receivable consist of commercial loans collateralized by property</pre><pre>in Pelham Manor, New York. The loans were non-performing and property was in</pre><pre>foreclosure as of December 31, 2012. In 2013, the Company gained title to the</pre><pre>property and is included in property, plant and equipment as of June 30, 2013.</pre><pre>The value of the mortgages was based on the fair value of the collateral</pre><pre>ALLOWANCE FOR LOAN LOSSES</pre><pre>An allowance for loan losses is established as losses are estimated to have</pre><pre>occurred through a provision for loan losses charged to operations. A loan is</pre><pre>determined to be non-accrual when it is probable that scheduled payments of</pre><pre>principal and interest will not be received when due according to the</pre><pre>contractual terms of the loan agreement. When a loan is placed on non-accrual</pre><pre>status, all accrued yet uncollected interest is reversed from income. Payments</pre><pre>received on non-accrual loans are generally applied to the outstanding principal</pre><pre>balance. Loans are removed from non-accrual status when management believes that</pre><pre>the borrower will resume making the payments required by the loan agreement.</pre><pre>INVENTORIES</pre><pre>Inventories are stated at the lower of cost or market using the first-in,</pre><pre>first-out method. Market is determined based on the net realizable value with</pre><pre>appropriate consideration given to obsolescence, excessive levels and other</pre><pre>market factors. An inventory reserve is recorded if the carrying amount of the</pre><pre>inventory exceeds its estimated market value.</pre><pre>PROPERTY, PLANT AND EQUIPMENT</pre><pre>Property, plant and equipment are stated at cost and the related depreciation is</pre><pre>computed using the straight-line method over the estimated useful lives of the</pre><pre>respective assets. Expenditures for repairs and maintenance are charged to</pre><pre>operations as incurred. Renewals and betterments are capitalized. Upon the sale</pre><pre>or retirement of an asset, the related costs and accumulated depreciation are</pre><pre>removed from the accounts and any gain or loss is recognized in the results of</pre><pre>operations.</pre><pre>Leasehold improvements are amortized over the lesser of the estimated life of</pre><pre>the asset or the lease term.</pre><pre>GOODWILL AND INTANGIBLE ASSETS</pre><pre>Goodwill represents the cost of acquiring a business that exceeds the net fair</pre><pre>value ascribed to its identifiable assets and liabilities. Goodwill and</pre><pre>indefinite-lived intangibles are not subject to amortization but are tested for</pre><pre>impairment annually and whenever events or circumstances change, such as a</pre><pre>significant adverse change in the economic climate that would make it more</pre><pre>likely than not that impairment may have occurred. If the carrying value of</pre><pre>goodwill or an indefinite-lived intangible asset exceeds its fair value, an</pre><pre>impairment loss is recognized.</pre><pre>Intangible assets with finite lives are recorded at cost less accumulated</pre><pre>amortization. Finite-lived tangible assets are amortized on a straight-line</pre><pre>basis over the expected useful lives of the respective assets.</pre><pre>IMPAIRMENT OF LONG-LIVED ASSETS</pre><pre>The Company evaluates the fair value of long-lived assets on an annual basis or</pre><pre>whenever events or changes in circumstances indicate that its carrying amounts</pre><pre>may not be recoverable. Accordingly, any impairment of value is recognized when</pre><pre>the carrying amount of a long-lived asset exceeds its fair value.</pre><pre>EARNINGS (LOSS) PER SHARE</pre><pre>Basic earnings (loss) per share is computed by dividing net income (loss)</pre><pre>available to common stockholders by the weighted-average number of common shares</pre><pre>outstanding for the period. Diluted earnings (loss) per share considers the</pre><pre>potential dilution that could occur if securities or other contracts to issue</pre><pre>common stock were exercised or could otherwise cause the issuance of common</pre><pre>stock. Such contracts include stock options and convertible preferred stock,</pre><pre>which when exercised or converted into common stock would cause the issuance of</pre><pre>common stock that then would share in earnings (loss). Such potential additional</pre><pre>common shares are included in the computation of diluted earnings per share.</pre><pre>Diluted loss per share is not computed because any potential additional common</pre><pre>shares would reduce the reported loss per share and therefore have an</pre><pre>antidilutive effect.</pre><pre>SHARE-BASED COMPENSATION</pre><pre>All share-based awards are measured based on their grant date fair values and</pre><pre>are charged to expenses over the period during which the required services are</pre><pre>provided in exchange for the award (the vesting period). Share-based awards are</pre><pre>subject to specific vesting conditions. Compensation cost is recognized over the</pre><pre>vesting period based on the grant date fair value of the awards and the portion</pre><pre>of the award that is ultimately expected to vest.</pre><pre>RECLASSIFICATIONS</pre><pre>Certain reclassifications have been made to the accompanying consolidated</pre><pre>condensed financial statements of prior periods to conform to the current</pre><pre>period's presentation.</pre>
<!--egx--><pre>3. GOING CONCERN</pre><pre>The accompanying consolidated financial statements have been prepared assuming</pre><pre>that the Company will continue as a going concern that contemplates the</pre><pre>realization of assets and the satisfaction of liabilities in the normal course</pre><pre>of business. The Company has suffered recurring net losses from operations and</pre><pre>had a working capital deficit of $24,185,563 as of June 30, 2013, which raises</pre><pre>substantial doubt about the Company's ability to continue as a going concern.</pre><pre>The Company's ability to continue as a going concern is dependent upon its</pre><pre>capability to raise additional funds through debt and equity financing, and to</pre><pre>achieve profitable operations. Management's plans to continue as a going concern</pre><pre>and to achieve a profitable level of operations are as follows:</pre><pre> * Advanced Waste & Water Technology, Inc.</pre><pre> * Successfully sell large-scale waste water treatment equipment</pre><pre> through AWWT's established licensing agreement.</pre><pre> * Baker's Pride, Inc.</pre><pre> * Secure additional donut and bread customers to increase the</pre><pre> utilization of existing plant assets and place significant and</pre><pre> competitive bids to strategic players within the fresh bread</pre><pre> manufacturing industry, as well as increase revenues from its</pre><pre> existing customers,</pre><pre> * Increase co-pack donut, bread and bun business once the existing</pre><pre> plant assets are operating at maximum capacity,</pre><pre> * Tyree Holdings Corp.</pre><pre> * Increase sales of the environmental business unit to existing</pre><pre> customers and bid on additional jobs outside of Tyree's current</pre><pre> customer base. Tyree's ability to succeed in securing additional</pre><pre> environmental business depends on the ability of one of Tyree's</pre><pre> primary customers to secure remediation work by bidding</pre><pre> environmental liabilities currently present on gasoline stations</pre><pre> and referring this work to Tyree,</pre><pre> * Evaluate Tyree's construction and maintenance business units with</pre><pre> respect to their ability to increase margins and operate</pre><pre> profitably independent of each other,</pre><pre> * Liquidate excess inventory that will not be utilized in the</pre><pre> normal course of operations during the next six months to</pre><pre> generate additional working capital.</pre><pre> * Amincor Other Assets, Inc.</pre><pre> * Liquidate assets held for sale to provide working capital to the</pre><pre> Company's subsidiaries,</pre><pre> * Rent out assets held for sale to offset the costs of ownership of</pre><pre> those assets wherever possible, if the assets cannot be</pre><pre> liquidated.</pre><pre> * Amincor, Inc.</pre><pre> * Secure new financing from a financial institution to provide</pre><pre> needed working capital to the subsidiary companies.</pre><pre>While management believes that it will be able to continue to raise capital from</pre><pre>various funding sources in such amounts sufficient to sustain operations at the</pre><pre>Company's current levels through at least June 30, 2014, if the Company is not</pre><pre>able to do so and if the Company is unable to become profitable in 2013 and the</pre><pre>first half of 2014, the Company would likely need to modify its plans and/or cut</pre><pre>back on its operations. If the Company is able to raise additional funds through</pre><pre>the issuance of equity securities, substantial dilution to existing shareholders</pre><pre>may result. However, if management's plans are not achieved, if significant</pre><pre>unanticipated events occur, or if the Company is unable to obtain the necessary</pre><pre>additional funding on favorable terms or at all, management would likely have to</pre><pre>modify its business plans to continue as a going concern. The condensed</pre><pre>consolidated financial statements do not include any adjustments that might be</pre><pre>necessary if the Company is unable to continue as a going concern.</pre>
<!--egx--><pre>4. DISCONTINUED OPERATIONS</pre><pre>Effective June 30, 2011, the Company discontinued the operations of Masonry and</pre><pre>Tulare Holdings, Inc., effective September 30, 2011 the Company discontinued the</pre><pre>operations of Epic Sports International, Inc and effective April 1 2013 the</pre><pre>Company discontinued the operations of Environmental Quality Services, Inc. As a</pre><pre>result, losses from Masonry, Tulare, EQS and ESI are included in the loss from</pre><pre>discontinued operations in the accompanying consolidated condensed financial</pre><pre>statements for the three and six months ended June 30, 2013 and 2012,</pre><pre>respectively. Assets and liabilities related to discontinued operations are</pre><pre>presented separately on the condensed consolidated balance sheets as of June 30,</pre><pre>2013 and December 31, 2012, respectively. Changes in net cash from discontinued</pre><pre>operations are presented in the accompanying consolidated statements of cash</pre><pre>flows for the six months ended June 30, 2013 and 2012, respectively.</pre><pre>The following amounts related to Masonry, Tulare, EQS and ESI have been</pre><pre>segregated from continuing operations and reported as discontinued operations:</pre><pre> Three Months Ended June 30, Six Months Ended June 30,</pre><pre> 2013 2012 2013 2012</pre><pre> ---------- ---------- ---------- ----------</pre><pre>Results From Discontinued Operations:</pre><pre> Net revenues from discontinued operations $ (1,771) $ 273,072 $ 231,887 $ 543,841</pre><pre> ========== ========== ========== ==========</pre><pre> Loss from discontinued operations $ (100,453) $ (311,479) $ (281,729) $ (542,583)</pre><pre> ========== ========== ========== ==========</pre><pre>The following is a summary of the assets and liabilities of the discontinued</pre><pre>operations, excluding assets held for sale (which is recorded separately on the</pre><pre>consolidated condensed balance sheets).</pre><pre> June 30, December 31,</pre><pre> 2013 2012</pre><pre> ------------ ------------</pre><pre>Cash $ 2,285 $ 2,699</pre><pre>Accounts receivable 1,968 231,558</pre><pre>Prepaid expenses and other current assets -- 13,840</pre><pre>Property, plant and equipment, net -- 348,798</pre><pre>Goodwill and other intangible assets -- 135,000</pre><pre>Other assets -- 429,451</pre><pre> ------------ ------------</pre><pre>Total assets $ 4,253 $ 1,161,346</pre><pre> ------------ ------------</pre><pre>Accounts payable $ 3,810,755 $ 4,350,376</pre><pre>Accrued expenses and other current liabilities 883,538 1,160,188</pre><pre>Other long term liabilities -- 130,625</pre><pre> ------------ ------------</pre><pre>Total liabilities $ 4,694,293 $ 5,641,189</pre><pre> ------------ ------------</pre><pre>Net liabilities $ (4,690,040) $ (4,479,843)</pre><pre> ============ ============</pre><pre>The Company will continue to provide administrative services for the</pre><pre>discontinued operations until the liquidation of these discontinued entities is</pre><pre>completed.</pre><pre>Pursuant to a Stock Purchase Agreement, effective April 1, 2013, Environmental</pre><pre>Holding Corp., a wholly-owned subsidiary of Amincor, Inc. sold all of its right,</pre><pre>title and interest in all of the common stock of EQS to Essential Environmental</pre><pre>Technologies.</pre><pre>The gain on the sale of EQS is summarized as follows:</pre><pre> Description Amount</pre><pre> ----------- -----------</pre><pre>Purchase price promissory note $ 500,000</pre><pre>Liabilities assumed by the Buyer 668,171</pre><pre> -----------</pre><pre> 1,168,171</pre><pre>Assets transferred (468,229)</pre><pre> -----------</pre><pre>Gain on the sale of EQS $ 699,942</pre><pre> ===========</pre><pre>The $500,000 promissory note has a maturity date of April 1, 2018 and is secured</pre><pre>by the assets sold. The annual interest rate on the note is 8% with the first</pre><pre>two years interest only and, subsequently, the note is amortized over a three</pre><pre>year period.</pre>
<!--egx--><pre>5. INVENTORIES</pre><pre>Inventories consist of:</pre><pre> * Construction and service maintenance parts</pre><pre> * Baking ingredients</pre><pre> * Finished bakery goods</pre><pre>A summary of inventory as of June 30, 2013 and December 31, 2012 is below:</pre><pre> June 30, December 31,</pre><pre> 2013 2012</pre><pre> ---------- ----------</pre><pre>Raw materials $2,685,322 $3,058,645</pre><pre>Ingredients 187,044 108,673</pre><pre>Finished goods 34,633 454</pre><pre> ---------- ----------</pre><pre> 2,906,999 3,167,772</pre><pre>Inventory reserves 337,696 546,873</pre><pre> ---------- ----------</pre><pre>Inventories, net $2,569,303 $2,620,899</pre><pre> ========== ==========</pre>
<!--egx--><pre>6. PROPERTY, PLANT AND EQUIPMENT</pre><pre>As of June 30, 2013 and December 31, 2012 property, plant and equipment from</pre><pre>continuing operations consisted of the following:</pre><pre> Useful Lives June 30, December 31,</pre><pre> (Years) 2013 2012</pre><pre> ------- ------------ ------------</pre><pre>Land n/a $ 6,430,000 $ 430,000</pre><pre>Machinery and equipment 2-10 15,996,507 15,893,600</pre><pre>Furniture and fixtures 5-10 169,258 110,439</pre><pre>Building and leasehold improvements 10 3,443,598 3,376,869</pre><pre>Computer equipment and software 5-7 843,314 827,191</pre><pre>Construction in progress n/a -- --</pre><pre>Vehicles 3-10 340,350 408,080</pre><pre> ------------ ------------</pre><pre> 27,223,027 21,046,179</pre><pre>Less accumulated depreciation 7,768,763 6,870,153</pre><pre> ------------ ------------</pre><pre> $ 19,454,264 $ 14,176,026</pre><pre> ============ ============</pre><pre>Total depreciation expense related to continuing operations for the six months</pre><pre>ended June 30, 2013 and 2012 was $925,980 and $694,328, respectively.</pre>
<!--egx--><pre>7. GOODWILL AND INTANGIBLE ASSETS</pre><pre>GOODWILL AND INTANGIBLE ASSETS</pre><pre>Goodwill of $22,241 as of June 30, 2013 and 2012, and licenses and permits (an</pre><pre>intangible asset) of $2,609,000 as of June 30, 2013 and December 31, 2012,</pre><pre>respectively, have indefinite useful lives and are not being amortized but are</pre><pre>instead tested for impairment annually or whenever an event occurs that may</pre><pre>indicate a significant decrease in the fair value of the assets has taken place.</pre><pre>The aforementioned licenses and permits have renewal provisions which are</pre><pre>generally one to four years. As of June 30, 2013, the weighted-average period to</pre><pre>the next renewal was ten months. The costs of renewal are nominal and are</pre><pre>expensed when incurred. The Company intends to renew all licenses and permits</pre><pre>currently held.</pre><pre>Amortization expense related to continuing operations for the six months ended</pre><pre>June 30, 2013 and 2012 was $0 and $935,668 respectively. As of June 30, 2013,</pre><pre>all intangible assets subject to amortization were fully amortized.</pre>
<!--egx--><pre>8. LONG-TERM DEBT</pre><pre>Long-term debt consists of the following as of June 30, 2013 and December 31,</pre><pre>2012:</pre><pre> June 30, December 31,</pre><pre> 2013 2012</pre><pre> ---------- ----------</pre><pre>Equipment loans payable, collateralized by</pre><pre>the assets purchased, and bearing interest at</pre><pre>annual fixed rates ranging from 8.00% to</pre><pre>15.00% as of June 30, 2013 and December 31,</pre><pre>2012 with principal and interest payable in</pre><pre>installments through July 2014 $ 620,823 $ 748,293</pre><pre>Promissory notes payable, with zero interest</pre><pre>to current accounts payable vendors. Payment</pre><pre>terms are from 12 to 36 months 3,301,582 3,135,840</pre><pre>Promissory notes payable, with accrued</pre><pre>interest, to three former stockholders of a</pre><pre>predecessor company. These notes are</pre><pre>unsecured and are subordinate to the</pre><pre>Company's senior debt. The notes matured and</pre><pre>are in default as of June 30, 2013 and bear</pre><pre>interest at an annual fixed rate of 6.00% 500,000 500,000</pre><pre>Note payable to a commercial bank. Payable in</pre><pre>monthly installments of principal and</pre><pre>interest through March 2015. The annual</pre><pre>interest rate is 7.25% 186,719 242,149</pre><pre>Bridge loan with a commercial bank,</pre><pre>collateralized by property, plant and</pre><pre>equipment in addition to assets purchased,</pre><pre>and bearing interest at 2.75% above the U.S.</pre><pre>Prime Rate with a floor of 5.00% and a</pre><pre>ceiling of 7.00%. The loan matures on</pre><pre>February 1, 2014. 2,749,985 2,749,985</pre><pre> ---------- ----------</pre><pre>Total 7,359,109 7,376,267</pre><pre>Less current portion 6,100,700 6,057,595</pre><pre> ---------- ----------</pre><pre>Long-term portion $1,258,409 $1,318,672</pre><pre> ========== ==========</pre>
<!--egx--><pre>9. RELATED PARTY TRANSACTIONS</pre><pre>Related parties are natural persons or other entities that have the ability,</pre><pre>directly or indirectly, to control another party or exercise significant</pre><pre>influence over the other party in making financial and operating decisions.</pre><pre>Related parties include other parties that are subject to common control or that</pre><pre>are subject to common significant influences.</pre><pre>DUE FROM FACTOR</pre><pre>AWWT, BPI & Tyree have entered into discount factoring agreements with a related</pre><pre>party ("Factor"), which shares common ownership and management with the Company,</pre><pre>under which eligible accounts receivable will be factored. The Factor assumes</pre><pre>credit risk for all credit-approved accounts. The Company pays to the Factoring</pre><pre>a commission on each accounts receivable purchased equal to (a) 1% for each 60</pre><pre>days that such accounts receivable is outstanding and (b) after the initial 15</pre><pre>day period, an additional 1% for each 30 days or part that such accounts</pre><pre>receivable is outstanding. The Company can request advances of up to 80% of</pre><pre>factored accounts based on the customer credit limit under the terms of the</pre><pre>factor agreements which controls the activity under the agreement. The factor</pre><pre>agreement is secured by the eligible accounts receivable. The factor fees</pre><pre>amounted to $124,013 and $0 for the six months ended June 30, 2013 and 2012,</pre><pre>respectively.</pre><pre>LOANS PAYABLE</pre><pre>Loans from a related party consist of the following at:</pre><pre> June 30, December 31,</pre><pre> 2013 2012</pre><pre> ---------- ----------</pre><pre>Loan and security agreement with Capstone</pre><pre>Capital Group, LLC which expires on November</pre><pre>1, 2013 bearing interest at 18% per annum.</pre><pre>Maximum borrowing of $4,000,000 $3,662,306 $ 764,799</pre><pre>Loan and security agreement with Capstone</pre><pre>Capital Group, LLC which expires on May 15,</pre><pre>2015 bearing interest at 18% per annum.</pre><pre>Maximum borrowing of $1,000,000 512,270 473,820</pre><pre>Loan and security agreement with Stephen</pre><pre>Tyree which expires on November 5, 2014</pre><pre>bearing interest at 5.0% per annum. 15,264 50,417</pre><pre> ---------- ----------</pre><pre>Total loans and amounts payable to related</pre><pre>parties $4,189,840 $1,289,036</pre><pre> ========== ==========</pre><pre>Interest expense for these loans amounted to $237,014 and $165,879 for the six</pre>months ended June 30, 2013 and 2012, respectively.
<!--egx--><pre>10. CORRECTION OF SHARES OF COMMON STOCK ISSUED</pre><pre>On June 27, 2012, the Company issued 68,928 shares of Class B common shares as a</pre><pre>correction of the amount of shares issued on the Company's Payment in Kind date.</pre><pre>As a result, the amount of Class B shares outstanding and the weighted average</pre><pre>shares outstanding for the six months ended June 30, 2012 have been restated.</pre><pre>This correction is de minimus and had no discernable effect on previously</pre><pre>reported loss per share.</pre>
<!--egx--><pre>11. SEGMENTS</pre><pre>The Company is organized into six segments: (1) Amincor, (2) Other Assets, (3)</pre><pre>AWWT (4) BPI, and (5) Tyree. Assets related to discontinued operations ("Disc.</pre><pre>Ops") are also presented below where relevant. Segment information is as</pre><pre>follows:</pre><pre> June 30, December 31,</pre><pre> 2013 2012</pre><pre> ------------ ------------</pre><pre>Total Assets:</pre><pre> Amincor $ 375,123 $ 298,792</pre><pre> Other Assets 8,596,433 8,566,433</pre><pre> AWWT 361,144 1,144,626</pre><pre> BPI 11,768,258 12,051,571</pre><pre> Tyree 12,647,075 12,529,072</pre><pre> Disc. Ops 4,253 424,647</pre><pre> ------------ ------------</pre><pre>Total assets $ 33,752,286 $ 35,015,141</pre><pre> ============ ============</pre><pre> June 30, December 31,</pre><pre> 2013 2012</pre><pre> ------------ ------------</pre><pre>Total Goodwill:</pre><pre> Amincor $ -- $ --</pre><pre> Other Assets -- --</pre><pre> AWWT 22,241 22,241</pre><pre> BPI -- --</pre><pre> Tyree -- --</pre><pre> ------------ ------------</pre><pre>Total goodwill $ 22,241 $ 22,241</pre><pre> ============ ============</pre><pre> June 30, December 31,</pre><pre> 2013 2012</pre><pre> ------------ ------------</pre><pre>Total Intangible Assets:</pre><pre> Amincor $ -- $ --</pre><pre> Other Assets -- --</pre><pre> AWWT -- --</pre><pre> BPI -- --</pre><pre> Tyree 2,609,000 2,609,000</pre><pre> ------------ ------------</pre><pre>Total intangible assets $ 2,609,000 $ 2,609,000</pre><pre> ============ ============</pre><pre> Three Months Ended June 30, Six Months Ended June 30,</pre><pre> 2013 2012 2013 2012</pre><pre> ------------ ------------ ------------ ------------</pre><pre>Net Revenues: </pre><pre> Amincor $ -- $ -- $ -- $ --</pre><pre> Other Assets -- -- -- --</pre><pre> AWWT 97,794 3,250 151,012 3,250</pre><pre> BPI 237,301 4,227,696 292,109 8,371,984</pre><pre> Tyree 6,709,459 8,606,178 13,569,480 8,125,487</pre><pre> ------------ ------------ ------------ ------------</pre><pre> </pre><pre>Net revenues $ 7,044,554 $ 12,837,124 $ 14,012,601 $ 26,500,721</pre><pre> ============ ============ ============ ============</pre><pre> Three Months Ended June 30, Six Months Ended June 30,</pre><pre> 2013 2012 2013 2012</pre><pre> ------------ ------------ ------------ ------------</pre><pre>Income (loss) before Provision for Income Taxes:</pre><pre> Amincor $ (907,343) (1,348,574) $ (1,998,713) $ (2,982,428)</pre><pre> Other Assets (338,460) (70,274) (368,586) (70,275)</pre><pre> AWWT (40,311) (330) (86,766) (330)</pre><pre> BPI (1,278,950) (137,216) (2,443,048) (274,381)</pre><pre> Tyree 59,739 (282,090) 87,986 (884,537)</pre><pre> ------------ ------------ ------------ ------------</pre><pre>Income (loss) before Provision for Income Taxes $ (2,505,325) $ (1,838,484) $ (4,809,127) $ (4,211,951)</pre><pre> ============ ============ ============ ============</pre><pre> Three Months Ended June 30, Six Months Ended June 30,</pre><pre> 2013 2012 2013 2012</pre><pre> ------------ ------------ ------------ ------------</pre><pre>Depreciation of Property and Equipment:</pre><pre> Amincor $ -- $ -- $ -- $ --</pre><pre> Other Assets -- -- -- --</pre><pre> AWWT 11,818 -- 23,635 --</pre><pre> BPI 294,444 207,751 588,475 414,301</pre><pre> Tyree 162,645 127,270 313,870 280,027</pre><pre> ------------ ------------ ------------ ------------</pre><pre>Total depreciation of property and equipment $ 468,907 $ 335,021 $ 925,980 $ 694,328</pre><pre> ============ ============ ============ ============</pre><pre> Three Months Ended June 30, Six Months Ended June 30,</pre><pre> 2013 2012 2013 2012</pre><pre> ------------ ------------ ------------ ------------</pre><pre>Amortization of Intangible Assets:</pre><pre> Amincor $ -- $ -- $ -- $ --</pre><pre> Other Assets -- -- -- --</pre><pre> AWWT -- -- -- --</pre><pre> BPI -- 191,225 -- 382,450</pre><pre> Tyree -- 276,609 -- 553,218</pre><pre> ------------ ------------ ------------ ------------</pre><pre>Total amortization of intangible assets $ -- $ 467,834 $ -- $ 935,668</pre><pre> ============ ============ ============ ============</pre><pre> Three Months Ended June 30, Six Months Ended June 30,</pre><pre> 2013 2012 2013 2012</pre><pre> ------------ ------------ ------------ ------------</pre><pre>Interest Expense - net:</pre><pre> Amincor $ (174,124) $ (87,420) $ (333,243) $ (168,134)</pre><pre> Other Assets (10,000) (6,980) (17,247) (13,875)</pre><pre> AWWT 671 2 1,360 2</pre><pre> BPI 245,461 127,318 414,788 228,137</pre><pre> Tyree 191,750 106,979 404,637 231,071</pre><pre> ------------ ------------ ------------ ------------</pre><pre>Total interest expense, net $ 253,758 $ 139,899 $ 470,295 $ 277,201</pre><pre> ============ ============ ============ ============</pre>
<!--egx--><pre>12. COMMITMENTS AND CONTINGENCIES</pre><pre>CONTINGENCIES:</pre><pre>BPI</pre><pre>In connection with Baker's Pride's USDA loan application, BPI had Environmental</pre><pre>Site Assessments done on the property where the Mt. Pleasant Street Bakery, Inc.</pre><pre>resides as required by BPI's prospective lender. A Phase II Environmental Site</pre><pre>Assessment was completed on October 31, 2011 and was submitted to the Iowa</pre><pre>Department of Natural Resources ("IDNR") for their review. IDNR requested that a</pre><pre>Tier Two Site Cleanup Report ("Tier Two") be issued and completed in order to</pre><pre>better understand what environmental hazards exist on the property. The Tier Two</pre><pre>was completed on February 3, 2012 and was submitted to IDNR for further review.</pre><pre>Management's latest correspondence with IDNR, dated March 21, 2012, required</pre><pre>additional environmental remediation to be in compliance with IDNR's</pre><pre>regulations. Management has retained the necessary environmental consultants to</pre><pre>become compliant with IDNR's request. Due to the nature of the liability, the</pre><pre>remediation work is 100% eligible for refund from INDR's Innocent Landowner</pre><pre>Fund. As such there is no direct liability related to the cleanup of the hazard.</pre><pre>TYREE</pre><pre>One of Tyree's largest customers, Getty Petroleum Marketing, Inc. ("GPMI") filed</pre><pre>for bankruptcy protection on December 5, 2011. As of that date, Tyree had a</pre><pre>pre-petition receivable of $1,515,401, which was subsequently written-off due to</pre><pre>the uncertainty of collection. Additionally, Tyree has a post-petition</pre><pre>administrative claim for $593,709. A Proof of Claim was filed with the</pre><pre>Bankruptcy court on Tuesday, April 10, 2012. On August 27, 2012, the United</pre><pre>States Bankruptcy Court for the Southern District of New York confirmed GPMI's</pre><pre>Chapter 11 plan of liquidation offered by its unsecured creditors committee,</pre><pre>overruling the remaining objections. The plan provides for all of the debtors'</pre><pre>property to be liquidated over time and for the proceeds to be allocated to</pre><pre>creditors. Any assets not distributed by the effective date will be held by a</pre><pre>liquidating trust and administered by a liquidation trustee, who will be</pre><pre>responsible for liquidating assets, resolving disputed claims, making</pre><pre>distributions, pursuing reserved causes of action and winding up GPMI's affairs.</pre><pre>As an unsecured creditor, Tyree may never collect or may only collect a small</pre><pre>percentage of the pre and post-petition amounts owed. To date, Tyree has not</pre><pre>been notified of any intent by the United States Bankruptcy Court for the</pre><pre>Southern District of New York to claw back any amounts paid to Tyree</pre><pre>pre-petition.</pre><pre>As of the date of this filing, Tyree management has negotiated settlements with</pre><pre>Local Unions 99, 138 and 355. Tyree management continues to negotiate with Local</pre><pre>Unions 1, 25 and 200 over unpaid benefits that are due to each of the respective</pre><pre>unions. As of June 30, 2013, Tyree had approximately $950,000 in unpaid</pre><pre>benefits. Tyree management does not dispute that benefits are due and owing to</pre><pre>each of the respective unions, however, settlement and payment plan discussions</pre><pre>are ongoing. Local Unions 1 and 200 have each filed suit in the United States</pre><pre>District Court Eastern District of New York to enforce their rights as to the</pre><pre>unpaid benefits due and owing from Tyree, and as guarantor of certain amounts</pre><pre>due and owing, Amincor, Inc. is also a named party in these lawsuits.</pre><pre>Local Union 200 filed a claim with the National Labor Relations Board ("NLRB")</pre><pre>alleging that Tyree Service Corp violated the National Labor Relations Act. By a</pre><pre>letter dated May 31, 2013, the NLRB dismissed all charges against Tyree Service</pre><pre>Corp. due to insufficient evidence to establish a violation. Local 200 intends</pre><pre>to appeal the NLRB decision.</pre><pre>A variety of unsecured vendors have filed suit for non-payment of outstanding</pre><pre>invoices totaling approximately $2.6 million as of June 30, 2013, which are</pre><pre>reflected as liabilities on the Company's consolidated condensed balance sheet.</pre><pre>Each of these actions is handled on a case by case basis, to determine the</pre><pre>settlement and payment plan.</pre><pre>ESI</pre><pre>The Volkl license agreement was terminated in September 2011 and concurrently</pre><pre>the Strategic Alliance Agreement with Samsung America CT, Inc. ("Samsung") was</pre><pre>also terminated. Volkl is seeking a $400,000 royalty payment. Epic has initiated</pre><pre>counterclaims against the various parties, including but not limited to Samsung,</pre><pre>seeking damages for, including but not limited to infringement, improper use of</pre><pre>company assets and breach of fiduciary duty. Volkl was successful in obtaining a</pre><pre>judgment against Epic Sports International, Inc. and a confirmation of the</pre><pre>Arbitration is presently pending in Federal Court. Management believes that this</pre><pre>matter and the Frost matter below will eventually be settled out of court for</pre><pre>less than the royalty and damages amounts sought.</pre><pre>On September 28, 2012, Sean Frost ("Frost"), the former President of Epic Sports</pre><pre>International, Inc., filed a complaint against Epic Sports International Inc.,</pre><pre>Amincor, Inc. and Joseph Ingrassia (collectively, the "Defendants"). The first</pre><pre>cause of action of the complaint is a petition to compel arbitration for unpaid</pre><pre>compensation and benefits pursuant to Frost's employment agreement. The second</pre><pre>cause of action of the complaint is for breach of contract for alleged</pre><pre>non-payment of expenses, vacation days and assumption of certain debts. The</pre><pre>third cause of action of the complaint is for violation of the California Labor</pre><pre>Code for failure to pay wages. In addition, Frost is seeking among other things,</pre><pre>damages, attorneys' fees and costs and expenses.</pre><pre>LEGAL PROCEEDINGS</pre><pre>AMINCOR</pre><pre>On July 6, 2012, SFR Holdings, Ltd., Eden Rock Finance Master Limited, Eden Rock</pre><pre>Asset Based Lending Master Ltd., Eden Rock Unleveraged Finance Master Limited,</pre><pre>SHK Asset Backed Finance Limited, Cannonball Plus Fund Limited and Cannonball</pre><pre>Stability Fund, LP (collectively, the "Plaintiffs") commenced an action in the</pre><pre>Supreme Court of the State of New York County of New York against Amincor, Inc.,</pre><pre>Amincor Other Assets, Inc., their officers and directors, John R. Rice III,</pre><pre>Joseph F. Ingrassia and Robert L. Olson and various other entities affiliated</pre><pre>with or controlled directly or indirectly by John R. Rice III and Joseph F.</pre><pre>Ingrassia (collectively the "Defendants"). Plaintiffs allege that Defendants</pre><pre>engaged in wrongful acts, including fraudulent inducement, fraud, breach of</pre><pre>fiduciary duty, unjust enrichment, fraudulent conveyance and breach of contract.</pre><pre>Plaintiffs are seeking compensatory damages in an amount in excess of $150,000</pre><pre>to be determined at trial. Litigation is pending. Management believes that this</pre><pre>lawsuit has no merit or basis and intends to vigorously defend it.</pre><pre>TYREE</pre><pre>Tyree's services are regulated by federal, state and local laws enacted to</pre><pre>regulate discharge of materials into the environment, remediation of</pre><pre>contaminated soil and groundwater or otherwise protect the environment. The</pre><pre>regulations put Tyree or Tyree's predecessor companies at risk for becoming a</pre><pre>party to legal proceedings involving customers or other interested parties. The</pre><pre>issues involved in such proceedings generally relate to alleged responsibility</pre><pre>arising under federal or state laws to remediate contamination at properties</pre><pre>owned or operated either by current or former customers or by other parties who</pre><pre>allege damages. To limit its exposure to such proceedings, Tyree purchases, for</pre><pre>itself and Tyree's predecessor companies, site pollution, pollution and</pre><pre>professional liability insurance. Aggregate limits, per occurrence limits and</pre><pre>deductibles for this policy are $10,000,000, $5,000,000 and $50,000,</pre><pre>respectively.</pre><pre>Tyree and its subsidiaries are, from time to time, involved in ordinary and</pre><pre>routine litigation. Management presently believes that the ultimate outcome of</pre><pre>these proceedings individually or in the aggregate, will not have a material</pre><pre>adverse effect on the Company's financial position, results of operations or</pre><pre>cash flows. Nevertheless, litigation is subject to inherent uncertainties and</pre><pre>unfavorable rulings could occur. An unfavorable ruling could include monetary</pre><pre>damages and, in such event, could result in a material adverse impact on the</pre><pre>Company's financial position, results of operations or cash flows for the period</pre><pre>in which the ruling occurs.</pre><pre>IMSC/OTHER ASSETS</pre><pre>Capstone Business Credit, LLC, a related party, is the plaintiff (on behalf of</pre><pre>Amincor Other Assets, Inc.) in a foreclosure action against Imperia Family</pre><pre>Realty, LLC ("IFR"). IFR is related to the former owners of Masonry's business.</pre><pre>In November 2011 a Judgment of Foreclosure was granted by the court ordering</pre><pre>that the IMSC property in Pelham Manor, New York (the "Property") be sold at</pre><pre>public auction. As of the date of this filing, the deed to the Property has been</pre><pre>recorded in the name of Amincor Other Assets, Inc. with the office of the</pre><pre>Westchester County Clerk.</pre><pre>A former principal of Imperia Bros., Inc. (a predecessor company of Masonry)</pre><pre>filed a notice of appeal dated November 14, 2011 with the court contesting the</pre><pre>Judgment of Foreclosure. On June 19, 2013, the parties in the above action</pre><pre>agreed to a settlement in principle, which resolves the remaining causes of</pre><pre>action and dismisses the third party complaint and the declaratory judgment</pre><pre>complaint, with prejudice</pre>
<!--egx--><pre>13. SUBSEQUENT EVENTS</pre><pre>On July 25, 2013, Amincor Other Assets, Inc. entered into a lease agreement to</pre><pre>rent the Pelham Manor, New York property for an initial lease term of one year</pre><pre>at an annual fixed rent of $240,000.</pre><pre>The Company has evaluated all other subsequent events after the report date and</pre><pre>there were no significant subsequent events requiring disclosure.</pre>
<!--egx--><pre>BASIS OF PRESENTATION</pre><pre>The accompanying unaudited consolidated condensed financial statements of the</pre><pre>Company have been prepared pursuant to the rules and regulations of the</pre><pre>Securities and Exchange Commission. Certain information and note disclosures</pre><pre>normally included in annual financial statements prepared in accordance with</pre><pre>generally accepted accounting principles in the United States of America</pre><pre>("GAAP") have been condensed or omitted pursuant to those rules and regulations;</pre><pre>however, although the Company believes that the disclosures are adequate to make</pre><pre>the information not misleading. In the opinion of management, all adjustments</pre><pre>necessary for a fair statement of the results of operations and financial</pre><pre>position for the periods presented have been reflected as required by Regulation</pre><pre>S-X. The results of operations for the interim period presented is not</pre><pre>necessarily indicative of the results of operations to be expected for the year.</pre><pre>These consolidated condensed financial statements should be read in conjunction</pre><pre>with the Company's most recent Form 10-K which includes the audited consolidated</pre><pre>or combined financial statements for the three years ended December 31, 2012.</pre>
<!--egx--><pre>PRINCIPLES OF CONSOLIDATION</pre><pre>The consolidated condensed financial statements include the accounts of Amincor,</pre><pre>Inc. and all of its consolidated subsidiaries (collectively the "Company"). All</pre><pre>intercompany balances and transactions have been eliminated in consolidation.</pre>
<!--egx--><pre>USE OF ESTIMATES</pre><pre>The preparation of financial statements in conformity with GAAP requires</pre><pre>management to make estimates and assumptions that affect the reported amount of</pre><pre>assets and liabilities and the disclosure of contingent assets and liabilities</pre><pre>at the date of the financial statements, and the reported amounts of revenues</pre><pre>and expenses during the reporting periods. Significant estimates include the</pre><pre>valuation of goodwill and intangible assets, the useful lives of tangible and</pre><pre>intangible assets, depreciation and amortization of property, plant and</pre><pre>equipment, allowances for doubtful accounts and inventory obsolescence,</pre><pre>estimates related to completion of contracts and loss contingencies on</pre><pre>particular uncompleted contracts and the valuation allowance on deferred tax</pre>assets. Actual results could differ from those estimates.
<!--egx--><pre>REVENUE RECOGNITION</pre><pre>BPI</pre><pre>Revenue is recognized from product sales when goods are delivered to BPI's</pre><pre>shipping dock, and are made available for pick-up by the customer, at which</pre><pre>point title and risk of loss pass to the customer. Customer sales discounts are</pre><pre>accounted for as reductions in revenues in the same period the related sales are</pre><pre>recorded.</pre><pre>TYREE</pre><pre>Maintenance and repair services for several retail petroleum customers are</pre><pre>performed under multi-year, unit price contracts ("Tyree Contracts"). Under</pre><pre>these agreements, the customer pays a set price per contracted retail location</pre><pre>per month and Tyree provides a defined scope of maintenance and repair services</pre><pre>at these locations on an on-call or as scheduled basis. Revenue earned under</pre><pre>Tyree Contracts is recognized each month at the prevailing per location unit</pre><pre>price. Revenue from other maintenance and repair services is recognized as these</pre><pre>services are rendered.</pre><pre>Tyree uses the percentage-of-completion method on construction services,</pre><pre>measured by the percentage of total costs incurred to date to estimated total</pre><pre>costs for each contract. This method is used because management considers costs</pre><pre>to date to be the best available measure of progress on these contracts.</pre><pre>Provisions for estimated losses on uncompleted contracts are made in the period</pre><pre>in which overall contract losses become probable. Changes in job performance,</pre><pre>job conditions and estimated profitability, including those arising from final</pre><pre>contract settlements, may result in revisions to costs and income. These</pre><pre>revisions are recognized in the period in which it is probable that the customer</pre><pre>will approve the variation and the amount of revenue arising from the revision</pre><pre>can be reliably measured. An amount equal to contract costs attributable to</pre><pre>claims is included in revenues when negotiations have reached an advance stage</pre><pre>such that it is probable that the customer will accept the claim and the amount</pre><pre>can be measured reliably.</pre><pre>The asset account "Costs and estimated earnings in excess of billings on</pre><pre>uncompleted contracts," represents revenues recognized in excess of amounts</pre><pre>billed.</pre><pre>The liability account, "Billings in excess of cost and estimated earnings on</pre><pre>uncompleted contracts," represents billings in excess of revenues recognized.</pre><pre>AWWT</pre><pre>AWWT provides water remediation and logistics services for its clients which</pre><pre>include any business that produces waste water. AWWT invoices clients based on</pre><pre>bills of lading which specify the quantity and type of water treated. Revenue is</pre><pre>recognized as water remediation services are performed.</pre>
<!--egx--><pre>ACCOUNTS RECEIVABLE</pre><pre>Accounts receivable are recorded net of an allowance for doubtful accounts. The</pre><pre>credit worthiness of customers is analyzed based on historical experience, as</pre><pre>well as the prevailing business and economic environment. An allowance for</pre><pre>doubtful accounts is established and determined based on management's</pre><pre>assessments of the aging of receivables, payment history, the customer's current</pre><pre>credit worthiness and the economic environment. Accounts are written off when</pre><pre>significantly past due and after exhaustive efforts at collection. Recoveries of</pre><pre>accounts receivables previously written off are recorded as income when</pre><pre>subsequently collected.</pre><pre>Tyree's accounts receivable for maintenance and repair services and construction</pre><pre>contracts are recorded at the invoiced amount and do not bear interest. Tyree,</pre><pre>BPI, EQS, and AWWT extend unsecured credit to customers in the ordinary course</pre><pre>of business but mitigate the associated risks by performing credit checks and</pre><pre>actively pursuing past due accounts. Tyree follows the practice of filing</pre><pre>statutory "mechanics" liens on construction projects where collection problems</pre>are anticipated.
<!--egx--><pre>MORTGAGES RECEIVABLE</pre><pre>The mortgages receivable consist of commercial loans collateralized by property</pre><pre>in Pelham Manor, New York. The loans were non-performing and property was in</pre><pre>foreclosure as of December 31, 2012. In 2013, the Company gained title to the</pre><pre>property and is included in property, plant and equipment as of June 30, 2013.</pre><pre>The value of the mortgages was based on the fair value of the collateral</pre>
<!--egx--><pre>ALLOWANCE FOR LOAN LOSSES</pre><pre>An allowance for loan losses is established as losses are estimated to have</pre><pre>occurred through a provision for loan losses charged to operations. A loan is</pre><pre>determined to be non-accrual when it is probable that scheduled payments of</pre><pre>principal and interest will not be received when due according to the</pre><pre>contractual terms of the loan agreement. When a loan is placed on non-accrual</pre><pre>status, all accrued yet uncollected interest is reversed from income. Payments</pre><pre>received on non-accrual loans are generally applied to the outstanding principal</pre><pre>balance. Loans are removed from non-accrual status when management believes that</pre><pre>the borrower will resume making the payments required by the loan agreement.</pre>
<!--egx--><pre>INVENTORIES</pre><pre>Inventories are stated at the lower of cost or market using the first-in,</pre><pre>first-out method. Market is determined based on the net realizable value with</pre><pre>appropriate consideration given to obsolescence, excessive levels and other</pre><pre>market factors. An inventory reserve is recorded if the carrying amount of the</pre><pre>inventory exceeds its estimated market value.</pre>
<!--egx--><pre>PROPERTY, PLANT AND EQUIPMENT</pre><pre>Property, plant and equipment are stated at cost and the related depreciation is</pre><pre>computed using the straight-line method over the estimated useful lives of the</pre><pre>respective assets. Expenditures for repairs and maintenance are charged to</pre><pre>operations as incurred. Renewals and betterments are capitalized. Upon the sale</pre><pre>or retirement of an asset, the related costs and accumulated depreciation are</pre><pre>removed from the accounts and any gain or loss is recognized in the results of</pre><pre>operations.</pre><pre>Leasehold improvements are amortized over the lesser of the estimated life of</pre><pre>the asset or the lease term.</pre>
<!--egx--><pre>GOODWILL AND INTANGIBLE ASSETS</pre><pre>Goodwill represents the cost of acquiring a business that exceeds the net fair</pre><pre>value ascribed to its identifiable assets and liabilities. Goodwill and</pre><pre>indefinite-lived intangibles are not subject to amortization but are tested for</pre><pre>impairment annually and whenever events or circumstances change, such as a</pre><pre>significant adverse change in the economic climate that would make it more</pre><pre>likely than not that impairment may have occurred. If the carrying value of</pre><pre>goodwill or an indefinite-lived intangible asset exceeds its fair value, an</pre><pre>impairment loss is recognized.</pre><pre>Intangible assets with finite lives are recorded at cost less accumulated</pre><pre>amortization. Finite-lived tangible assets are amortized on a straight-line</pre><pre>basis over the expected useful lives of the respective assets.</pre>
<!--egx--><pre>IMPAIRMENT OF LONG-LIVED ASSETS</pre><pre>The Company evaluates the fair value of long-lived assets on an annual basis or</pre><pre>whenever events or changes in circumstances indicate that its carrying amounts</pre><pre>may not be recoverable. Accordingly, any impairment of value is recognized when</pre><pre>the carrying amount of a long-lived asset exceeds its fair value.</pre>
<!--egx--><pre>EARNINGS (LOSS) PER SHARE</pre><pre>Basic earnings (loss) per share is computed by dividing net income (loss)</pre><pre>available to common stockholders by the weighted-average number of common shares</pre><pre>outstanding for the period. Diluted earnings (loss) per share considers the</pre><pre>potential dilution that could occur if securities or other contracts to issue</pre><pre>common stock were exercised or could otherwise cause the issuance of common</pre><pre>stock. Such contracts include stock options and convertible preferred stock,</pre><pre>which when exercised or converted into common stock would cause the issuance of</pre><pre>common stock that then would share in earnings (loss). Such potential additional</pre><pre>common shares are included in the computation of diluted earnings per share.</pre><pre>Diluted loss per share is not computed because any potential additional common</pre><pre>shares would reduce the reported loss per share and therefore have an</pre><pre>antidilutive effect.</pre>
<!--egx--><pre>SHARE-BASED COMPENSATION</pre><pre>All share-based awards are measured based on their grant date fair values and</pre><pre>are charged to expenses over the period during which the required services are</pre><pre>provided in exchange for the award (the vesting period). Share-based awards are</pre><pre>subject to specific vesting conditions. Compensation cost is recognized over the</pre><pre>vesting period based on the grant date fair value of the awards and the portion</pre><pre>of the award that is ultimately expected to vest.</pre>
<!--egx--><pre>RECLASSIFICATIONS</pre><pre>Certain reclassifications have been made to the accompanying consolidated</pre><pre>condensed financial statements of prior periods to conform to the current</pre><pre>period's presentation.</pre>
10-Q
2013-06-30
false
Amincor, Inc.
0001167905
--12-31
28949367
Non-accelerated Filer
No
Yes
Yes
2013
Q2
<!--egx--><pre>The following amounts related to Masonry, Tulare, EQS and ESI have been</pre><pre>segregated from continuing operations and reported as discontinued operations:</pre><pre> Three Months Ended June 30, Six Months Ended June 30,</pre><pre> 2013 2012 2013 2012</pre><pre> ---------- ---------- ---------- ----------</pre><pre>Results From Discontinued Operations:</pre><pre> Net revenues from discontinued operations $ (1,771) $ 273,072 $ 231,887 $ 543,841</pre><pre> ========== ========== ========== ==========</pre><pre> Loss from discontinued operations $ (100,453) $ (311,479) $ (281,729) $ (542,583)</pre><pre> ========== ========== ========== ==========</pre>
<!--egx--><pre>The following is a summary of the assets and liabilities of the discontinued</pre><pre>operations, excluding assets held for sale (which is recorded separately on the</pre><pre>consolidated condensed balance sheets).</pre><pre> June 30, December 31,</pre><pre> 2013 2012</pre><pre> ------------ ------------</pre><pre>Cash $ 2,285 $ 2,699</pre><pre>Accounts receivable 1,968 231,558</pre><pre>Prepaid expenses and other current assets -- 13,840</pre><pre>Property, plant and equipment, net -- 348,798</pre><pre>Goodwill and other intangible assets -- 135,000</pre><pre>Other assets -- 429,451</pre><pre> ------------ ------------</pre><pre>Total assets $ 4,253 $ 1,161,346</pre><pre> ------------ ------------</pre><pre>Accounts payable $ 3,810,755 $ 4,350,376</pre><pre>Accrued expenses and other current liabilities 883,538 1,160,188</pre><pre>Other long term liabilities -- 130,625</pre><pre> ------------ ------------</pre><pre>Total liabilities $ 4,694,293 $ 5,641,189</pre><pre> ------------ ------------</pre><pre>Net liabilities $ (4,690,040) $ (4,479,843)</pre><pre> ============ ============</pre>
<!--egx--><pre>A summary of inventory as of June 30, 2013 and December 31, 2012 is below:</pre><pre> June 30, December 31,</pre><pre> 2013 2012</pre><pre> ---------- ----------</pre><pre>Raw materials $2,685,322 $3,058,645</pre><pre>Ingredients 187,044 108,673</pre><pre>Finished goods 34,633 454</pre><pre> ---------- ----------</pre><pre> 2,906,999 3,167,772</pre><pre>Inventory reserves 337,696 546,873</pre><pre> ---------- ----------</pre><pre>Inventories, net $2,569,303 $2,620,899</pre><pre> ========== ==========</pre>
<!--egx--><pre>As of June 30, 2013 and December 31, 2012 property, plant and equipment from</pre><pre>continuing operations consisted of the following:</pre><pre> Useful Lives June 30, December 31,</pre><pre> (Years) 2013 2012</pre><pre> ------- ------------ ------------</pre><pre>Land n/a $ 6,430,000 $ 430,000</pre><pre>Machinery and equipment 2-10 15,996,507 15,893,600</pre><pre>Furniture and fixtures 5-10 169,258 110,439</pre><pre>Building and leasehold improvements 10 3,443,598 3,376,869</pre><pre>Computer equipment and software 5-7 843,314 827,191</pre><pre>Construction in progress n/a -- --</pre><pre>Vehicles 3-10 340,350 408,080</pre><pre> ------------ ------------</pre><pre> 27,223,027 21,046,179</pre><pre>Less accumulated depreciation 7,768,763 6,870,153</pre><pre> ------------ ------------</pre><pre> $ 19,454,264 $ 14,176,026</pre><pre> ============ ============</pre>
<!--egx--><pre>Long-term debt consists of the following as of June 30, 2013 and December 31,</pre><pre>2012:</pre><pre> June 30, December 31,</pre><pre> 2013 2012</pre><pre> ---------- ----------</pre><pre>Equipment loans payable, collateralized by</pre><pre>the assets purchased, and bearing interest at</pre><pre>annual fixed rates ranging from 8.00% to</pre><pre>15.00% as of June 30, 2013 and December 31,</pre><pre>2012 with principal and interest payable in</pre><pre>installments through July 2014 $ 620,823 $ 748,293</pre><pre>Promissory notes payable, with zero interest</pre><pre>to current accounts payable vendors. Payment</pre><pre>terms are from 12 to 36 months 3,301,582 3,135,840</pre><pre>Promissory notes payable, with accrued</pre><pre>interest, to three former stockholders of a</pre><pre>predecessor company. These notes are</pre><pre>unsecured and are subordinate to the</pre><pre>Company's senior debt. The notes matured and</pre><pre>are in default as of June 30, 2013 and bear</pre><pre>interest at an annual fixed rate of 6.00% 500,000 500,000</pre><pre>Note payable to a commercial bank. Payable in</pre><pre>monthly installments of principal and</pre><pre>interest through March 2015. The annual</pre><pre>interest rate is 7.25% 186,719 242,149</pre><pre>Bridge loan with a commercial bank,</pre><pre>collateralized by property, plant and</pre><pre>equipment in addition to assets purchased,</pre><pre>and bearing interest at 2.75% above the U.S.</pre><pre>Prime Rate with a floor of 5.00% and a</pre><pre>ceiling of 7.00%. The loan matures on</pre><pre>February 1, 2014. 2,749,985 2,749,985</pre><pre> ---------- ----------</pre><pre>Total 7,359,109 7,376,267</pre><pre>Less current portion 6,100,700 6,057,595</pre><pre> ---------- ----------</pre><pre>Long-term portion $1,258,409 $1,318,672</pre><pre> ========== ==========</pre>
<!--egx--><pre>Loans from a related party consist of the following at:</pre><pre> June 30, December 31,</pre><pre> 2013 2012</pre><pre> ---------- ----------</pre><pre>Loan and security agreement with Capstone</pre><pre>Capital Group, LLC which expires on November</pre><pre>1, 2013 bearing interest at 18% per annum.</pre><pre>Maximum borrowing of $4,000,000 $3,662,306 $ 764,799</pre><pre>Loan and security agreement with Capstone</pre><pre>Capital Group, LLC which expires on May 15,</pre><pre>2015 bearing interest at 18% per annum.</pre><pre>Maximum borrowing of $1,000,000 512,270 473,820</pre><pre>Loan and security agreement with Stephen</pre><pre>Tyree which expires on November 5, 2014</pre><pre>bearing interest at 5.0% per annum. 15,264 50,417</pre><pre> ---------- ----------</pre><pre>Total loans and amounts payable to related</pre><pre>parties $4,189,840 $1,289,036</pre><pre> ========== ==========</pre>
<!--egx--><pre>Segment information is as</pre><pre>follows:</pre><pre> June 30, December 31,</pre><pre> 2013 2012</pre><pre> ------------ ------------</pre><pre>Total Assets:</pre><pre> Amincor $ 375,123 $ 298,792</pre><pre> Other Assets 8,596,433 8,566,433</pre><pre> AWWT 361,144 1,144,626</pre><pre> BPI 11,768,258 12,051,571</pre><pre> Tyree 12,647,075 12,529,072</pre><pre> Disc. Ops 4,253 424,647</pre><pre> ------------ ------------</pre><pre>Total assets $ 33,752,286 $ 35,015,141</pre> ============
<!--egx--><pre> June 30, December 31,</pre><pre> 2013 2012</pre><pre> ------------ ------------</pre><pre>Total Goodwill:</pre><pre> Amincor $ -- $ --</pre><pre> Other Assets -- --</pre><pre> AWWT 22,241 22,241</pre><pre> BPI -- --</pre><pre> Tyree -- --</pre><pre> ------------ ------------</pre><pre>Total goodwill $ 22,241 $ 22,241</pre><pre> ============ ============</pre>
<!--egx--><pre> June 30, December 31,</pre><pre> 2013 2012</pre><pre> ------------ ------------</pre><pre>Total Intangible Assets:</pre><pre> Amincor $ -- $ --</pre><pre> Other Assets -- --</pre><pre> AWWT -- --</pre><pre> BPI -- --</pre><pre> Tyree 2,609,000 2,609,000</pre><pre> ------------ ------------</pre><pre>Total intangible assets $ 2,609,000 $ 2,609,000</pre> ============
<!--egx--><pre> Three Months Ended June 30, Six Months Ended June 30,</pre><pre> 2013 2012 2013 2012</pre><pre> ------------ ------------ ------------ ------------</pre><pre>Net Revenues: </pre><pre> Amincor $ -- $ -- $ -- $ --</pre><pre> Other Assets -- -- -- --</pre><pre> AWWT 97,794 3,250 151,012 3,250</pre><pre> BPI 237,301 4,227,696 292,109 8,371,984</pre><pre> Tyree 6,709,459 8,606,178 13,569,480 8,125,487</pre><pre> ------------ ------------ ------------ ------------</pre><pre> </pre><pre>Net revenues $ 7,044,554 $ 12,837,124 $ 14,012,601 $ 26,500,721</pre><pre> ============ ============ ============ ============</pre>
<!--egx--><pre> Three Months Ended June 30, Six Months Ended June 30,</pre><pre> 2013 2012 2013 2012</pre><pre> ------------ ------------ ------------ ------------</pre><pre>Interest Expense - net:</pre><pre> Amincor $ (174,124) $ (87,420) $ (333,243) $ (168,134)</pre><pre> Other Assets (10,000) (6,980) (17,247) (13,875)</pre><pre> AWWT 671 2 1,360 2</pre><pre> BPI 245,461 127,318 414,788 228,137</pre><pre> Tyree 191,750 106,979 404,637 231,071</pre><pre> ------------ ------------ ------------ ------------</pre><pre>Total interest expense, net $ 253,758 $ 139,899 $ 470,295 $ 277,201</pre> ============ ============ ============
<!--egx--><pre> Three Months Ended June 30, Six Months Ended June 30,</pre><pre> 2013 2012 2013 2012</pre><pre> ------------ ------------ ------------ ------------</pre><pre>Depreciation of Property and Equipment:</pre><pre> Amincor $ -- $ -- $ -- $ --</pre><pre> Other Assets -- -- -- --</pre><pre> AWWT 11,818 -- 23,635 --</pre><pre> BPI 294,444 207,751 588,475 414,301</pre><pre> Tyree 162,645 127,270 313,870 280,027</pre><pre> ------------ ------------ ------------ ------------</pre><pre>Total depreciation of property and equipment $ 468,907 $ 335,021 $ 925,980 $ 694,328</pre> ============ ============ ============
<!--egx--><pre> Three Months Ended June 30, Six Months Ended June 30,</pre><pre> 2013 2012 2013 2012</pre><pre> ------------ ------------ ------------ ------------</pre><pre>Amortization of Intangible Assets:</pre><pre> Amincor $ -- $ -- $ -- $ --</pre><pre> Other Assets -- -- -- --</pre><pre> AWWT -- -- -- --</pre><pre> BPI -- 191,225 -- 382,450</pre><pre> Tyree -- 276,609 -- 553,218</pre><pre> ------------ ------------ ------------ ------------</pre><pre>Total amortization of intangible assets $ -- $ 467,834 $ -- $ 935,668</pre> ============ ============ ============
<!--egx--><pre> Three Months Ended June 30, Six Months Ended June 30,</pre><pre> 2013 2012 2013 2012</pre><pre> ------------ ------------ ------------ ------------</pre><pre>Income (loss) before Provision for Income Taxes:</pre><pre> Amincor $ (907,343) (1,348,574) $ (1,998,713) $ (2,982,428)</pre><pre> Other Assets (338,460) (70,274) (368,586) (70,275)</pre><pre> AWWT (40,311) (330) (86,766) (330)</pre><pre> BPI (1,278,950) (137,216) (2,443,048) (274,381)</pre><pre> Tyree 59,739 (282,090) 87,986 (884,537)</pre><pre> ------------ ------------ ------------ ------------</pre><pre>Income (loss) before Provision for Income Taxes $ (2,505,325) $ (1,838,484) $ (4,809,127) $ (4,211,951)</pre><pre> ============ ============ ============ ============</pre>
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us-gaap:EquityMember
2013-06-30
0001167905
2012-01-01
2012-12-31
0001167905
2013-07-25
shares
iso4217:USD
iso4217:USD
shares
pure