Preview
FILED: NEW YORK COUNTY CLERK 01/21/2021 11:26 PM INDEX NO. 657193/2020
NYSCEF DOC. NO. 55 RECEIVED NYSCEF: 01/21/2021
Exhibit 14
FILED: NEW YORK COUNTY CLERK 01/21/2021 11:26 PM INDEX NO. 657193/2020
NYSCEF DOC. NO. 55 RECEIVED NYSCEF: 01/21/2021
GERMAN NEWS CO., INC. AND SUBSIDIARY
FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2018
(UNAUDITED)
FILED: NEW YORK COUNTY CLERK 01/21/2021 11:26 PM INDEX NO. 657193/2020
NYSCEF DOC. NO. 55 RECEIVED NYSCEF: 01/21/2021
GERMAN NEWS CO., INC. AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2018
(UNAUDITED)
TABLE OF CONTENTS
Page
Number
Accountant’s Compilation Report 1
Consolidated Balance Sheet 2–3
Consolidated Statement of Income and Retained Earnings 4
Consolidated Statement of Cash Flows 5–6
Notes to Financial Statements 7 – 10
Supplemental Schedules:
Schedule I - Consolidated Rental Income and Expenses 11
Schedule II - Consolidated General and Administrative Expenses 12
FILED: NEW YORK COUNTY CLERK 01/21/2021 11:26 PM INDEX NO. 657193/2020
NYSCEF DOC. NO. 55 RECEIVED NYSCEF: 01/21/2021
BECK & BAUMANN, CPA, LLC
CERTIFIED PUBLIC ACCOUNTANTS
440 STATE HIGHWAY 17N, SUITE 4
ALLEN M. BECK, CPA, MST HASBROUCK HEIGHTS, NJ 07604
DENISE A. BAUMANN, CPA, MBA (201) 288-0314
(201) 933-5860 – FAX
To the Board of Directors
German News Co., Inc. and Subsidiary
New York, NY
Management isresponsible for the accompanying consolidated financial statements of German News Co., Inc. and
Subsidiary (“S” corporations) (the “Company”) which comprise the consolidated balance sheet as of December 31, 2018,
and the related consolidated statements of income and retained earnings, and cash flows for the year then ended, and the
related notes to the consolidated financial statements, in accordance with accounting principles generally accepted in the
United States of America. We have performed a compilation engagement in accordance with Statements on Standards for
Accounting and Review Services promulgated by the Accounting and Review Services Committee of the AICPA. We did not
audit or review the consolidated financial statements nor were we required to perform any procedures to verify the accuracy
or completeness of the information provided by management. Accordingly, we do not express an opinion, a conclusion, nor
provide any form of assurance on these financial statements.
Supplementary Information
The supplementary information contained in Schedules I and II is presented for purposes of additional analysis and is not a
required part of the basic financial statements. This information is the representation of management. The information was
subject to our compilation engagement, however, we have not audited or reviewed the supplementary information and,
accordingly, do not express an opinion, a conclusion, nor provide any form of assurance on such supplementary
information.
______________________________________________
Beck & Baumann, CPA, LLC
Hasbrouck Heights, New Jersey
March 31, 2019
FILED: NEW YORK COUNTY CLERK 01/21/2021 11:26 PM INDEX NO. 657193/2020
NYSCEF DOC. NO. 55 RECEIVED NYSCEF: 01/21/2021
GERMAN NEWS CO., INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
AS AT DECEMBER 31, 2018
(UNAUDITED)
German German News
News Inc. Texas, Inc. Eliminations Total
ASSETS
Current Assets:
Cash and cash equivalents (Notes B and I) $ 294,533 $ 21,226 $ $ 315,759
Restricted cash - deposits (Notes B and 42,140 42,140
security I)
Tenants rent receivable 16,666 1,620 18,286
Prepaid expenses 148,869 4,089 152,958
Real estate tax escrow 20,630 106,703 127,333
Reserve escrow 108,954 108,954
Due from officer(Note C) 1,059,601 1,059,601
Due from affiliates
(Note D) 8,327,289 1,148,492 (9,762) 9,466,019
Total Current Assets 9,909,728 1,391,084 (9,762) 11,291,050
and equipment - net(Notes B and 494,209 893,120 1,387,329
Property E)
Mortgage recording costs (less accumulated amortization of $76,837) 179,286 179,286
Total Assets $ 10,583,223 $ 2,284,204 $ (9,762) $ 12,857,665
Attention isdirected to the accountant's
compilation reportand notes to the financialstatements.
-2-
FILED: NEW YORK COUNTY CLERK 01/21/2021 11:26 PM INDEX NO. 657193/2020
NYSCEF DOC. NO. 55 RECEIVED NYSCEF: 01/21/2021
GERMAN NEWS CO., INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
AS AT DECEMBER 31, 2018
(UNAUDITED)
(CONTINUED)
German German News
News Inc. Texas, Inc. Eliminations Total
LIABILITIES AND SHAREHOLDER'S EQUITY
Current Liabilities:
Accounts payable and accrued expenses $ 49,724 $ 132,630 $ $ 182,354
Mortgage payable (Note F) 109,403 109,403
Loan payable (Note G) 104,173 104,173
Investment inGerman News Texas, Inc 142,348 -
(142,348)
Due to affiliates
(Note D) 505,888 148,447 (9,762) 644,573
Deferred rent payable 10,235 12,300 22,535
Total Current Liabilities 817,598 397,550 (152,110) 1,063,038
Other Liabilities:
Mortgage payable - netof current portion (Note 4,063,880 1,182,565 5,246,445
F)
Loan payable - net ofcurrent portion (Note 920,523 920,523
G)
Security deposits payable (Notes B and I) 142,104 38,364 180,468
Total Other Liabilities 4,205,984 2,141,452 6,347,436
Total Liabilities 5,023,582 2,539,002 (152,110) 7,410,474
Commitments and contingencies (Note H)
Shareholder's Equity:
Capital stock - 10 Shares no par value, authorized, issued and 26,768 26,768
outstanding
Retained earnings 5,532,873 (254,798) 142,348 5,420,423
Total Shareholder's Equity 5,559,641 (254,798) 142,348 5,447,191
Total Liabilities
and Shareholder's Equity $ 10,583,223 $ 2,284,204 $ (9,762) $ 12,857,665
Attention isdirected to the accountant's
compilation reportand notes to the financialstatements.
-3-
FILED: NEW YORK COUNTY CLERK 01/21/2021 11:26 PM INDEX NO. 657193/2020
NYSCEF DOC. NO. 55 RECEIVED NYSCEF: 01/21/2021
GERMAN NEWS CO., INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 2018
(UNAUDITED)
German German News
News Inc. Texas, Inc. Eliminations Total
Income:
Rental income and expenses (Schedule I) $ 276,655 $ 37,529 $ $ 314,184
Miscellaneous income 6 6
Total Income 276,661 37,529 314,190
General and administrative expenses (Schedule II) (793,605) (148,209) (941,814)
Net income before corporation income taxes (516,944) (110,680) (627,624)
Corporation income taxes (12,153) (1,770) (13,923)
Net income (529,097) (112,450) (641,547)
Retained earnings:
Beginning of year 6,061,970 (142,348) 5,919,622
End of year $ 5,532,873 $ $ - $ 5,278,075
(254,798)
Attention isdirected to the accountant's
compilation report and notes to the financial statements.
-4-
FILED: NEW YORK COUNTY CLERK 01/21/2021 11:26 PM INDEX NO. 657193/2020
NYSCEF DOC. NO. 55 RECEIVED NYSCEF: 01/21/2021
GERMAN NEWS CO., INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2018
(UNAUDITED)
German German News
News Inc. Texas, Inc. Eliminations Total
Cash Flows From Operating Activities:
Net income $ (529,097) $ (112,450) $ $ (641,547)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 107,240 81,844 189,084
Changes inOperating Assets and Liabilities:
Decrease intenants receivable 17,719 3,473 21,192
(Increase) in prepaid expenses (4,619) (4,089) (8,708)
Decrease in realestate tax escrow 12,810 (106,703) (93,893)
Decrease in reserve escrow (108,954) (108,954)
Increase inaccounts payable and accrued expenses (171,890) 129,170 (42,720)
(Decrease) indeferred rent payable 10,235 12,300 22,535
Net Cash Provided by Operating Activities (557,602) (105,409) (663,011)
Cash Flows From Financing Activities:
Decrease in mortgage recording costs 109,242 109,242
Increase in mortgage proceeds 1,084,452 1,084,452
Decrease in principalpayments 1,018,386 1,018,386
(Decrease) in loan payable (1,122,809) (1,122,809)
Net Cash Provided by Financing Activities 4,819 1,084,452 1,089,271
Attention isdirected to the accountant's
compilation report and notes to the financialstatements.
-5-
FILED: NEW YORK COUNTY CLERK 01/21/2021 11:26 PM INDEX NO. 657193/2020
NYSCEF DOC. NO. 55 RECEIVED NYSCEF: 01/21/2021
GERMAN NEWS CO., INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2018
(UNAUDITED)
(CONTINUED)
German German News
News Inc. Texas, Inc. Eliminations Total
Cash Flows From Investing Activities:
Increase inrestricted cash - deposits 242 242
security
Purchases of property and equipment (38,598) 16,000 (22,598)
indue from officer - - -
(Increase)
(Increase) indue from affiliates 816,496 (1,148,492) (331,996)
Increase insecurity deposits payable 3,063 3,470 6,533
Increase in investment inGerman News Texas, Inc (142,348) (142,348)
Increase indue to affiliates 166,559 144,962 311,521
Net Cash Utilizedby Investing Activities 805,414 (984,060) (178,646)
Net Decrease In Cash 252,631 (5,017) 247,614
Cash and Cash Equivalents - of Year 41,902 26,243 68,145
Beginning
Cash and Cash Equivalents - End of Year $ 294,533 $ 21,226 $ $ 315,759
Supplemental disclosures:
Cash paid during the year for:
Interest $ $ 99,950 $ $
Corporation income taxes $ 12,153 $ 1,770 $ $
Attention isdirected to the accountant's
compilation report and notes to the financialstatements.
-6-
FILED: NEW YORK COUNTY CLERK 01/21/2021 11:26 PM INDEX NO. 657193/2020
NYSCEF DOC. NO. 55 RECEIVED NYSCEF: 01/21/2021
GERMAN NEWS CO., INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2017
(UNAUDITED)
Note A – Organization and Nature of Activities
Organization
The accompanying consolidated financial statements of German News Co., Inc. and Affiliate (collectively
the “Company”) have been prepared by consolidating German News Co., Inc. and German News Texas,
Inc.
The Company owns, manages and rents commercial and residential real estate in New York City and
Irving, Texas. German News Co., Inc. was incorporated in New York, in 1956.
On June 12, 2017 German News, Co., Inc. transferred the ownership of a shopping center, known as
“Village at Valley Ranch”, located in Irving, Texas for a 100% interest in a new corporation – German
News Texas, Inc. (“the Subsidiary”). The Subsidiary was incorporated in Delaware.
Note B - Summary of Significant Accounting Policies
Basis of Accounting
The Company prepares its financial statements using the accrual basis of accounting. The Company
follows accounting principles generally accepted in the United States of America (“U.S. GAAP).
Basis of Consolidation
German News Co., Inc. consolidates the activities of its affiliate since it has both control and an economic
interest in the affiliate. All significant intercompany balances and transactions have been eliminated during
the consolidation.
Estimates
The preparation of financial statements in conformity with U. S. GAAP requires management to make
estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual
results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of less than three months to
be cash equivalents.
Property and Equipment
Property and equipment are carried at cost. Depreciation and amortization is recorded using accelerated
and straight line methods, over the estimated useful lives of the related assets ranging from 5 to 39 years.
The Company capitalizes property and equipment with a useful life of three years or more and a cost of
$2,500 or more.
-7-
FILED: NEW YORK COUNTY CLERK 01/21/2021 11:26 PM INDEX NO. 657193/2020
NYSCEF DOC. NO. 55 RECEIVED NYSCEF: 01/21/2021
GERMAN NEWS CO., INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2018
(UNAUDITED)
(Continued)
Note B - Summary of Significant Accounting Policies (continued)
Corporation Income Taxes
The Company with the consent of its shareholder, has elected under the Internal Revenue Code to be
treated as a subchapter “S” corporation. In lieu of corporation income taxes, the shareholder of an “S”
corporation are taxed on their proportionate share of the Company’s taxable income. Therefore, no
provision or liability for federal income taxes has been included in these financial statements. However,
the Company is liable for state and local corporation income taxes. Generally, Federal, State and Local
income tax returns are subject to possible examination by taxing authorities until the expiration of related
statues of limitations on those returns. The taxing authorities may examine the Company’s tax returns for
three years from the date of filing.
Accounting for Uncertainty in Income Taxes
The Company’s accounting policy is to provide liabilities for uncertain tax positions when a liability is
probable and estimable. Management is not aware of any violation or of any exposure to corporation
income taxes.
For all open tax years and for all major taxing jurisdictions, the Shareholder has concluded that the
Company is a pass-through entity and there are no uncertain tax positions that would require recognition
in the financial statements. If the Company were to incur an income tax liability in the future, interest on
any income tax liability would be reported as interest expense and penalties on any income tax liability
would be reported as income taxes. No interest expense or penalties have been recognized as of or for
the year ended December 31, 2018. The Company does not expect that itsassessment regarding
unrecognized tax positions will materially change over the next 12 months.
Subsequent Events Evaluation by Management
Management has evaluated subsequent events for disclosure and/or recognition in the financial
statements through the date that the financial statements were available to be issued, which date is March
31, 2019.
Note C – Due From Officer
Advances and loans to Berrin Tekiner are non-interest bearing and due on demand.
Note D – Due From (To) Affiliates
Amounts due from (to) affiliates consist of cash advances for working capital which are unsecured and
payable on demand.
German German News
News, Inc Texas, Inc
Bremen House, Inc. $8,317,526 $ (115,144)
Residuary Trust U/W of Sami Tekiner ( 71,071) 34,458
254-258 W. 35th Street, LLC (241,110) ( 23,540)
Bremen House Texas, Inc. (193,707) 1,114,034
Total $7,811,638 $1,009,808)
-8-
FILED: NEW YORK COUNTY CLERK 01/21/2021 11:26 PM INDEX NO. 657193/2020
NYSCEF DOC. NO. 55 RECEIVED NYSCEF: 01/21/2021
GERMAN NEWS CO., INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2018
(UNAUDITED)
(Continued)
Note E - Property and Equipment
Property and equipment consist of the following:
German German News
News, Inc Texas, Inc
Land $ 267,812 $ 502,000
Buildings and improvements 1,182,957 2,082,465
1,450,769 2,584,465
Less: accumulated depreciation and amortization (956,560) (1,691,345)
$ 494,209 $ 893,120
Note F - Mortgage Payable
Principal Interest
Property Balance Rate Held by Due
300 and 304 E. 86th St. Dime
New York, NY $ 4,173,283* 4.00% Community June 20, 2027
(variable) Bank
*In June 2017, the Company and its affiliate, Bremen House, Inc., (See Note D) obtained a ten year
mortgage in the amount of $6,000,000, financed through Dime Community Bank. Monthly fixed payments
of $31,670 are inclusive of interest at 4% per annum. The interest rate for the first 5 years is 4%. During
years 6 -10, the interest rate is 2.5% over the banks cost of borrowing for a five year period. The loan is
guaranteed by the Company and Bremen House, Inc.
German News Co., Inc.’s portion of the loan is $4,277,706 at December 31, 2017.
Total maturities for the mortgage payable is as follows for the year ending:
December 31, 2019 $ 109,403
2020 113,860
2021 118,500
2022 123,327
2023 128,352
Thereafter 3,579,841
$ 4,173,283
Note G – Loan Payable
In 2003, the Company borrowed $1,644,866 from the Residuary QTIP Trust U/W of Sami Tekiner (an
affiliate).During the fiscal year ended December 31, 2018, the remaining principal of this loan was
transferred to 254-258 W. 35th Street, LLC. The loan is due on or about January 1, 2027, with interest at
4% per annum. Monthly payments of principal and interest are $11,770.
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FILED: NEW YORK COUNTY CLERK 01/21/2021 11:26 PM INDEX NO. 657193/2020
NYSCEF DOC. NO. 55 RECEIVED NYSCEF: 01/21/2021
GERMAN NEWS CO., INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2018
(UNAUDITED)
(Continued)
Note G – Loan Payable (continued)
Maturities are as follows:
Year ended December 31, 2019 $ 104,173
2020 108,417
2021 112,834
2022 117,432
2023 122,202
Thereafter 459,638
$ 1,024,696
Note H - Commitments and Contingencies
1) The Company leases residential property in New York City, NY. Rent expense for the year ended
December 31, 2017 was $30,000. The lease expires August 31, 2027.
The minimum annual cumulative rental expense for non-cancellable leases for the future years ending are
as follows:
December 31, 2019 $ 30,000
2020 30,000
2021 30,000
2022 30,000
2023 30,000
Thereafter 140,000
$ 290,000
2) Bremen House Texas, Inc., an affiliate (see Note D) refinanced the property at Green Oaks Shopping
Center in Irving, Texas and Crossroads Center in Arlington, Texas with Wells Fargo Bank. The interest
rate is a swap product amortized over 30 years and due September 11, 2027. The loan is secured by a
first mortgage lien on the land and building at the two properties. Monthly fixed payments are $31,616
inclusive of interest. The balance due on this loan is $1,182,565 at December 31, 2018.
The loan is also collateralized by German News Texas, Inc., a subsidiary of German News Co. Inc.
Note I – Concentration of Credit Risk
The company maintains several bank accounts at a bank which is an institution insured by the Federal
Deposit Insurance Corporation (FDIC) up to $250,000 per depositor. At December 31, 2018 there was no
uninsured deposits.
Note J - Retirement Plans
The company has a noncontributory deferred contribution plan covering all employees, who meet eligibility
requirements of a minimum of six months employment. Company contributions are based on employee
compensation to a maximum of 25%. Company contributions made to this plan in 2018 was $21,983.
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FILED: NEW YORK COUNTY CLERK 01/21/2021 11:26 PM INDEX NO. 657193/2020
NYSCEF DOC. NO. 55 RECEIVED NYSCEF: 01/21/2021
GERMAN NEWS CO., INC. AND SUBSIDIARY
SCHEDULE I
CONSOLIDATED RENTAL INCOME AND EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 2018
(UNAUDITED)
300 EAST 304 EAST 200 EAST
86th ST. 86th ST. 85th ST. VALLEY RANCH
NYC, NY NYC, NY NYC, NY IRVING, TX TOTALS
Rental Income and Escalations
Rental income $ 513,467 $ 351,423 $ 604,153 $ 415,214 $ 1,884,257
Real estate tax escalations 16,400 21,664 38,064
Total Rental Income and Escalations 513,467 351,423 620,553 436,878 1,922,321
Expenses:
Interest - mortgage 91,559 91,559 104,736 287,854
Rent 30,000 30,000
Real property taxes 132,583 114,960 202,500 114,907 564,950
Depreciation - building and improvements 28,888 35,497 42,855 81,844 189,084
Fuel 44,823 3,838 48,661
Utilities 2,670 2,859 20,219 4,892 30,640
Water and sewer charges 63,193 79,421 25,193 167,807
Maintenance services 12,867 8,823 15,073 17,834 54,597
Repairs 12,522 30,052 25,616 68,190
Exterminating and carting 1,639 4,814 22,382 28,835
Insurance 8,348 6,458 11,007 4,752 30,565
Professional fees and permits 3,993 25,841 7,150 752 37,736
Building supplies 10,679 6,147 1
Preview
FILED: NEW YORK COUNTY CLERK 01/21/2021 11:26 PM INDEX NO. 657193/2020 NYSCEF DOC. NO. 55 RECEIVED NYSCEF: 01/21/2021 Exhibit 14 FILED: NEW YORK COUNTY CLERK 01/21/2021 11:26 PM INDEX NO. 657193/2020 NYSCEF DOC. NO. 55 RECEIVED NYSCEF: 01/21/2021 GERMAN NEWS CO., INC. AND SUBSIDIARY FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2018 (UNAUDITED) FILED: NEW YORK COUNTY CLERK 01/21/2021 11:26 PM INDEX NO. 657193/2020 NYSCEF DOC. NO. 55 RECEIVED NYSCEF: 01/21/2021 GERMAN NEWS CO., INC. AND SUBSIDIARY CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2018 (UNAUDITED) TABLE OF CONTENTS Page Number Accountant’s Compilation Report 1 Consolidated Balance Sheet 2–3 Consolidated Statement of Income and Retained Earnings 4 Consolidated Statement of Cash Flows 5–6 Notes to Financial Statements 7 – 10 Supplemental Schedules: Schedule I - Consolidated Rental Income and Expenses 11 Schedule II - Consolidated General and Administrative Expenses 12 FILED: NEW YORK COUNTY CLERK 01/21/2021 11:26 PM INDEX NO. 657193/2020 NYSCEF DOC. NO. 55 RECEIVED NYSCEF: 01/21/2021 BECK & BAUMANN, CPA, LLC CERTIFIED PUBLIC ACCOUNTANTS 440 STATE HIGHWAY 17N, SUITE 4 ALLEN M. BECK, CPA, MST HASBROUCK HEIGHTS, NJ 07604 DENISE A. BAUMANN, CPA, MBA (201) 288-0314 (201) 933-5860 – FAX To the Board of Directors German News Co., Inc. and Subsidiary New York, NY Management isresponsible for the accompanying consolidated financial statements of German News Co., Inc. and Subsidiary (“S” corporations) (the “Company”) which comprise the consolidated balance sheet as of December 31, 2018, and the related consolidated statements of income and retained earnings, and cash flows for the year then ended, and the related notes to the consolidated financial statements, in accordance with accounting principles generally accepted in the United States of America. We have performed a compilation engagement in accordance with Statements on Standards for Accounting and Review Services promulgated by the Accounting and Review Services Committee of the AICPA. We did not audit or review the consolidated financial statements nor were we required to perform any procedures to verify the accuracy or completeness of the information provided by management. Accordingly, we do not express an opinion, a conclusion, nor provide any form of assurance on these financial statements. Supplementary Information The supplementary information contained in Schedules I and II is presented for purposes of additional analysis and is not a required part of the basic financial statements. This information is the representation of management. The information was subject to our compilation engagement, however, we have not audited or reviewed the supplementary information and, accordingly, do not express an opinion, a conclusion, nor provide any form of assurance on such supplementary information. ______________________________________________ Beck & Baumann, CPA, LLC Hasbrouck Heights, New Jersey March 31, 2019 FILED: NEW YORK COUNTY CLERK 01/21/2021 11:26 PM INDEX NO. 657193/2020 NYSCEF DOC. NO. 55 RECEIVED NYSCEF: 01/21/2021 GERMAN NEWS CO., INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEET AS AT DECEMBER 31, 2018 (UNAUDITED) German German News News Inc. Texas, Inc. Eliminations Total ASSETS Current Assets: Cash and cash equivalents (Notes B and I) $ 294,533 $ 21,226 $ $ 315,759 Restricted cash - deposits (Notes B and 42,140 42,140 security I) Tenants rent receivable 16,666 1,620 18,286 Prepaid expenses 148,869 4,089 152,958 Real estate tax escrow 20,630 106,703 127,333 Reserve escrow 108,954 108,954 Due from officer(Note C) 1,059,601 1,059,601 Due from affiliates (Note D) 8,327,289 1,148,492 (9,762) 9,466,019 Total Current Assets 9,909,728 1,391,084 (9,762) 11,291,050 and equipment - net(Notes B and 494,209 893,120 1,387,329 Property E) Mortgage recording costs (less accumulated amortization of $76,837) 179,286 179,286 Total Assets $ 10,583,223 $ 2,284,204 $ (9,762) $ 12,857,665 Attention isdirected to the accountant's compilation reportand notes to the financialstatements. -2- FILED: NEW YORK COUNTY CLERK 01/21/2021 11:26 PM INDEX NO. 657193/2020 NYSCEF DOC. NO. 55 RECEIVED NYSCEF: 01/21/2021 GERMAN NEWS CO., INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEET AS AT DECEMBER 31, 2018 (UNAUDITED) (CONTINUED) German German News News Inc. Texas, Inc. Eliminations Total LIABILITIES AND SHAREHOLDER'S EQUITY Current Liabilities: Accounts payable and accrued expenses $ 49,724 $ 132,630 $ $ 182,354 Mortgage payable (Note F) 109,403 109,403 Loan payable (Note G) 104,173 104,173 Investment inGerman News Texas, Inc 142,348 - (142,348) Due to affiliates (Note D) 505,888 148,447 (9,762) 644,573 Deferred rent payable 10,235 12,300 22,535 Total Current Liabilities 817,598 397,550 (152,110) 1,063,038 Other Liabilities: Mortgage payable - netof current portion (Note 4,063,880 1,182,565 5,246,445 F) Loan payable - net ofcurrent portion (Note 920,523 920,523 G) Security deposits payable (Notes B and I) 142,104 38,364 180,468 Total Other Liabilities 4,205,984 2,141,452 6,347,436 Total Liabilities 5,023,582 2,539,002 (152,110) 7,410,474 Commitments and contingencies (Note H) Shareholder's Equity: Capital stock - 10 Shares no par value, authorized, issued and 26,768 26,768 outstanding Retained earnings 5,532,873 (254,798) 142,348 5,420,423 Total Shareholder's Equity 5,559,641 (254,798) 142,348 5,447,191 Total Liabilities and Shareholder's Equity $ 10,583,223 $ 2,284,204 $ (9,762) $ 12,857,665 Attention isdirected to the accountant's compilation reportand notes to the financialstatements. -3- FILED: NEW YORK COUNTY CLERK 01/21/2021 11:26 PM INDEX NO. 657193/2020 NYSCEF DOC. NO. 55 RECEIVED NYSCEF: 01/21/2021 GERMAN NEWS CO., INC. AND SUBSIDIARY CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS FOR THE YEAR ENDED DECEMBER 31, 2018 (UNAUDITED) German German News News Inc. Texas, Inc. Eliminations Total Income: Rental income and expenses (Schedule I) $ 276,655 $ 37,529 $ $ 314,184 Miscellaneous income 6 6 Total Income 276,661 37,529 314,190 General and administrative expenses (Schedule II) (793,605) (148,209) (941,814) Net income before corporation income taxes (516,944) (110,680) (627,624) Corporation income taxes (12,153) (1,770) (13,923) Net income (529,097) (112,450) (641,547) Retained earnings: Beginning of year 6,061,970 (142,348) 5,919,622 End of year $ 5,532,873 $ $ - $ 5,278,075 (254,798) Attention isdirected to the accountant's compilation report and notes to the financial statements. -4- FILED: NEW YORK COUNTY CLERK 01/21/2021 11:26 PM INDEX NO. 657193/2020 NYSCEF DOC. NO. 55 RECEIVED NYSCEF: 01/21/2021 GERMAN NEWS CO., INC. AND SUBSIDIARY CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2018 (UNAUDITED) German German News News Inc. Texas, Inc. Eliminations Total Cash Flows From Operating Activities: Net income $ (529,097) $ (112,450) $ $ (641,547) Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 107,240 81,844 189,084 Changes inOperating Assets and Liabilities: Decrease intenants receivable 17,719 3,473 21,192 (Increase) in prepaid expenses (4,619) (4,089) (8,708) Decrease in realestate tax escrow 12,810 (106,703) (93,893) Decrease in reserve escrow (108,954) (108,954) Increase inaccounts payable and accrued expenses (171,890) 129,170 (42,720) (Decrease) indeferred rent payable 10,235 12,300 22,535 Net Cash Provided by Operating Activities (557,602) (105,409) (663,011) Cash Flows From Financing Activities: Decrease in mortgage recording costs 109,242 109,242 Increase in mortgage proceeds 1,084,452 1,084,452 Decrease in principalpayments 1,018,386 1,018,386 (Decrease) in loan payable (1,122,809) (1,122,809) Net Cash Provided by Financing Activities 4,819 1,084,452 1,089,271 Attention isdirected to the accountant's compilation report and notes to the financialstatements. -5- FILED: NEW YORK COUNTY CLERK 01/21/2021 11:26 PM INDEX NO. 657193/2020 NYSCEF DOC. NO. 55 RECEIVED NYSCEF: 01/21/2021 GERMAN NEWS CO., INC. AND SUBSIDIARY CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2018 (UNAUDITED) (CONTINUED) German German News News Inc. Texas, Inc. Eliminations Total Cash Flows From Investing Activities: Increase inrestricted cash - deposits 242 242 security Purchases of property and equipment (38,598) 16,000 (22,598) indue from officer - - - (Increase) (Increase) indue from affiliates 816,496 (1,148,492) (331,996) Increase insecurity deposits payable 3,063 3,470 6,533 Increase in investment inGerman News Texas, Inc (142,348) (142,348) Increase indue to affiliates 166,559 144,962 311,521 Net Cash Utilizedby Investing Activities 805,414 (984,060) (178,646) Net Decrease In Cash 252,631 (5,017) 247,614 Cash and Cash Equivalents - of Year 41,902 26,243 68,145 Beginning Cash and Cash Equivalents - End of Year $ 294,533 $ 21,226 $ $ 315,759 Supplemental disclosures: Cash paid during the year for: Interest $ $ 99,950 $ $ Corporation income taxes $ 12,153 $ 1,770 $ $ Attention isdirected to the accountant's compilation report and notes to the financialstatements. -6- FILED: NEW YORK COUNTY CLERK 01/21/2021 11:26 PM INDEX NO. 657193/2020 NYSCEF DOC. NO. 55 RECEIVED NYSCEF: 01/21/2021 GERMAN NEWS CO., INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2017 (UNAUDITED) Note A – Organization and Nature of Activities Organization The accompanying consolidated financial statements of German News Co., Inc. and Affiliate (collectively the “Company”) have been prepared by consolidating German News Co., Inc. and German News Texas, Inc. The Company owns, manages and rents commercial and residential real estate in New York City and Irving, Texas. German News Co., Inc. was incorporated in New York, in 1956. On June 12, 2017 German News, Co., Inc. transferred the ownership of a shopping center, known as “Village at Valley Ranch”, located in Irving, Texas for a 100% interest in a new corporation – German News Texas, Inc. (“the Subsidiary”). The Subsidiary was incorporated in Delaware. Note B - Summary of Significant Accounting Policies Basis of Accounting The Company prepares its financial statements using the accrual basis of accounting. The Company follows accounting principles generally accepted in the United States of America (“U.S. GAAP). Basis of Consolidation German News Co., Inc. consolidates the activities of its affiliate since it has both control and an economic interest in the affiliate. All significant intercompany balances and transactions have been eliminated during the consolidation. Estimates The preparation of financial statements in conformity with U. S. GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of less than three months to be cash equivalents. Property and Equipment Property and equipment are carried at cost. Depreciation and amortization is recorded using accelerated and straight line methods, over the estimated useful lives of the related assets ranging from 5 to 39 years. The Company capitalizes property and equipment with a useful life of three years or more and a cost of $2,500 or more. -7- FILED: NEW YORK COUNTY CLERK 01/21/2021 11:26 PM INDEX NO. 657193/2020 NYSCEF DOC. NO. 55 RECEIVED NYSCEF: 01/21/2021 GERMAN NEWS CO., INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2018 (UNAUDITED) (Continued) Note B - Summary of Significant Accounting Policies (continued) Corporation Income Taxes The Company with the consent of its shareholder, has elected under the Internal Revenue Code to be treated as a subchapter “S” corporation. In lieu of corporation income taxes, the shareholder of an “S” corporation are taxed on their proportionate share of the Company’s taxable income. Therefore, no provision or liability for federal income taxes has been included in these financial statements. However, the Company is liable for state and local corporation income taxes. Generally, Federal, State and Local income tax returns are subject to possible examination by taxing authorities until the expiration of related statues of limitations on those returns. The taxing authorities may examine the Company’s tax returns for three years from the date of filing. Accounting for Uncertainty in Income Taxes The Company’s accounting policy is to provide liabilities for uncertain tax positions when a liability is probable and estimable. Management is not aware of any violation or of any exposure to corporation income taxes. For all open tax years and for all major taxing jurisdictions, the Shareholder has concluded that the Company is a pass-through entity and there are no uncertain tax positions that would require recognition in the financial statements. If the Company were to incur an income tax liability in the future, interest on any income tax liability would be reported as interest expense and penalties on any income tax liability would be reported as income taxes. No interest expense or penalties have been recognized as of or for the year ended December 31, 2018. The Company does not expect that itsassessment regarding unrecognized tax positions will materially change over the next 12 months. Subsequent Events Evaluation by Management Management has evaluated subsequent events for disclosure and/or recognition in the financial statements through the date that the financial statements were available to be issued, which date is March 31, 2019. Note C – Due From Officer Advances and loans to Berrin Tekiner are non-interest bearing and due on demand. Note D – Due From (To) Affiliates Amounts due from (to) affiliates consist of cash advances for working capital which are unsecured and payable on demand. German German News News, Inc Texas, Inc Bremen House, Inc. $8,317,526 $ (115,144) Residuary Trust U/W of Sami Tekiner ( 71,071) 34,458 254-258 W. 35th Street, LLC (241,110) ( 23,540) Bremen House Texas, Inc. (193,707) 1,114,034 Total $7,811,638 $1,009,808) -8- FILED: NEW YORK COUNTY CLERK 01/21/2021 11:26 PM INDEX NO. 657193/2020 NYSCEF DOC. NO. 55 RECEIVED NYSCEF: 01/21/2021 GERMAN NEWS CO., INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2018 (UNAUDITED) (Continued) Note E - Property and Equipment Property and equipment consist of the following: German German News News, Inc Texas, Inc Land $ 267,812 $ 502,000 Buildings and improvements 1,182,957 2,082,465 1,450,769 2,584,465 Less: accumulated depreciation and amortization (956,560) (1,691,345) $ 494,209 $ 893,120 Note F - Mortgage Payable Principal Interest Property Balance Rate Held by Due 300 and 304 E. 86th St. Dime New York, NY $ 4,173,283* 4.00% Community June 20, 2027 (variable) Bank *In June 2017, the Company and its affiliate, Bremen House, Inc., (See Note D) obtained a ten year mortgage in the amount of $6,000,000, financed through Dime Community Bank. Monthly fixed payments of $31,670 are inclusive of interest at 4% per annum. The interest rate for the first 5 years is 4%. During years 6 -10, the interest rate is 2.5% over the banks cost of borrowing for a five year period. The loan is guaranteed by the Company and Bremen House, Inc. German News Co., Inc.’s portion of the loan is $4,277,706 at December 31, 2017. Total maturities for the mortgage payable is as follows for the year ending: December 31, 2019 $ 109,403 2020 113,860 2021 118,500 2022 123,327 2023 128,352 Thereafter 3,579,841 $ 4,173,283 Note G – Loan Payable In 2003, the Company borrowed $1,644,866 from the Residuary QTIP Trust U/W of Sami Tekiner (an affiliate).During the fiscal year ended December 31, 2018, the remaining principal of this loan was transferred to 254-258 W. 35th Street, LLC. The loan is due on or about January 1, 2027, with interest at 4% per annum. Monthly payments of principal and interest are $11,770. -9- FILED: NEW YORK COUNTY CLERK 01/21/2021 11:26 PM INDEX NO. 657193/2020 NYSCEF DOC. NO. 55 RECEIVED NYSCEF: 01/21/2021 GERMAN NEWS CO., INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2018 (UNAUDITED) (Continued) Note G – Loan Payable (continued) Maturities are as follows: Year ended December 31, 2019 $ 104,173 2020 108,417 2021 112,834 2022 117,432 2023 122,202 Thereafter 459,638 $ 1,024,696 Note H - Commitments and Contingencies 1) The Company leases residential property in New York City, NY. Rent expense for the year ended December 31, 2017 was $30,000. The lease expires August 31, 2027. The minimum annual cumulative rental expense for non-cancellable leases for the future years ending are as follows: December 31, 2019 $ 30,000 2020 30,000 2021 30,000 2022 30,000 2023 30,000 Thereafter 140,000 $ 290,000 2) Bremen House Texas, Inc., an affiliate (see Note D) refinanced the property at Green Oaks Shopping Center in Irving, Texas and Crossroads Center in Arlington, Texas with Wells Fargo Bank. The interest rate is a swap product amortized over 30 years and due September 11, 2027. The loan is secured by a first mortgage lien on the land and building at the two properties. Monthly fixed payments are $31,616 inclusive of interest. The balance due on this loan is $1,182,565 at December 31, 2018. The loan is also collateralized by German News Texas, Inc., a subsidiary of German News Co. Inc. Note I – Concentration of Credit Risk The company maintains several bank accounts at a bank which is an institution insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 per depositor. At December 31, 2018 there was no uninsured deposits. Note J - Retirement Plans The company has a noncontributory deferred contribution plan covering all employees, who meet eligibility requirements of a minimum of six months employment. Company contributions are based on employee compensation to a maximum of 25%. Company contributions made to this plan in 2018 was $21,983. -10- FILED: NEW YORK COUNTY CLERK 01/21/2021 11:26 PM INDEX NO. 657193/2020 NYSCEF DOC. NO. 55 RECEIVED NYSCEF: 01/21/2021 GERMAN NEWS CO., INC. AND SUBSIDIARY SCHEDULE I CONSOLIDATED RENTAL INCOME AND EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2018 (UNAUDITED) 300 EAST 304 EAST 200 EAST 86th ST. 86th ST. 85th ST. VALLEY RANCH NYC, NY NYC, NY NYC, NY IRVING, TX TOTALS Rental Income and Escalations Rental income $ 513,467 $ 351,423 $ 604,153 $ 415,214 $ 1,884,257 Real estate tax escalations 16,400 21,664 38,064 Total Rental Income and Escalations 513,467 351,423 620,553 436,878 1,922,321 Expenses: Interest - mortgage 91,559 91,559 104,736 287,854 Rent 30,000 30,000 Real property taxes 132,583 114,960 202,500 114,907 564,950 Depreciation - building and improvements 28,888 35,497 42,855 81,844 189,084 Fuel 44,823 3,838 48,661 Utilities 2,670 2,859 20,219 4,892 30,640 Water and sewer charges 63,193 79,421 25,193 167,807 Maintenance services 12,867 8,823 15,073 17,834 54,597 Repairs 12,522 30,052 25,616 68,190 Exterminating and carting 1,639 4,814 22,382 28,835 Insurance 8,348 6,458 11,007 4,752 30,565 Professional fees and permits 3,993 25,841 7,150 752 37,736 Building supplies 10,679 6,147 1