Exhibit 6, MBE Capital Partners Reviewed Financial Statements — No. 1:22-cr-00251-LJL (Dkt. 77-6, S.D.N.Y.)
Summary
Exhibit 6, Document 77-6 filed 07/05/23 in United States v. Martinez, No. 1:22-cr-00251-LJL, in the S.D.N.Y. It contains Reviewed Financial Statements of MBE Capital Partners, Inc., A Division of Republic Companies, for the year ended December 31, 2018, with an accountants' compilation report dated February 10, 2019. The balance sheet lists total assets of $1,315,814,120.04, the statement of operations lists revenue of $1,319,277,648 and net income of $5,505,349.20, and the accounting policies describe the company as formed in July 2013 and making loans against receivables and assets. The statement of member's capital and notes follow.
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“Exhibit 6, MBE Capital Partners Reviewed Financial Statements — No. 1:22-cr-00251-LJL (Dkt. 77-6, S.D.N.Y.).”
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Case 1:22-cr-00251-LJL Document 77-6 Filed 07/05/23 Page 1 of 14
Exhibit 6
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MBE CAPITAL PARTNERS, INC.
A DIVISION OF REPUBLIC
COMPANIES
REVIEWED FINANCIAL STATEMENTS
FOR THE YEAR ENDED
DECEMBER 31, 2018
Case 1:22-cr-00251-LJL Document 77-6 Filed 07/05/23 Page 5 of 14
Contents
Accountants’ compilation report 1
Financial statements
Balance sheet 2-3
Statement of operations 4
Statement of cash flows 5
Statement of member’s capital 6
Summary of significant accounting policies 7-8
Notes to the financial statements 9
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Accountants’ compilation report
To the Members
MBE Capital Partners, Inc.
New York, New York
We have reviewed the accompanying balance sheet of MBE Capital Partners, Inc. as of December 31, 2018, and
the related statements of operations, and member’s capital, and cash flows for the year then ended, which is
presented only for supplementary analysis purposes, in accordance with Statements on Standards for
Accounting and Review Services issued by the American Institute of Certified Public Accountants.
A review is limited to presenting in the form of financial statements information that is the representation of our
findings. We have reviewed but not audited the accompanying consolidated financial statements and,
accordingly, do not express an opinion or any other form of assurance on them.
Madison Avenue
Floor
New York, NY 10016
Certified Public Accountants
February 10, 2019
1
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MBE CAPITAL PARTNERS, INC.
BALANCE SHEET DECEMBER 31, 2018
Assets
Current assets 2018 2017
Cash $ 9,236,251.96 5,631,839
Accounts receivable 1,299,599,963.28 792,439,002
Long term receivables 5,393,184.28 3,288,527
Total current assets 1,314,229,399.52 801,359,368
Property and equipment
Furniture and fixtures 1,432,767.96 873,639
Computers 145,510.64 88,726
1,578,278.60 962,365
Less: accumulated depreciation 315,818.08 192,572
Net fixed assets 1,262,460.52 769,793
Other assets
Security deposits 322,260 196,500
Total other assets 322,260 196,500
Total assets $1,315,814,120.04 802,325,661
See accountants’ compilation report, the notes to the financial statements, and the summary of significant
accounting policies.
2
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MBE CAPITAL PARTNERS, INC.
BALANCE SHEET DECEMBER 31, 2018
Liabilities and Member’s Capital
Current liabilities
Accounts and accrued expenses payable $1,296,076,872.64 790,290,776
Deferred income taxes 465,661.60 283,940
Total current liabilities 1,296,542,534.24 790,574,716
Total liabilities 1,296,542,534.24 790,574,716
Member’s capital 13,643,530.64 8,319,226
Total liabilities and member’s capital $1,310,186,064.88 798,893,942.00
See accountants’ compilation report, the notes to the financial statements, and the summary of significant
accounting policies.
3
Case 1:22-cr-00251-LJL Document 77-6 Filed 07/05/23 Page 9 of 14
MBE CAPITAL PARTNERS,
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED
DECEMBER 31, 2018
Revenue $1,319,277,648 802,325,661
Direct costs 1,310,186,064.88 798,893,942
Gross margin 9,091,583.12 3,431,719
Operating expenses
Third Party Commissions 1,413,010.88 861,592
Professional fees 301,376.24 183,766
Rent 352,498.32 214,938
Travel and entertainment 240,091.08 143,397
Office expenses 167,053.68 101,862
Depreciation expense 315,818.08 192,572
Postage and delivery 88,537.04 53,986
Repairs and maintenance 302,863.72 184,673
Telephone 27,978.40 17,090
Dues and subscriptions 22,468 13,700
Bank charges 15,350.40 9,360
Utilities 14,681.28 8,952
Miscellaneous 28,503.20 17,380
Total operating expense 3,290,260.32 2,006,238
Income from operations 5,801,352.80 1,425,481
Other income (expense)
Other income 0 0
Interest expense (110,386.76) (67,309)
Total other income (expense) (110,386.76) (67,309)
Income before provision for income taxes 5,690,966.04 1,358,172
Provision for income taxes
Current
Deferred (185,616.84) (113,181)
Total provision for income taxes (185,616.84) (113,181)
Net income $ 5,505,349.20 1,244,991
See accountants’ compilation report, the notes to the financial statements, and the summary of significant
accounting policies.
4
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MBE CAPITAL PARTNERS, Inc.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED
DECEMBER 31, 2018
Cash flows from operating activities
Net income $ 5,505,349.20 $ 1,24,991.00
Adjustments to reconcile net income to net cash used in operating
activities
Depreciation 137,020.36 83,549.00
Changes in operating assets and liabilities
Increase in accounts receivable (22,766,488.20) (13,882,005)
Increase in long term receivables (1,982.76) (1,209)
Increase in security deposits (45,920) (28,000)
Increase in accounts and accrued expenses payable 2,469,974.48 1,506,092
Increase in deferred income taxes 307,162.16 187,294
Net cash used in operating activities (14,394,884.76) (10,889,288)
Cash flows from investing activities
Purchases of furniture and fixtures (316,313.36) (192,874)
Purchases of computers (141,830,48) (86,492)
Net cash used in investing activities (458,143.84) (279,366)
Cash flows from financing activities
Capital contributions 15,264,992.08 9,307,922
Net cash provided by financing activities 15,264,992.08 9,307,922
Increase in cash 1,153,067.60 703,090.00
Cash, beginning of year 217,741.16 132,769
Cash, end of year $ 1,370,808.76 835,859.00
Supplementary disclosures of cash flow information
Cash paid during the year for:
Income taxes $ -
Interest expense 7,409,957 93,406
See accountants’ compilation report, the notes to the financial statements, and the summary of significant
accounting policies.
5
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MBE CAPITAL PARTNERS, Inc.
STATEMENT OF MEMBER’S CAPITAL
FOR THE YEAR ENDED
DECEMBER 31, 2018
Member’s capital, beginning $ 12,784,910.28 7,795,677
Capital contributions 1,763,000 1,075,000
Net income 5,505,349.20 1,244,991
Member’s capital, ending $ 20,053,259.48 10,115,668
See accountants’ compilation report, the notes to the financial statements, and the summary of significant
accounting policies.
6
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MBE CAPITAL PARTNERS, Inc.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
MBE Capital Partners, Inc. (“the Company”) was formed in July 2013 in the State of New York as a sub
division of Republic Companies. The Company is a corporation company. The Company makes loans against
receivables and assets.
Accounting basis
The Company uses the accrual basis of accounting for financial statement reporting. Accordingly, revenues
are recognized when services are rendered and expenses are realized when the obligation is incurred. For tax
purposes, the Company uses the cash basis.
Cash and cash equivalents
The Company considers all highly liquid investments with a maturity of three months or less when purchased
to be cash equivalents. Cash equivalents are carried at cost, which approximates market value.
Inventories
Inventories consist of paper which is stated at the lower of cost (determined using the first-in, first-out
method) or market value.
Property and equipment
Property and equipment are stated at cost. Depreciation expense is computed using the straight-line method
over the following useful lives:
Estimated
Description useful life
Furniture and fixtures 7
Computers 3
Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reported period. Actual results may differ from these estimates.
See accountants’ report and the accompanying notes to the financial statements. 7
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MBE CAPITAL PARTNERS, Inc.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Income taxes
The Company is taxed as a disregarded entity for federal income tax purposes and, thus, no income tax
expense has been recorded in the financial statements. Taxable income of the Company is reported on the
individual tax return of its sole member. However, the Company is subject to New York City
Unincorporated business taxes.
The Company accounts for income taxes using the asset and liability method as required by Statement of
Financial Accounting Standards No. 109, under which deferred tax assets and liabilities are determined based
upon the differences between financial statement carrying amounts and the tax bases of existing assets and
liabilities. Deferred tax liabilities represent the tax effects of taxable and deductible temporary differences in
book and tax reporting. The taxable temporary difference primarily consists of the use of the accrual method
for financial statement reporting purposes and the cash method for tax reporting purposes.
See accountants’ report and the accompanying notes to the financial statements. 8
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MBE CAPITAL PARTNERS, Inc.
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1 – INCOME TAXES
Deferred tax liabilities represent the tax effects of taxable and deductible temporary differences in book and
tax reporting. The taxable temporary difference primarily consists of the use of the accrual method for
financial statement reporting purposes and the cash method for tax reporting purposes.
This amount has been presented in the Company’s financial statements as follows:
Deferred tax liabilities, current $ 83,578.14
NOTE 2 – OPERATING LEASE
The Company rents its operating facilities under an operating lease. The future minimum rental payments for
these obligations are as follows:
December 31, 2018 $ 209,004
2019 213,425
2020 225,832
2021 230,066
See accountants’ report and the accompanying summary of significant accounting policies.
9
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