Case KG Doc 238 Filed 05/07/18 Page 1 of 19

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1 Fill in this information to identify the case: Debtor Name United States Bankruptcy Court for the: District of Delaware Case number: Case KG Doc 238 Filed 05/07/18 Page 1 of 19 Official Form 426 Periodic Report Regarding Value, Operations, and Profitability of Entities in Which the Debtor s Estate Holds a Substantial or Controlling Interest 12/17 This is the Periodic Report as of 3/31/2018 on the value, operations, and profitability of those entities in which a Debtor holds, or two or more Debtors collectively hold, a substantial or controlling interest (a Controlled Non-Debtor Entity ), as required by Bankruptcy Rule For purposes of this form, Debtor shall include the estate of such Debtor. holds a substantial or controlling interest in the following entities: Name of Controlled Non-Debtor Entity Interest of the Debtor Tab # FAAST Equipment Leasing Limited 100% This Periodic Report contains separate reports (Entity Reports) on the value, operations, and profitability of each Controlled Non-Debtor Entity. Each Entity Report consists of five exhibits. Exhibit A contains the most recently available: balance sheet, statement of income (loss), statement of cash flows, and a statement of changes in shareholders or partners equity (deficit) for the period covered by the Entity Report, along with summarized footnotes. Exhibit B describes the Controlled Non-Debtor Entity s business operations. Exhibit C describes claims between the Controlled Non-Debtor Entity and any other Controlled Non-Debtor Entity. Exhibit D describes how federal, state or local taxes, and any tax attributes, refunds, or other benefits, have been allocated between or among the Controlled Non-Debtor Entity and any Debtor or any other Controlled Non-Debtor Entity and includes a copy of each tax sharing or tax allocation agreement to which the Controlled Non-Debtor Entity is a party with any other Controlled Non-Debtor Entity. Exhibit E describes any payment, by the Controlled Non-Debtor Entity, of any claims, administrative expenses or professional fees that have been or could be asserted against any Debtor, or the incurrence of any obligation to make such payments, together with the reason for the entity s payment thereof or incurrence of any obligation with respect thereto. This Periodic Report must be signed by a representative of the trustee or debtor in possession. Official Form 426 Periodic Report About Controlled Non-Debtor Entities Value, Operations, and Profitability page 1

2 Case KG Doc 238 Filed 05/07/18 Page 2 of 19 Debtor Name Case number The undersigned, having reviewed the Entity Reports for each Controlled Non-Debtor Entity, and being familiar with the Debtor s financial affairs, verifies under the penalty of perjury that to the best of his or her knowledge, (i) this Periodic Report and the attached Entity Reports are complete, accurate, and truthful to the best of his or her knowledge, and (ii) the Debtor did not cause the creation of any entity with actual deliberate intent to evade the requirements of Bankruptcy Rule For non-individual Debtors: /s/ Lawrence E. Young Signature of Authorized Individual Lawrence E. Young Printed name of Authorized Individual 5/7/2018 Date MM / DD / YYYY For individual Debtors: Signature of Debtor 1 Printed name of Debtor 1 Date MM / DD / YYYY Signature of Debtor 2 Printed name of Debtor 2 Date MM / DD / YYYY Official Form 426 Periodic Report About Controlled Non-Debtor Entity s Value, Operations, and Profitability page 2

3 Case KG Doc 238 Filed 05/07/18 Page 3 of 19 General Notes to the Periodic Report On April 5, 2018 (the "Petition Date"), VER Technologies HoldCo LLC ("VER") and eight of its direct and indirect subsidiaries (collectively, the "Debtors") 1 filed voluntary petitions for relief (the "Chapter 11 Cases") under chapter 11 of title 11 of the United States Code (the "Bankruptcy Code") in the Bankruptcy Court for the District of Delaware (the "Bankruptcy Court"). The Debtors' Chapter 11 Cases are being jointly administered under the caption "In re: VER Technologies HoldCo LLC, et al. (Case No KG). VER's other subsidiaries and affiliates (the "Non-Debtors") were not included in the bankruptcy filing. Basis of Presentation - In accordance with Bankruptcy Rule , the financial statements and supplemental information contained herein are provided as of December 31, 2017 and for the three months ended March 31, 2018 for the legal entities owned at the Petition Date. The condensed financial statements contained herein are unaudited, have not been prepared in accordance with U.S. generally accepted accounting principles ( U.S. GAAP ) or any other recognized financial reporting framework and are not intended to reconcile to any financial statements otherwise prepared or distributed by the Debtors or any of the Debtors affiliates. The financial statements contained herein are generated out of VER s financial consolidation systems without all adjustments or reclassification that may be necessary or typical. Significant efforts have been put forth to attribute the assets and liabilities to the proper legal entity. However, because the Debtors accounting systems, policies, and practices were developed to produce consolidated financial statements, rather than financial statements by legal entity, it is possible that not all assets, liabilities, income or expenses have been recorded on the correct legal entity. Accordingly, the Debtors reserve all rights to supplement or amend any financial statements contained in this Periodic Report. Unless otherwise noted, all amounts are in U.S. dollars. The Periodic Report is limited in scope, covers a limited time period, and has been prepared solely for the purposes of complying with the reporting requirements of the Federal Rules of Bankruptcy Procedure (the Bankruptcy Rules ) and the Office of the United States Trustee. Moreover, given, among other things, the uncertainty surrounding the collection and ownership of certain assets and the valuation and nature of certain liabilities, to the extent that a Non-Debtor entity shows more assets than liabilities, this is not an admission that the Non-Debtor entity was solvent at the Petition Date or at any time prior to the Petition Date, including the date as of or for the period of any financial statements or other information included in this Periodic Report. Likewise, to the extent that a Non-Debtor entity shows more liabilities than assets, this is not an admission that the Non- Debtor entity was insolvent at the Petition Date or any time prior to the Petition Date, including the date as of or for the period of any financial statements or other information included in this Periodic Report. The unaudited condensed financial statements presented in the Periodic Report have been derived from the books and records of the Non-Debtor entities. This information, however, has not been subjected to procedures that would typically be applied to financial information presented in 1 The Debtors in these chapter 11 cases are: VER Technologies HoldCo LLC; VER Technologies MidCo LLC; ; Full Throttle Films, LLC; FAAST Leasing California, LLC; Revolution Display, LLC; VER Finco, LLC; CPV Europe Investments LLC; and Maxwell Bay Holdings LLC.

4 Case KG Doc 238 Filed 05/07/18 Page 4 of 19 accordance with U.S. GAAP, and upon application of such procedures, the Debtors and Non-Debtor entities believe that the financial information could be subject to changes, and these changes could be material. The information furnished in this Periodic Report includes primarily normal recurring adjustments, but does not include all of the adjustments, any of the footnotes and certain financial presentations that would typically be made in accordance with U.S. GAAP, and may not comply with U.S. GAAP in all material respects. The preparation of the unaudited condensed financial statements presented in the Periodic Report requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements, as well as the reported amount of revenues and expenses during the reporting period. Actual amounts and results could differ materially from those estimates. The results of operations contained herein are not necessarily indicative of results that are expected from any other period or for the full year and may not necessarily reflect the combined results of operations, financial position and cash flows of the Non-Debtors in the future. For the reasons discussed above, the Debtors caution readers not to place undue reliance upon information contained in the Periodic Report. Reservation of Rights - Nothing contained in this Periodic Report shall constitute a waiver of any of the Debtors rights or admission with respect to their Chapter 11 Cases including, but not limited to, matters involving objections to claims, substantive consolidation, equitable subordination, defenses, characterization or re-characterization of contracts, assumption or rejection of contracts under the provisions of chapter 3 of the Bankruptcy Code and/or causes of action under the provisions of chapter 5 of the Bankruptcy Code or any other relevant applicable laws to recover assets or avoid transfers. The Debtors are reviewing the assets and liabilities of their affiliates on an ongoing basis, including without limitation with respect to intercompany claims and obligations, and nothing contained in this Periodic Report shall constitute a waiver of any of the Debtors or their affiliates rights with respect to such assets, liabilities, claims and obligations that may exist. Intercompany Transactions - Intercompany transactions between the Debtors and Non-Debtors and/or among the Non-Debtors and related period ending balances have not been eliminated in the financial statements contained herein. No conclusion as to the legal obligation nor the related asset valuation associated with these intercompany transactions and balances is made by the presentation herein. Included as Exhibit C herein, if applicable, is a schedule of the Non-Debtor s intercompany claims against both Debtors and other Non-Debtors. Valuation Estimates - The Debtors do not maintain fair market value or other bases of valuation for these entities, which may differ substantially from the net book value of these entities, and it would be prohibitively expensive, unduly burdensome, and an inefficient use of estate assets for the Debtors to obtain current market valuations of these entities. Income Taxes - Domestic income taxes are calculated on a consolidated basis only, as all domestic subsidiaries are flow-through entities for federal income tax purposes. Foreign taxes are

5 Case KG Doc 238 Filed 05/07/18 Page 5 of 19 provided by jurisdiction in accordance with Accounting Standards Codification Topic 740 and have not been allocated to each legal entity. Accordingly, income is presented before income taxes in the accompanying financial statements. Statements of Cash Flows and Changes in Shareholder s Equity - The Company prepares its Statements of Cash Flows and Statements of Shareholder s Equity solely on a consolidated basis. The individual entities Statements of Cash Flows contained herein may differ from the Company s consolidated Statements of Cash Flows. For the reasons discussed above, the Debtors caution readers not to place undue reliance upon the information contained in this Periodic Report. The results herein are not necessarily indicative of results which may be expected in any other period, and may not necessarily reflect the combined results and financial position of the Debtors affiliates reported below in the future. Although management of the Debtors have made every reasonable effort to ensure that this Periodic Report is as accurate and complete as possible, based on the information that was available to them at the time of preparation, subsequent information may result in material changes to the Periodic Report, and inadvertent errors of omissions may have occurred. Because the Periodic Report contains unaudited information, which is subject to further review, verification, and potential adjustment, there can be no assurance that the Periodic report is accurate and/or complete. Nothing contained in this filing shall constitute a waiver of any rights of the Debtors, specifically including the Debtors right to amend the information.

6 Case KG Doc 238 Filed 05/07/18 Page 6 of 19 Entity Report for: FAAST Equipment Leasing Limited

7 Case KG Doc 238 Filed 05/07/18 Page 7 of 19 Debtor Name Case number Exhibit A: Financial Statements for FAAST Equipment Leasing Limited Official Form 426 Periodic Report About Controlled Non-Debtor Entity s Value, Operations, and Profitability page 3

8 Case KG Doc 238 Filed 05/07/18 Page 8 of 19 Debtor Name Case number Exhibit A-1: Balance Sheet for FAAST Equipment Leasing Limited as of March 31, 2018 See attached. Official Form 426 Periodic Report About Controlled Non-Debtor Entity s Value, Operations, and Profitability page 4

9 Case KG Doc 238 Filed 05/07/18 Page 9 of 19 VER FAAST Equipment Leasing, Ltd. Balance Sheet End of Mar 2018 VER FAAST Equipment Leasing, Ltd. Balance Sheet End of Dec 2017 Financial Row Amount Financial Row Amount Current Assets Current Assets Bank 4, Bank 4, Other Current Asset 435, Other Current Asset 435, Total Current Assets 439, Total Current Assets 439, Total Assets 439, Total Assets 439, Current Liabilities Current Liabilities Accounts Payable 1, Accounts Payable 16, Other Current Liability 64, Other Current Liability 49, Total Liabilities 65, Total Liabilities 65, Capital and Reserves 374, Capital and Reserves 374, Page 1 of 1

10 Case KG Doc 238 Filed 05/07/18 Page 10 of 19 Debtor Name Case Number Exhibit A-2: Statement of Income (Loss) for FAAST Equipment Leasing Limited for period ending March 31, 2018 See attached. Official Form 426 Periodic Report About Controlled Non-Debtor Entity s Value, Operations, and Profitability page 5

11 Case KG Doc 238 Filed 05/07/18 Page 11 of 19 VER FAAST Equipment Leasing, Ltd. Income Statement Jan 2018, Feb 2018, Mar 2018 VER FAAST Equipment Leasing, Ltd. Income Statement From Jan 2017 to Dec 2017 Financial Row Amount Financial Row Amount Gross Profit 0.00 N/A Total - SG&A Expense 64, Operating Profit - 64, Net Profit/(Loss) - 64, Page 1 of 1

12 Case KG Doc 238 Filed 05/07/18 Page 12 of 19 Debtor Name Case number Exhibit A-3: Statement of Cash Flows for FAAST Equipment Leasing Limited for period ending March 31, 2018 See attached. Official Form 426 Periodic Report About Controlled Non-Debtor Entity s Value, Operations, and Profitability page 6

13 Case KG Doc 238 Filed 05/07/18 Page 13 of 19 VER VER FAAST Equipment Leasing, Ltd. FAAST Equipment Leasing, Ltd. Cash Flow Statement Cash Flow Statement Jan 2018, Feb 2018, Mar 2018 From Jan 2017 to Dec 2017 Financial Row Amount Financial Row Amount Operating Activities Operating Activities Net Income 0.00 Net Income - 64, Adjustments to Profit/(Loss) Adjustments to Profit/(Loss) Accounts Payable - 14, Other Current Asset Other Current Liabilities 14, Accounts Payable 16, Total Adjustments to Profit/(Loss) 0.00 Other Current Liabilities 48, Total Operating Activities 0.00 Total Adjustments to Profit/(Loss) 64, Net Change in Cash for Period 0.00 Total Operating Activities 0.00 Cash at Beginning of Period 4, Net Change in Cash for Period 0.00 Cash at End of Period 4, Cash at Beginning of Period 4, Cash at End of Period 4, Page 1 of 1

14 Case KG Doc 238 Filed 05/07/18 Page 14 of 19 Debtor Name Case number Exhibit A-4: Statement of Changes in Shareholders /Partners Equity (Deficit) for FAAST Equipment Leasing Limited for period ending March 31, 2018 Not applicable. Official Form 426 Periodic Report About Controlled Non-Debtor Entity s Value, Operations, and Profitability page 7

15 Case KG Doc 238 Filed 05/07/18 Page 15 of 19 Debtor Name Case number Exhibit B: Description of Operations for FAAST Equipment Leasing Limited FAAST Equipment Leasing, Ltd. is a wholly-owned subsidiary of Debtor. FAAST Equipment Leasing, Ltd. is a holding company owning 100% of shares of subsidiaries VER Holland B.V. and Verrents UK Limited. Official Form 426 Periodic Report About Controlled Non-Debtor Entity s Value, Operations, and Profitability page 8

16 Case KG Doc 238 Filed 05/07/18 Page 16 of 19 Debtor Name Case number Exhibit C: Description of Intercompany Claims for FAAST Equipment Leasing Limited See attached. Official Form 426 Periodic Report About Controlled Non-Debtor Entity s Value, Operations, and Profitability page 9

17 Case KG Doc 238 Filed 05/07/18 Page 17 of 19 VER FAAST Equipment Leasing, Ltd. Intercompany Receivables End of Mar 2018 Account Total Intercompany Receivable VER Germany GmbH - Interco Rec 435, Total Intercompany Receivable 435, See "Intercompany Transactions" section of the General Notes to the Periodic Report. Page 1 of 1

18 Case KG Doc 238 Filed 05/07/18 Page 18 of 19 Debtor Name Case number Exhibit D: Allocation of Tax Liabilities and Assets for FAAST Equipment Leasing Limited See "Income Taxes" section of the General Notes to the Periodic Report. Official Form 426 Periodic Report About Controlled Non-Debtor Entity s Value, Operations, and Profitability page 10

19 Case KG Doc 238 Filed 05/07/18 Page 19 of 19 Debtor Name Case number Exhibit E: Description of Controlled Non-Debtor Entity s payments of Administrative Expenses, or Professional Fees otherwise payable by a Debtor for FAAST Equipment Leasing Limited Not applicable. Official Form 426 Periodic Report About Controlled Non-Debtor Entity s Value, Operations, and Profitability page 11