2. Blissful Technology, LLC
Year 2 Annual Report
2
REPORT PROFILE
The Year 2 Annual Report for Blissful Technology, LLC (Blissful) reviews the
operational andfinancial performancesofthe company for the Year 2 fiscal year
(FY2), from 1 January Year 2 to 31 December Year 2.
This report has been complied in line with the regulations of the United States Generally
Accepted Accounting Principles (U.S. GAAP). Throughout this report, financial data is
reported in U.S. Dollars.
Included in this report is a management letter discussing the company’s goals, strategies, past
performance (Year 1 and Year 2) and future expectations, a complete set of financial
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statements prepared in accordance with U.S. GAAP, financial ratios, and an audit opinion
from KPMG LLP.
CONTENTS
MANAGEMENT LETTER ..……………………………………………………………….. 4
Description of The Company ..……………………………………………….. 4
Goals ..………………..………………………………………………….…….. 4
Strategies..………………..…………………………………….……….…….. 5
Past Performance..………………..…..……………………………….…….. 5
Future Expectations ..……………………………………..………….…….. 6
FINANCIAL STATEMENTS .……………………………………………………….....….. 7
Income Statement (Quarterly and Annual) .…………………………….... 8
Cost of Goods Sold Statement (Quarterly and Annual).…………….... 13
Comparative Income Statements for Year 1 and Year 2 .…………….. 16
Statement of Cash Flows (Quarterly and Annual).………….…..….... 17
Balance Sheet (Year 2) ……...………………..…………………………... 22
Retained Earnings Statement (Year 2).……………………………….... 23
Comparative Balance Sheets for Year 1 and Year 2 .………………... 24
FINANCIAL RATIOS .…………………………...……………………………………….. 25
Current Ratio..………………………………………………………..….. 26
Quick Ratio..……………………………………………………….…….. 26
Inventory Turnover..……………………………………..………….….. 26
Profit Margin..…………………………………………………….…….. 26
Return On Assets..…………………………………………….……..….. 26
Debt To Equity..…………………………………………………..…….. 26
Book Value Per Share ..…………………………………………….….. 26
Earnings Per Share..……………………………………….……….….. 26
INDEPENDENT AUDITOR’S REPORT …………………..………………………..….. 27
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CORPORATE DIRECTORY ………………………………………………………….….29
MANAGEMENT LETTER
December 31, Year 2
The Board of Directors
Blissful Technology, LLC
In planning and performing our audit of the financial statements of Blissful Technology, LLC
(Blissful) as of and for the year ended December 31, Year 2, in accordance with auditing
standards generally accepted in the United States of America, we considered Blissful’s
internal control over financial reporting (internal control) as a basis for designing our auditing
procedures for the purpose of expressing our opinion on the financial statements, but not for
the purpose of expressing an opinion on the effectiveness of Blissful’s internal
control.Accordingly, we do not express an opinion on the effectiveness of Blissful’s internal
control.
A deficiency in internal control exists when the design or operation of a control does not
allow management or employees, in the normal course of performing their assigned
functions, to prevent, or detect and correct misstatements on a timely basis. A material
weakness is a deficiency, or combination of deficiencies, in internal control, such that there is
a reasonable possibility that a material misstatement of the entity’s financial statements will
not be prevented, or detected and corrected on a timely basis.
During our audit, if we become aware of areas where there are opportunities for
strengthening internal controls, we communicate our findings and suggestions in this letter.
Our comments are summarized below. This letter does not affect our report dated December
31, Year 2, on the financial statements of Blissful Technology, LLC. Our consideration of
internal control was for the limited purpose described in first paragraph and was not designed
to identify all deficiencies in internal control that might be material weaknesses. Given these
limitations during our audit, we did not identify any deficiencies in internal control that we
consider to be material weaknesses.
Description of The Company
Blissful Technology, LLC is a manufacturer and marketer for subassemblies for
microcomputers and computerized games. The company contains four distinct functional
areas: marketing, production, finance, and accounting.
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Year 2 Annual Report
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Goals
Blissful Technology, LLC’s long-term goal is to emerge as the leader in the industry and to
maintain this distinction throughout future years.
Blissful Technology, LLC is focused on producing high-quality subassemblies and does not
plan on competing in the circuit board industry.nd
Blissful Technology, LLC had an outstanding profit margin through both Year 1 and Year 2.
The company looks to continue this trend into future years. The company seeks to increase
market share, revenues, customer satisfaction, and reduce overall budget costs. Blissful also
aims to increase common stock dividends each quarter and attract more
investors.Additionally, Blissful wants to keep decreasing its interest rate.
Blissful Technology, LLC’s current ratio has increased in the last two quarters of Year 2.
The company hopes to continue this trend by continuing to decrease its debt.
Some internal goals for Blissful Technology, LLC are to acquire and maintain capital if
expansion is needed to keep up with demand. The company also hopes to continue the high
quality production of its subassemblies.
Blissful Technology, LLC has agreed to several benefit plans with its workers union. The
company hopes this will keep up employee morale.
Blissful Technology, LLC also hopes to reduce variances helping it predict the market
demand for subassemblies.
Strategies
Blissful Technology, LLC’s strategy is to provide customers with high quality products at
affordable prices.
Blissful Technology, LLC increases net income and profit margin through several areas;
increasing sales, reducing interest expense, and spending the optimum amount for advertising
and marketing of subassemblies. The company sells products at prices that are affordable by
the customers. The company adjusts the price according to the industry trends, and demands
along with advertising expenditure each quarter. In this way, Blissful could maximum the
operating income.
Blissful Technology, LLC does not want to keep a large outstanding debt. Blissful increases
production capacity in Year 2 to create sufficient finished goods inventory and ensure
demand is met. The company invests most of the available funds to short-term investments;
as a result, the company can generate extra money each quarter.
To attract more investors and maintain a good stock price, Blissful Technology, LLC rarely
issues stocks. The company increases common stock dividends every quarter.
To improve employee morale, Blissful Technology, LLC increases wages and employee
benefits. Blissful has several ongoing research and development projects to improve the
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Year 2 Annual Report
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product quality. The company also keeps developing new technologies to increase
competitive advantage.
Blissful Technology, LLC offers good customer service on a timely basis. The company
allows returns and sells warranty for certain products.
Past Performance
In Year 1, Blissful Technology, LLC maintained the dominating position within the industry.
Blissful had extremely high profit margins of 12% and a total net income of $896,232 in Year
1. The company had a market share that was always above 24% throughout Year 1. The
average EPS for Year 1 was $3.50. The ending retained earning at the end of Year 1 was
$839,646. The stock price boosted to $9.47 at the end of Year 1.
In Year 2, Blissful Technology, LLC kept its dominating position and had outstanding
performance. The average advertising expenditure for Year 2 was $146,250, which was
above the industry average for all four quarters. The advertising expense generated three to
four thousand more unit sales in quarter 3 and 4 in Year 2. Blissful’s annual sale in Year 2
equals to298,295 units. The stock price increased to $19.36 at the end of Year 2. The
company declared and paid a dividend of $0.07/share. Retained earnings have increased a
good amount from Year 1 to Year 2.
Blissful Technology, LLC has had a good year for sales. The company’s sales have
increased by over $3 million in Year 2. The company is on a current trend of increasing its
net income from Quarter 3 to Quarter 4 in Year 2. Blissful no longer has a shortage of
inventory as was the case at the beginning of Year 2, so the company expects this trend of
increasing profits to continue into the future.
Blissful Technology, LLC’s liquidity ratioshows that the company is not going to default on
its debts in the immediate future. The company is in good financial health.
Future Expectations
Based on the past performance, Blissful Technology, LLC would be able to be a strong
competitor within the industry and maintain its leader position. The company is expected to
reduce its outstanding loans by paying the principal and interest every quarter as well as
increasing its revenue. Blissful would keep or increase the stock price and dividend. The
company may increase the production capacity due to the increasing demand from the
market.
As the competition in the industry increases these years, Blissful Technology, LLC would
need to improve its competitive advantage. It is important for the company to maintain a
good reputation and create an innovative image to its employees, customers, and investors.
* * * * *
Management’s reaction to our comments and recommendations has not been subjected to the
auditing procedures applied in the audit of the financial statements and, accordingly, we
express no opinion on it.
7. Blissful Technology, LLC
Year 2 Annual Report
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We would like to thank Blissful Technology, LLC management and staff for the courtesy and
cooperation extended to us during the course of our engagement.
The accompanying communications and recommendations are intended solely for the
information and use of the Board of Directors, management, and others within the
organization, and are not intended to be and should not be used by anyone other than these
specified parties.
MichaelWitts, P.C.
January 10, Year 3
FINANCIAL STATEMENTS
Income Statement (Quarterly and Annual)
Cost of Goods Sold Statement (Quarterly and Annual)
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Year 2 Annual Report
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Comparative Income Statements for Year 1 and Year 2
Statement of Cash Flows (Quarterly and Annual)
Balance Sheet (Year 2)
Retained Earnings Statement (Year 2)
Comparative Balance Sheets for Year 1 and Year 2
Blissful Technology, LLC
Income Statement
For Quarter 1, Year 2
Sales $3,560,284.00
Cost of Goods Sold 2,669,620.06
Gross Margin $890,663.94
Expenses
Selling Expense:
Sales Commissions 5% $178,014.20
Fixed Selling Expense 25,000.00
Advertising Expense 80,000.00
Total Selling Expense $283,014.20
Administration Expense:
Fixed Administration $60,000.00
Depreciation-Equipment 3,000.00
Depreciation-Building 1,800.00
Total Administration Expense $64,800.00
Total Selling & Administration Expense $347,814.20
Net Income from Operation $542,849.74
Other Income and Expenses
Interest Income On Short-term Investments $17,648.44
Interest Expense On Notes Payable, Short-term $-
Interest Expense On Line Of Credit 10,053.22
Interest Expense On Mortgage Payable 12,470.40
Total Interest Expense $22,523.62
Total Other Income and Expenses $(4,875.18)
Income Before Taxes $537,974.56
Income Tax $(215,189.82)
Net Income $322,784.74
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Year 2 Annual Report
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Blissful Technology, LLC
Income Statement
For Quarter 2, Year 2
Sales $3,150,594.00
Circuit Board Sales 100,000.00
Less: Cost of Circuit Board Sales 126,261.60
Cost of Goods Sold 2,439,099.49
Gross Margin $685,232.91
Expenses
Selling Expense:
Sales Commissions 5% $157,529.70
Fixed Selling Expense 25,000.00
Advertising Expense 125,000.00
Total Selling Expense $307,529.70
Administration Expense:
Fixed Administration $60,000.00
Depreciation-Equipment 3,000.00
Depreciation-Building 1,800.00
Total Administration Expense $64,800.00
Total Selling & Administration Expense $372,329.70
Net Income from Operation $312,903.21
Other Income and Expenses
Interest Income On Short-term Investments $-
Interest Expense On Notes Payable, Short-term $40,177.80
Interest Expense On Line Of Credit 14,754.88
Interest Expense On Mortgage Payable 16,968.00
Total Interest Expense $71,900.68
Total Other Income and Expenses $(71,900.68)
Income Before Taxes $241,002.53
Income Tax (96,401.01)
Net Income $144,601.52
Earnings Per Share $1.61
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Year 2 Annual Report
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Blissful Technology, LLC
Income Statement
For Quarter 3, Year 2
Sales $3,641,841.00
Cost of Goods Sold 3,150,509.11
Gross Margin $491,331.89
Expenses
Selling Expense:
Sales Commissions 5% $182,092.05
Fixed Selling Expense 25,000.00
Advertising Expense 125,000.00
Total Selling Expense $332,092.05
Administration Expense:
Fixed Administration $60,000.00
Depreciation-Equipment 3,000.00
Depreciation-Building 1,800.00
Total Administration Expense $64,800.00
Total Selling & Administration Expense $396,892.05
Net Income from Operation $94,439.84
Other Income and Expenses
Interest Income On Short-term Investments $-
Interest Expense On Notes Payable,Short-term $86,468.25
Interest Expense On Line Of Credit 27,367.39
Interest Expense On Mortgage Payable 21,093.60
Total Interest Expense $134,929.24
Total Other Income and Expenses $(134,929.24)
Income Before Taxes $(40,489.40)
Income Tax $16,195.76
Net Income $(24,293.64)
Earnings Per Share $(0.27)
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Year 2 Annual Report
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Blissful Technology, LLC
Income Statement
For Quarter 4, Year 2
Sales $4,297,040.00
Cost of Goods Sold 3,600,579.77
Gross Margin $696,460.23
Expenses
Selling Expense:
Sales Commissions 5% $214,852.00
Fixed Selling Expense 25,000.00
Advertising Expense 130,000.00
Total Selling Expense $369,852.00
Administration Expense:
Fixed Administration $60,000.00
Depreciation-Equipment 3,000.00
Depreciation-Building 1,800.00
Total Administration Expense $64,800.00
Total Selling & Administration Expense $434,652.00
Net Income from Operation $261,808.23
Other Income and Expenses
Interest Income On Short-term Investments $-
Interest Expense On Notes Payable,Short-term $13,080.55
Interest Expense On Line Of Credit 13,689.58
Interest Expense On Mortgage Payable 12,289.20
Total Interest Expense $39,059.33
Total Other Income and Expenses $(39,059.33)
Income Before Taxes $222,748.90
Income Tax (89,099.56)
Net Income $133,649.34
Earnings Per Share $1.07
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Year 2 Annual Report
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Blissful Technology, LLC
Income Statement
For The Year Ended December 31, Year 2
Sales $14,649,759.00
Cost of Goods Sold 11,859,808.43
Gross Margin $2,789,950.57
Expenses
Selling Expense:
Sales Commissions 5% $732,487.95
Fixed Selling Expense 100,000.00
Advertising Expense 460,000.00
Total Selling Expense $1,292,487.95
Administration Expense:
Fixed Administration $240,000.00
Depreciation-Equipment 12,000.00
Depreciation-Building 7,200.00
Total Administration Expense $259,200.00
Total Selling & Administration Expense $1,551,687.95
Net Income from Operation $1,238,262.62
Other Income and Expenses
Interest Income On Short-term Investments $17,648.44
Interest Expense On Notes Payable, Short-term 139,726.60
Interest Expense On Line Of Credit 65,865.07
Interest Expense On Mortgage Payable 62,821.20
Total Interest Expense $268,412.87
Total Other Income and Expenses $(250,764.43)
Income Before Taxes $987,498.19
Income Tax 394,999.28
Net Income $592,498.91
Earnings Per Share $4.74
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Year 2 Annual Report
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Blissful Technology, LLC
Cost of Goods Sold Statement
For Quarter 1, Year 2
Beginning Finished Goods Inventory
433 Units @ $35.74 $15,477.20
Production Costs for 96,000 Units:
Raw Materials $1,814,400.05
Direct Labor 1,444,800.06
Variable Overhead 201,599.99
Fixed Overhead 199,756.80
Total Production Costs $3,660,556.90
Total Costs to Account for $3,676,034.10
Ending Finished Goods Inventory
27,966 Units @ $38.13 $1,066,365.95
Cost of Good Sold at Standard $2,609,668.15
Variance $59,951.90
Total Cost of Goods Sold $2,669,620.05
Blissful Technology, LLC
Cost of Goods Sold Statement
For Quarter 2, Year 2
Beginning Finished Goods Inventory
27,966 Units @ $38.13 $1,066,365.95
Production Costs for 96,000 Units:
Raw Materials $1,814,400.05
Direct Labor 1,444,800.06
Variable Overhead 201,599.99
Fixed Overhead 199,756.80
Total Production Costs $3,660,556.90
Less: Cost of Units Processed to Circuit Boards 76,261.60
Total Costs to Account for $3,676,034.10
Ending Finished Goods Inventory
59,578 Units @ $38.13 $2,271,756.80
Cost of Good Sold at Standard $2,378,904.45
Variance $ 60,195.04
Total Cost of Goods Sold $2,439,099.49
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Year 2 Annual Report
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Blissful Technology, LLC
Cost of Goods Sold Statement
For Quarter 3, Year 2
Beginning Finished Goods Inventory
59,578 Units @ $ 38.13 $2,271,756.80
Production Costs for 96,000 Units:
Raw Materials $1,270,080.04
Direct Labor 1,011,360.04
Variable Overhead 141,119.99
Fixed Overhead 139,829.76
Total Production Costs $2,562,389.83
Total Costs to Account for $4,834,146.63
Ending Finished Goods Inventory
49,702 Units @ $ 38.13 $1,895,177.02
Cost of Good Sold at Standard $2,938,969.61
Variance $211,539.49
Total Cost of Goods Sold $3,150,509.10
Blissful Technology, LLC
Cost of Goods Sold Statement
For Quarter 4, Year 2
Beginning Finished Goods Inventory
49,702 Units @ $ 38.13 $1,895,177.02
Production Costs for 96,000 Units:
Raw Materials $1,451,520.04
Direct Labor 1,155,840.05
Variable Overhead 161,279.99
Fixed Overhead 159,805.44
Total Production Costs $2,928,445.52
Total Costs to Account for $4,823,622.54
Ending Finished Goods Inventory
36,038 Units @ $ 38.13 $1,374,157.77
Cost of Goods Sold at Standard $3,449,464.77
Variance $151,114.99
Total Cost of Goods Sold $3,600,579.76
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Year 2 Annual Report
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Blissful Technology, LLC
Cost of Goods Sold Statement
For The Year Ended December 31, Year 2
Beginning Finished Goods Inventory
433 Units @ $35.74 $15,477.20
Production Costs for 96,000 Units:
Raw Materials $6,350,400.18
Direct Labor 5,056,800.21
Variable Overhead 705,599.96
Fixed Overhead 699,148.80
Total Production Costs $12,811,949.15
Less: Cost of Units Processed to Circuit Boards 76,261.60
Total Costs to Account for $12,751,164.75
Ending Finished Goods Inventory
36,038 Units @ $ 38.13 $1,374,157.77
Cost of Good Sold at Standard $11,377,006.98
Variance $482,801.42
Total Cost of Goods Sold $11,859,808.40
Blissful Technology, LLC has had a good year for sales. The company’s sales have
increased by over $3 million in Year 2.
Blissful Technology, LLC can attribute its increase in Cost of Goods Sold, to several
elements. First, Blissful was producing more goods because demand in the industry was
increasing. Second, the company decided to increase employee morale by increasing wages
and benefits, thus increase the cost for direct labor.
Blissful Technology, LLC is on a current trend of increasing its net income from Quarter 3 to
Quarter 4 in Year 2. Blissful no longer has a shortage of inventory as was the case at the
beginning of Year 2, so the company expects this trend of increasing profits to continue into
the future.
Blissful Technology, LLC increased expense on Short-Term Notes Payable, was a one time
necessity. The company expanded its manufacturing capacity to meet demand, and had to
acquire additional debt to finance the expansion. In the future Blissful expects to be able to
finance its expansion through the cash flow of profits.
17. Blissful Technology, LLC
Year 2 Annual Report
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Blissful Technology, LLC
Comparative Income Statement
For Years Ended December 31, Year 1 and Year 2
Amounts
Increase
Percentage
Increase
Year 2 Year 1 or Decrease or Decrease
Sales $14,649,759.00 $11,577,019.50 $3,072,739.50 27%
Cost of Goods Sold 11,859,808.43 8,708,230.75 3,151,577.68 36%
Gross Margin $2,789,950.57 $2,868,788.75 (78,838.18) -3%
Expenses
Selling Expense:
Sales Commissions 5% $732,487.95 $578,850.98 $153,636.97 27%
Fixed Selling Expense 100,000.00 100,000.00 - 0%
Advertising Expense 460,000.00 310,000.00 150,000.00 48%
Total Selling Expense $1,292,487.95 $988,850.98 303,636.97 31%
Administration Expense:
Fixed Administration $240,000.00 $240,000.00 $- 0%
Depreciation-Equipment 12,000.00 12,000.00 - 0%
Depreciation-Building 7,200.00 7,200.00 - 0%
Total Administration Expense 259,200.00 259,200.00 - 0%
Total Selling & Administration Expense $1,551,687.95 $1,248,050.98 (69,049.82) -6%
Net Income from Operation $1,238,262.62 $1,620,737.77 (382,475.15) -24%
Other Income and Expenses
Interest Income On Short-term Investments $17,648.44 $12,985.68 $4,662.76 36%
Interest Expense On Notes Payable, Short-term 139,726.60 - 139,726.60
Interest Expense On Line Of Credit 65,865.07 61,670.40 4,194.67 7%
Interest Expense On Mortgage Payable 62,821.20 78,332.40 (15,511.20) -20%
Total Interest Expense $268,412.87 $140,002.80 $128,410.07 92%
Total Other Income and Expenses $(250,764.43) $(127,017.12) (123,747.31) 97%
Income Before Taxes $987,498.19 $1,493,720.65 (506,222.46) -34%
Income Tax 394,999.28 597,488.26 (202,488.98) -34%
Net Income $592,498.91 $896,232.39 (303,733.48) -34%
Earnings Per Share $4.74 $9.96
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Blissful Technology, LLC
Statement of Cash Flow
For Quarter 1, Year 2
Operating Activities
Cash Receipts From:
Sales $3,428,072.44
Income Tax Refund -
Sale of Securities 642,648.44
Line of Credit 663,000.00
Cash Disbursements From:
Payments to Suppliers $1,722,461.97
Payments to Employees 1,713,757.40
Payment to Subcontractor -
Interest 22,523.62
Taxes 215,189.83
Advertising 80,000.00
Misc Exp 378,602.31
Payment of Short-Term Note -
Short-Term Investments -
Cash Flow From Operating Activities $601,185.75
Investing Activities
Cash Disbursements From:
Equipment $(300,000.00)
Cash Flow From Investing Activities $(300,000.00)
Financing Activities
Cash Receipts From:
Long-Term Borrowing -
Issuance of Stock
-
Cash Disbursements From:
Payment on Line of Credit $277,391.98
Payment for Mortgage 24,000.00
Payment of Cash Dividend -
Cash Flow From Financing Activities $(301,391.98)
Net Decrease in Cash $(206.23)
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Blissful Technology, LLC
Statement of Cash Flow
For Quarter 2, Year 2
Operating Activities
Cash Receipts From:
Sales $3,659,281.21
Income Tax Refund -
Sale of Securities -
Line of Credit 1,115,000.00
Cash Disbursements From:
Payments to Suppliers $1,874,102.83
Payments to Employees 1,688,430.35
Payment to Subcontractor 50,000.00
Interest 71,900.68
Taxes 96,401.01
Advertising 125,000.00
Misc Exp 396,388.80
Payment of Short-Term Note 663,000.00
Short-Term Investments -
Cash Flow From Operating Activities $(190,942.46)
Investing Activities
Cash Disbursements From:
Equipment $-
Cash Flow From Investing Activities $-
Financing Activities
Cash Receipts From:
Long-Term Borrowing $300,000.00
Issuance of Stock -
Cash Disbursements From:
Payment on Line of Credit $81,159.98
Payment for Mortgage 24,000.00
Payment of Cash Dividend 4,500.00
Cash Flow From Financing Activities $190,340.02
Net Decrease in Cash $(602.44)
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Blissful Technology, LLC
Statement of Cash Flow
For Quarter 3, Year 2
Operating Activities
Cash Receipts From:
Sales $3,475,707.99
Income Tax Refund 16,195.76
Sale of Securities -
Line of Credit 281,000.00
Cash Disbursements From:
Payments to Suppliers $1,512,736.21
Payments to Employees 1,230,591.81
Payment to Subcontractor -
Interest $134,929.24
Taxes -
Advertising 125,000.00
Misc Exp 453,998.47
Payment of Short-Term Note 1,115,000.00
Short-Term Investments -
Cash Flow From Operating Activities $(799,351.98)
Investing Activities
Cash Disbursements From:
Equipment $-
Cash Flow From Investing Activities $-
Financing Activities
Cash Receipts From:
Long-Term Borrowing $300,000.00
Issuance of Stock 646,450.00
Cash Disbursements From:
Payment on Line of Credit $117,633.32
Payment for Mortgage 24,000.00
Payment of Cash Dividend 5,400.00
Cash Flow From Financing Activities $799,416.68
Net Decrease in Cash $64.70
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Blissful Technology, LLC
Statement of Cash Flow
For Quarter 4, Year 2
Operating Activities
Cash Receipts From:
Sales $4,100,480.30
Income Tax Refund -
Sale of Securities -
Line of Credit
Cash Disbursements From:
Payments to Suppliers $1,343,009.53
Payments to Employees 1,439,681.44
Payment to Subcontractor -
Interest 39,059.33
Taxes $89,099.56
Advertising 130,000.00
Misc Exp 434,280.00
Payment of Short-Term Note 281,000.00
Short-Term Investments 213,000.00
Cash Flow From Operating Activities $131,350.44
Investing Activities
Cash Disbursements From:
Equipment $-
Cash Flow From Investing Activities $-
Financing Activities
Cash Receipts From:
Long-Term Borrowing $-
Issuance of Stock -
Cash Disbursements From:
Payment on Line of Credit $98,027.76
Payment for Mortgage 24,000.00
Payment of Cash Dividend 8,750.00
Cash Flow From Financing Activities $(130,777.76)
Net Decrease in Cash $572.68
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Blissful Technology, LLC
Statement of Cash Flow
For The Year Ended December 31, Year 2
Operating Activities
Cash Receipts From:
Sales $14,663,541.94
Income Tax Refund 16,195.76
Sale of Securities 642,648.44
Line of Credit 2,059,000.00
Cash Disbursements From:
Payments to Suppliers $6,452,310.54
Payments to Employees $6,072,461.00
Payment to Subcontractor $50,000.00
Interest $268,412.87
Taxes $400,690.40
Advertising $460,000.00
Misc Exp $1,663,269.58
Payment of Short-Term Note $2,059,000.00
Short-Term Investments $213,000.00
Cash Flow From Operating Activities $(257,758.25)
Investing Activities
Cash Disbursements From:
Equipment $(300,000.00)
Cash Flow From Investing Activities $(300,000.00)
Financing Activities
Cash Receipts From:
Long-Term Borrowing $600,000.00
Issuance of Stock $646,450.00
Cash Disbursements From:
Payment on Line of Credit $574,213.04
Payment for Mortgage $96,000.00
Payment of Cash Dividend $18,650.00
Cash Flow From Financing Activities $557,586.96
Net Decrease in Cash $(171.29)
23. Blissful Technology, LLC
Year 2 Annual Report
23
Blissful Technology, LLC
Balance Sheet
For The Year Ended December 31, Year 2
Assets
Current Assets:
Cash $ 25,825.45
Short-Term Investments $ 213,000.00
Accounts Receivable $ 1,289,112.00
Finished Goods Inventory $ 1,374,157.77
Total Current Assets $ 2,902,095.22
Plant Assets:
Equipment $ 775,000.00
Less:Accumulated Depreciation $ 253,750.00 $ 521,250.00
Building $ 1,125,000.00
Less: Accumulated Depreciation $ 167,062.50 $ 957,937.50
Total Plant Assets $ 1,479,187.50
Administration Assets:
Equipment $ 60,000.00
Less: Accumulated Depreciation $ 24,000.00 $ 36,000.00
Building $ 80,000.00
Less: Accumulated Depreciation $ 14,400.00 $ 65,600.00
Land $ 125,000.00
Total Administration Assets $ 226,600.00
Total Assets $ 4,607,882.72
Liabilities
Current Liabilities:
Accounts Payable $ 576,555.43
Notes Payable, Short-Term $ -
Total Current Liabilities $ 576,555.43
Long-Term Liabilities:
Notes Payable, Line of Credit $ 490,138.82
Mortgage Payable $ 768,000.00
Total Long-Term Liabilities $ 1,258,138.82
Total Liabilities $ 1,834,694.25
Stockholder's Equity
Contributed Capital:
Common Stock (500,000 shares
authorized, 125,000 issued at
$2.00 par value $ 250,000.00
Capital in excess of Par Value $ 1,125,450.00
Total Contributed Capital $ 1,375,450.00
Retained Earnings $ 1,397,738.47
Total Stockholder's Equity $ 2,773,188.47
25. Blissful Technology, LLC
Year 2 Annual Report
25
Blissful Technology, LLC
Statement of Retained Earnings
For 12 Months Ending Year 2
Retained Earnings: Beginning $ 839,646.52
Add Net Income For The Year $ 576,741.95
Deduct Common Stock Dividends $ 18,650.00
Retained Earnings: Ending $ 1,397,738.47
Blissful Technology, LLC has been hard at work reaching its goal, of increasing shareholder
wealth this year. Retained earnings have increased a good amount from Year 1 to Year 2.
Blissful Technology, LLC doesn’t have as high of retained earnings as it did in year one. The
reason is due to the financing of expanding manufacturing capacity. The company has
addressed the inventory shortage situation with great results. Its future net income is
predicted to grow at a steady rate.
Each quarter Blissful Technology, LLC has increased its dividend amount paid to common
stockholders. This has attributed to its increasing stock price.Blissful Technology, LLC is
dedicated to increasing shareholder wealth, and the company expects continued growth in its
quarterly dividends, and its stock price.
Blissful Technology, LLC has had a busy year. The company has increased its plant assets,
because it needed to expand its production capacity in its manufacturing facility. The
company was able to finance this expansion through liabilities and distribution of common
stock.
Blissful Technology LLC, has done well this year. Total Liabilities has decreased over
$100,000 this year and retained earnings has increased by over $500,000. It paid off much of
its debts that were used to expand capacity.
26. Blissful Technology, LLC
Year 2 Annual Report
26
Blissful Technology, LLC
Comparative Balance Sheet
As of December 31, Year 1 and Year 2
Year 2 Year 1
Assets
Current Assets:
Cash $ 25,825 $ 25,997
Short-Term Investments $ 213,000 $ 625,000
Accounts Receivable $ 1,289,112 $ 1,202,895
Finished Goods Inventory $ 1,374,158 $ 15,477
Total Current Assets $ 2,902,095 $ 1,869,369
Plant Assets:
Equipment net of Accumulated Depreciation $ 521,250 $ 551,250
Building net of Accumulated Depreciation $ 957,938 $ 884,188
Total Plant Assets $ 1,479,188 $ 1,435,438
Administration Assets:
Equipment net of Accumulated Depreciation $ 36,000 $ 48,000
Building net of Accumulated Depreciation $ 65,600 $ 72,800
Land $ 125,000 $ 125,000
Total Administration Assets $ 226,600 $ 245,800
Total Assets $ 4,607,883 $ 3,550,606
Liabilities
Current Liabilities:
Accounts Payable $ 576,555 $ 653,608
Notes Payable, Short-Term $ -
Total Current Liabilities $ 576,555 $ 653,608
Long-Term Liabilities:
Notes Payable, Line of Credit $ 490,139 $ 464,352
Mortgage Payable $ 768,000 $ 864,000
Total Long-Term Liabilities $ 1,258,139 $ 1,328,352
Total Liabilities $ 1,834,694 $ 1,981,960
Stockholder's Equity
Contributed Capital:
Common Stock ($2 par, 500,000 shares authorized) $ 250,000 $ 180,000
Capital In Excess of Par Value $ 1,125,450 $ 549,000
Total Contributed Capital $ 1,375,450 $ 729,000
Retained Earnings $ 1,397,738 $ 839,647
Total Stockholder's Equity $ 2,773,188 $ 1,568,647
27. Blissful Technology, LLC
Year 2 Annual Report
27
Total Liabilities and Stockholder's Equity $ 4,607,883 $ 3,550,606
Financial Ratios
Current Ratio
Quick Ratio
Inventory Turnover
Profit Margin
Return On Assets
29. Blissful Technology, LLC
Year 2 Annual Report
29
Quarter Current Ratio Quick Ratio Inventory Turnover PM ROA Debt to Equity
BV Per
Share
Q1 1.708 0.958 4.935 0.091 0.074 1.294 21.016
Q2 1.777 0.525 1.461 0.046 0.029 1.494 22.573
Q3 3.969 1.472 1.472 -0.007 -0.005 0.808 21.186
Q4 5.034 2.65 2.65 0.031 0.029 0.662 22.186
*The ratios are indicative of the management team’s objective of increasing inventory to
position the company as a leader in the industry.
Blissful Technology, LLC’s inventory turnover decreased in the second quarter, as a result of
management’s decrease in advertising and increase in selling price as compared to the
industry average. The company has increased finished goods inventory to help sustain
operations in the future.
The increase in Blissful Technology, LLC’s inventory of finished goods did have some
negative consequences. Along with the decrease in inventory turnover, the company also
experienced a decrease in the ratio of cash and cash equivalents to current liabilities and a
decrease in profitability and return on assets. These were due to the increasing competition
within the industry as well as the economic recession these years.However, Blissful
Technology, LLC is still in the industry leader position and keeps increasing benefits to its
employees, customers, and investors. The company has strong competitive advantage and
good reputation in the industry.
The chart above illustrates the effect that the inventory build-up had on the earnings per share
of Blissful Technology, LLC throughout Year 2. Initially, the company experienced lower
sales and revenue. As seen in the 4th quarter, the company’s financial position had improved
and had not followed the general decline shown in the industry average. The company’s
financial position is expected to continue to improve during the next fiscal year.
30. Blissful Technology, LLC
Year 2 Annual Report
30
INDEPENDENT AUDITOR’S REPORT
Board of Directors, Stockholders, Owners, and/or Management of
Blissful Technology, LLC
1234 Rose Street
Suite 100-150
Springfield, Missouri 65897
We have audited the accompanying financial statements of Blissful Technology, LLC, which
comprise the balance sheet as of December 31, Year 2, and the related statements of income,
retained earnings, and cash flows for the year then ended, and the related notes to the
financial statements.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated
financial statements in accordance with U.S. Generally Accepted Accounting Principles; this
includes the design, implementation, and maintenance of internal control relevant to the
preparation and fair presentation of consolidated financial statements that are free from
material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based
on our audit. We conducted our audit in accordance with U.S. Generally Accepted Auditing
Standards. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditors'
judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity's preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
entity's internal control. Accordingly, we express no such opinion. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of
significant accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
31. Blissful Technology, LLC
Year 2 Annual Report
31
Opinion
In our opinion, the financial statements referred to above present fairly, in all material
respects, the financial position of Blissful Technology, LLC as of December 31, Year 2, and
the results of its operations and its cash flows for the year then ended in accordance with U.S.
Generally Accepted Accounting Principles.
Bob Cratchit,P.C., CPA
KPMG LLP
1 National Avenue
St. Louis, Missouri 63101
February 2, Year 3
32. Blissful Technology, LLC
Year 2 Annual Report
32
CORPORATE DIRECTORY
REGISTED OFFICE
1234 Rose Street
Suite 100-150
Springfield, Missouri65897
BOARD OF DIRECTORS
Jing Shi
Jonathan Carter
Matthew Wheatley
Tingting Liu
COMPANY SECRETARY
Jean White
AUDITOR
KPMG LLP
1 National Avenue
St. Louis, Missouri63101
AUDIT COMMITTEE
Bob Cratchit
Michael Witts
Chris Allen
Andy Bishop
PRINCIPAL BANKER
Bank of America
20 Green Street
Springfield, Missouri65831
www.blissfultechllc.com