AMNC Amincor Inc (PK)

1. ORGANIZATION AND NATURE OF BUSINESS

Amincor, Inc. ("Amincor") is headquartered in New York, New York. As of March 31, 2014 and December 31, 2013 Amincor's had the following operating subsidiaries:

Advanced Waste & Water Technology, Inc. ("AWWT") Baker's Pride, Inc. ("BPI")
Tyree Holdings Corp. ("Tyree")
Amincor Other Assets, Inc. ("Other Assets")

AWWT

AWWT performs water remediation services in the Northeastern United States and is headquartered in Farmingdale, New York. In addition to its fixed station operations AWWT is working with impacted water produces to provide water remediation equipment and services throughout the United States and select international markets. The services include water testing and evaluation, system engineering and design, system training servicing and maintenance.

BPI

BPI manufactures bakery food products, consisting primarily of several varieties of sliced and packaged private label bread in addition to fresh and frozen varieties of donuts, in the Midwest and Eastern region of the United States. BPI is headquartered and operates facilities in Burlington, Iowa.

TYREE

Tyree performs maintenance, repair and construction services to customers with underground petroleum storage tanks and petroleum product dispensing equipment. Complimenting these services, Tyree is engaged in environmental consulting, site assessment, analysis and management of site remediation for owners and operators of property with petroleum storage facilities. Tyree markets its services throughout the Northeast and Mid-Atlantic regions of the United States to national and multinational enterprises, as well as to local and national governmental agencies and municipalities. The majority of Tyree's revenue is derived from customers in the Northeastern United States. Tyree's headquarters are located in Mt. Laurel, New Jersey.

OTHER ASSETS

Other Assets was incorporated to hold real estate, equipment and loan receivables.

On April 30, 2013, Other Assets sold its 360,000 square foot facility located in Allentown, Pennsylvania. The property was sold for $500,000, less outstanding taxes and costs due and owing on the property, for net sale proceeds of $232,497.

On December 19, 2013, Other Assets executed a promissory note against its property located in Pelham Manor, New York. The promissory note is for $1.5 million and provides for interest only payments of $15,000 per month, with the full principal balance due on January 1, 2015. The note carries an interest rate of 12.0% per annum.

DISCONTINUED OPERATIONS

On April 1, 2013, Amincor sold the business of a subsidiary, Environmental Quality Services ("EQS") to a former manager of the Company. EQS provided environmental and hazardous waste testing services in the Northeastern United States.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The accompanying consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP").

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of Amincor and all of its consolidated subsidiaries (collectively, the "Company"). All intercompany balances and transactions have been eliminated in consolidation.

USE OF ESTIMATES

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Significant estimates include the valuation of goodwill and intangible assets, the useful lives of tangible and intangible assets, depreciation and amortization of property, plant and equipment, allowances for doubtful accounts and inventory obsolescence, completion of contracts and loss contingencies on particular uncompleted contracts and the valuation allowance on deferred tax assets. Actual results could differ from those estimates.

REVENUE RECOGNITION

BPI

Revenue is recorded net of discounts and is recognized upon the sale of products when title to the goods has passed, the price to the customer is fixed and determinable, and collection from the customer is reasonably assured. Those conditions are typically satisfied when goods are delivered to BPI's shipping dock, and are made available for pick-up by the customer, at which point the title passes to the customer. Customer sales discounts are accounted for as reductions of revenues in the same period the related sales are recorded.

TYREE

Maintenance and repair services for several retail petroleum customers are performed under multi-year, unit price contracts ("Tyree Contracts"). Under these agreements, the customer pays a set price per contracted retail location per month and Tyree provides a defined scope of maintenance and repair services at these locations on an on-call or as scheduled basis. Revenue earned under Tyree Contracts is recognized each month at the prevailing rate per location unit price. Revenue from other maintenance and repair services is recognized as these services are rendered.

Tyree uses the percentage-of-completion method on construction services, measured by the percentage of total costs incurred to date to estimated total costs for each contract. This method is used because management considers costs to date to be the best available measure of progress on these contracts.

Provisions for estimated losses on uncompleted contracts are made in the period in which overall contract losses become probable. Changes in job performance, job conditions and estimated profitability, including those arising from final contract settlements, may result in revisions to costs and income. These revisions are recognized in the period in which it is probable that the customer will approve the variation and the amount of revenue arising from the revision can be reliably measured. An amount equal to contract costs attributable to claims is included in revenues when negotiations have reached an advance stage such that it is probable that the customer will accept the claim and the amount can be measured reliably.

The asset account "Costs and estimated earnings in excess of billings on uncompleted contracts," represents revenues recognized in excess of amounts billed.

The liability account, "Billings in excess of cost and estimated earnings on uncompleted contracts," represents billings in excess of revenues recognized.

AWWT

AWWT provides water remediation and logistics services for its clients which include any business that produces waste water. AWWT invoices clients based on bills of lading, which specify the quantity and type of water treated. Revenue is recognized as water remediation services are performed.

ACCOUNTS RECEIVABLE

Accounts receivable represents amounts due from customers and is reported net of an allowance for doubtful accounts. The allowance for doubtful accounts is based on management's estimate of the amount of receivables that will actually be collected after analyzing the credit worthiness of its customers and historical experience, as well as the prevailing business and economic environment.

Accounts are written off when significantly past due and after exhaustive efforts at collection. Recoveries of accounts receivables previously written off are recorded as income when subsequently collected.

Tyree's accounts receivable for maintenance and repair services and construction contracts are recorded at the invoiced amount and do not bear interest. Tyree, BPI, and AWWT extend unsecured credit to customers in the ordinary course of business but mitigate the associated risks by performing credit checks and actively pursuing past due accounts. Tyree follows the practice of filing statutory "mechanics" liens on construction projects where collection problems are anticipated.

ALLOWANCE FOR LOAN LOSSES

The Company performs ongoing credit evaluations of its loans receivable and provides an allowance for loan losses based on the payee's credit evaluation, current financial condition, and collection history. When it is determined that it is more likely than not that the scheduled payments of principal and interest under the terms of the loan will not be received when due, an allowance for loan losses is established, based upon management's estimate of the amount of the loan that will actually be collected.

INVENTORIES

Inventories are stated at the lower of cost or market using the first-in, first-out method. Market is determined based on the net realizable value with appropriate consideration given to obsolescence, excessive levels and other market factors. An inventory reserve is recorded if the carrying amount of the inventory exceeds its estimated market value.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation is calculated using the straight-line method over the estimated useful lives of the respective assets. Leasehold improvements are amortized over the lesser of their estimated useful lives or the remaining lease terms. Expenditures for repairs and maintenance are charged to operations as incurred. Renewals and betterments are capitalized. Upon the sale or retirement of an asset, the related costs and accumulated depreciation are removed from the accounts and any gain or loss is recognized in the results of operations.

PROPERTY HELD FOR INVESTMENT

Property held for investment consists of property in Pelham Manor, New York. The value of the property is based on the fair value of the property.

GOODWILL AND INTANGIBLE ASSETS

Goodwill represents the cost of acquiring a business that exceeds the net fair value ascribed to its identifiable assets and liabilities. Goodwill and indefinite-lived intangibles are not subject to amortization but are tested for impairment annually and whenever events or circumstances change, such as a significant adverse change in the economic climate that would make it more likely than not that impairment may have occurred. If the carrying value of goodwill or an indefinite-lived intangible asset exceeds its fair value, an impairment loss is recognized.

IMPAIRMENT OF LONG-LIVED ASSETS

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. The Company assesses recoverability by determining whether the net book value of the related asset will be recovered through the projected undiscounted future cash flows of the asset. If the Company determines that the carrying value of the asset may not be recoverable, it measures any impairment based on the asset's fair value as compared to the asset's carrying value.

EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted earnings (loss) per share considers the potential dilution that could occur if securities or other contracts to issue common stock were exercised or could otherwise cause the issuance of common stock. Such contracts include stock options and convertible preferred stock, which when exercised or converted into common stock would cause the issuance of common stock that then would share in earnings (loss). Such potential additional common shares are included in the computation of diluted earnings per share. Diluted loss per share is not computed for the three months ended March 31, 2014 and 2013 because any potential additional common shares would reduce the reported loss per share and therefore have an antidilutive effect.

SHARE-BASED COMPENSATION

All share-based awards are measured based on their grant date fair values and are charged to expenses over the period during which the required services are provided in exchange for the award (the vesting period). Share-based awards are subject to specific vesting conditions. Compensation cost is recognized over the vesting period based on the grant date fair value of the awards and the portion of the award that is ultimately expected to vest.

RECLASSIFICATIONS

Certain reclassifications have been made to the accompanying consolidated financial statements of prior periods to conform to the current period's presentation.

3. GOING CONCERN

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has suffered recurring net losses from operations and had a working capital deficit of $36,719,942 and a (deficit) equity of $16,719,589 as of March 31, 2014, which raises substantial doubt about the Company's ability to continue as a going concern. Our auditors have stated, in their report dated April 15, 2014, that there is substantial doubt on the Company's ability to continue operations as a going concern due to our recurring net losses from operations, and significant deficits in working capital and equity. The Company's ability to continue as a going concern is dependent upon its ability to raise additional funds through debt and equity financing, and to achieve profitable operations. Management's plans to continue as a going concern and to achieve a profitable level of operations are as follows:

* Advanced Waste & Water Technology, Inc.
* Successfully selling large-scale waste water treatment equipment through AWWT's established licensing agreement.
* Acquiring the company with which AWWT has established its licensing agreement.

* Baker's Pride, Inc.
* Securing additional donut and bread customers to increase the utilization of existing plant assets and place significant and competitive bids to strategic players within the fresh bread manufacturing industry, as well as increase revenues from its existing customers,
* Increasing co-pack donut, bread and bun business once the existing plant assets are operating at maximum capacity,
* Negotiating with its commercial bank to commence paying principal payments on its bridge loan, which matures on September 1, 2014, when BPI's cash flow improves.

* Tyree Holdings Corp.
* Increasing sales of the environmental business unit to existing customers and bid on additional jobs outside of Tyree's current customer base. Tyree's ability to succeed in securing additional environmental business depends on the ability of one of Tyree's primary customers to secure remediation work by bidding environmental liabilities currently present on gasoline stations and referring this work to Tyree,

* Evaluating Tyree's construction and maintenance business units with respect to their ability to increase margins and operate profitably independent of each other,
* Liquidating excess inventory that will not be utilized in the normal course of operations during the next six months to generate additional working capital.

* Amincor Other Assets, Inc.
* Liquidating assets held for sale to provide working capital to the Company's subsidiaries,
* Renting assets held for sale until they can be sold.

* Amincor, Inc.
* Securing new financing from a financial institution to provide needed working capital to the subsidiary companies.

While management believes that it will be able to continue to raise capital from various funding sources in such amounts sufficient to sustain operations at the Company's current levels through at least March 31, 2015, if the Company is not able to do so and if the Company is unable to become profitable for the next twelve months through March 31, 2015, the Company would likely need to modify its plans and/or cut back on its operations. If the Company raises additional funds through the issuance of equity securities, substantial dilution to existing shareholders may result. However, if management's plans are not achieved, if significant unanticipated events occur, or if the Company is unable to obtain the necessary additional funding on favorable terms or at all, management would likely have to modify its business plans to continue as a going concern. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

4. DISCONTINUED OPERATIONS

The Company discontinued the operations of EQS when it was sold on April 1, 2013 and the loss from discontinued operations in the accompanying consolidated financial statements for the three months ended March 31, 2013 primarily relates to EQS. Liabilities related to EQS and previously discontinued operations are presented separately on the consolidated balance sheets as of March 31, 2014 and December 31, 2013. Changes in net cash from discontinued operations are presented in the accompanying consolidated statements of cash flows for the three months ended March 31, 2014 and 2013. All prior period information has been reclassified to conform to the current period presentation.

The following amounts have been segregated from continuing operations and reported as discontinued operations:

                                            For The Three Months Ended March 31,
                                                  2014                2013
                                               ----------          ----------
Results From Discontinued Operations:
  Net revenues from discontinued operations    $       --          $  233,658
                                               ==========          ==========
  Income (loss) from discontinued operations   $    2,722          $ (181,276)
                                               ==========          ==========

Assets held for sale (which is recorded separately on the consolidated balance sheets) are the only remaining assets related to the discontinued operations. The following is a summary of the liabilities of the discontinued operations:

                                                  March 31,        December 31,
                                                    2014              2013
                                                 ----------        ----------

Accounts payable                                 $3,938,221        $3,945,632
Accrued expenses and other current liabilities    1,056,033         1,056,033
                                                 ----------        ----------
Total liabilities                                $4,994,254        $5,001,665
                                                 ==========        ==========

The Company will continue to provide administrative services for the discontinued entities until their liquidation is completed.

                                                  March 31,        December 31,
                                                    2014              2013
                                                 ----------        ----------

Raw materials                                    $1,250,905        $1,316,364
Ingredients                                         333,605           254,492
Finished goods                                      173,345            72,750
                                                 ----------        ----------
                                                  1,757,855         1,643,606
Inventory reserves                                  805,442           805,442
                                                 ----------        ----------
Inventories, net                                 $  952,413        $  838,164
                                                 ==========        ==========

                                        Useful Lives       March 31,        December 31,
                                          (Years)            2014               2013
                                          -------        ------------       ------------
Land                                        n/a          $    430,000       $    430,000
Machinery and equipment                    2-10            15,177,814         15,147,163
Furniture and fixtures                     5-10               169,258            169,258
Building and leasehold improvements          10             3,443,598          3,443,598
Computer equipment and software             5-7               842,989            838,466
Property Held for Investment                n/a             6,000,000          6,000,000
Vehicles                                   3-10               446,692            437,042
                                                          -----------        -----------
                                                           26,510,351         26,465,527
Less accumulated depreciation                               8,635,550          8,204,670
                                                          -----------        -----------
                                                          $17,874,801        $18,260,857
                                                          ===========        ===========

Total depreciation expense related to continuing operations for the three months ended March 31, 2014 and 2013 was $433,505 and $457,344, respectively.

7. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

During the years ended December 31, 2013 and 2012, Tyree did not file certain required payroll tax returns on a timely basis and did not properly pay its payroll tax liabilities, including trust funds withheld on behalf of its employees. Through the assistance of an outside payroll services company, Tyree filed all delinquent payroll tax returns during the fourth quarter of 2013 and is currently in negotiations with federal and various state authorities to settle its remaining payroll tax obligations. Tyree estimates that its outstanding payroll tax liability, including penalties and interest, was approximately $2.5 million as of March 31, 2014.

During the year ended December 31, 2013, Tyree did not file required sales tax returns in various jurisdictions. Tyree subsequently filed the required returns and is currently in negotiations with various state authorities to settle the remaining sales tax liability. Tyree estimates that its outstanding sales tax liability, including penalties and interest, is approximately $1.3 million as of March 31, 2014.

                                                   March 31,        December 31,
                                                     2014              2013
                                                 -----------        -----------
Equipment  loans payable,  collateralized  by
the assets purchased, and bearing interest at
annual  fixed  rates  ranging  from  8.00% to
15.00% as of March 31, 2014 and  December 31,
2013 with  principal and interest  payable in
installments through July 2014                    $  280,912         $  355,056

Promissory   notes  converted  from  accounts
payable,  with an  imputed  interest  rate of
10%. Payment terms are from 12 to 36 months        2,781,236          2,884,937

Promissory   notes   payable,   with  accrued
interest,  to three former  stockholders of a
predecessor   company.    These   notes   are
unsecured   and   are   subordinate   to  the
Company's  senior debt. The notes matured and
are in default as of March 31,  2014 and bear
interest at an annual fixed rate of 6.00%            500,000            500,000

installments   of   principal   and  interest
through  January  2015.  The annual  interest
rate is 4.78%                                        595,713                 --

Note payable to a commercial bank. Payable in
monthly   installments   of   principal   and
interest   through  March  2015.  The  annual
interest rate is 7.25%                               170,817            188,613

Bridge   loan   with   a   commercial   bank,
collateralized   by   property,   plant   and
equipment  in addition  to assets  purchased,
and bearing  interest at 2.75% above the U.S.
Prime  Rate  with  a  floor  of  5.00%  and a
ceiling  of  7.00%.   The  loan   matures  on
September 1, 2014.                                 2,749,985          2,749,985

Promissory  note payable,  collateralized  by
property.  Payable in monthly installments of
interest  only  bearing an  interest  rate of
12.00%.  The loan  matures on January 1, 2015
at which  time the  entire  unpaid  principal
amount and all accrued  interest is fully due
and payable.                                       1,515,273          1,500,273
                                                 -----------        -----------

Total                                              8,593,936          8,178,864


Less current portion                               8,394,047          7,957,909
                                                 -----------        -----------

Long-term portion                                $   199,889        $   220,955
                                                 ===========        ===========

9. RELATED PARTY TRANSACTIONS

Related parties are natural persons or other entities that have the ability, directly or indirectly, to control another party or exercise significant influence over the other party in making financial and operating decisions. Related parties include other parties that are subject to common control or that are subject to common significant influences.

                                                   March 31,        December 31,
                                                     2014              2013
                                                 -----------        -----------
Loan and  security  agreement  with  Capstone
Capital  Group,  LLC which matures on October
31, 2016  bearing  interest at 18% per annum.
Maximum borrowing of $8,000,000                  $ 7,172,895        $ 6,001,021

Loan and  security  agreement  with  Capstone
Capital  Group,  LLC which matures on May 15,
2015  bearing  interest  at  18%  per  annum.
Maximum borrowing of $1,000,000                      377,092            427,069

Short-term  accounts   receivable   financing
arrangement with Capstone  Business  Funding,
LLC. No maturity date is specified.  Interest
is  charged  at  variable  rates  based  upon
collection days outstanding                        1,944,031          2,060,730

Loan  and  security  agreement  with  Stephen
Tyree  which  matures  on  November  5,  2014
bearing interest at 5.0% per annum.                    4,930              4,869
                                                 -----------        -----------
Total  loans and  amounts  payable to related
parties                                          $ 9,498,948        $ 8,493,689
                                                 ===========        ===========

Interest expense for these loans amounted to $660,960 and $125,388 for the three months ended March 31, 2014 and 2013, respectively.

MANAGEMENT FEES

The Company maintains an informal management services agreement with Capstone Credit Group, LLC to provide office space, back office services and other various services from time to time for a monthly fee. Management fees are due and payable monthly and the Company recorded management fee income of $75,000 and $45,000 for the three months ended March 31, 2014 and 2013, respectively. As of March 31, 2014, $45,000 of accrued management fees remained unpaid. There were no unpaid management fees as of December 31, 2013.

10. SHARES OF COMMON STOCK ISSUED

On January 9, 2014 the Company issued 1,083,332 shares of Class A Voting common shares to certain officers of the Company in exchange for $130,000. The Company's Class A shares were valued using a $0.12 valuation, which was the market price for the Company's Class A shares on January 9, 2014.

11. SHARE-BASED COMPENSATION

The Company does not have a formally adopted share-based compensation plan. Stock option grants have been made as determined by the Board of Directors.

During the three months ended March 31, 2014, the Company's Board of Directors granted 635,000 common stock Class A options to the President, Vice-President and Interim Chief Financial Officer, certain management and employees of the Company, certain officers and employees of its subsidiary companies, and certain

non-employees of the Company, at an exercise price of $0.50. No common stock options were granted in the three months ended March 31, 2013. Stock based compensation expense totaled $134,799 and $139,139 for the three months ended March 31, 2014 and 2013, respectively. 50% of the options vest and become exercisable on the first anniversary of the grant date and the remaining 50% vest on the second anniversary of the grant date, provided that the individual is employed by the Company on such anniversary date.

The Company estimates the fair value of the stock options on the date of the grant using the Black-Scholes option model, which requires the input of subjective assumptions. These assumptions include the estimated volatility of the Company's common stock price of the expected term, the fair value of the Company's stock, the risk-free interest rate and the dividend yield. Changes in the subjective assumptions can materially affect the estimated fair value of stock compensation.

                                                   March 31,       December 31,
                                                     2014              2013
                                                 ------------      ------------
Total Assets:
  Amincor                                        $    148,711      $    362,839
  Other Assets                                      8,452,170         8,446,271
  AWWT                                                359,531           354,264
  BPI                                              11,253,154        11,313,853
  Tyree                                             6,884,126         8,118,257
                                                 ------------      ------------
Total assets                                     $ 27,097,692      $ 28,595,484
                                                 ============      ============

                                                   March 31,       December 31,
                                                     2014              2013
                                                 ------------      ------------
Total Goodwill:
  Amincor                                        $         --      $         --
  Other Assets                                             --                --
  AWWT                                                 22,241            22,241
  BPI                                                      --                --
  Tyree                                                    --                --
                                                 ------------      ------------
Total goodwill                                   $     22,241      $     22,241
                                                 ============      ============

                                       21

                                                   March 31,       December 31,
                                                     2014              2013
                                                 ------------      ------------
Total Other Intangible Assets:
  Amincor                                        $         --      $         --
  Other Assets                                             --                --
  AWWT                                                     --                --
  BPI                                                      --                --
  Tyree                                               851,000           851,000
                                                 ------------      ------------
Total other intangible assets                    $    851,000      $    851,000
                                                 ============      ============

                                                  Three Months Ended March 31,
                                                     2014              2013
                                                 ------------      ------------
Net Revenues:
  Amincor                                        $         --      $         --
  Other Assets                                             --                --
  AWWT                                                114,503            53,216
  BPI                                               1,207,296            54,808
  Tyree                                             5,019,877         6,860,022
                                                 ------------      ------------
Net revenues                                     $  6,341,676      $  6,968,046
                                                 ============      ============

                                                  Three Months Ended March 31,
                                                     2014              2013
                                                 ------------      ------------
Income (loss) before Provision
for Income Taxes:
  Amincor                                        $   (178,857)     $    150,219
  Other Assets                                        (69,830)          (30,126)
  AWWT                                                (29,234)          (17,038)
  BPI                                              (1,871,403)       (1,750,171)
  Tyree                                              (713,364)         (656,688)
                                                 ------------      ------------
Income (loss) before Provision
for Income Taxes                                 $ (2,862,688)     $ (2,303,804)
                                                 ============      ============

                                                  Three Months Ended March 31,
                                                     2014              2013
                                                 ------------      ------------
Depreciation of Property and Equipment:
  Amincor                                        $         --      $         --
  Other Assets                                             --                --
  AWWT                                                 12,225            11,818
  BPI                                                 296,360           294,301
  Tyree                                               124,920           151,225
                                                 ------------      ------------
Total depreciation of property and equipment     $    433,505      $    457,344
                                                 ============      ============

                                                  Three Months Ended March 31,
                                                     2014              2013
                                                 ------------      ------------
Interest  Expense - net:
  Amincor                                        $   (174,532)     $   (136,619)
  Other Assets                                         35,000            (7,247)
  AWWT                                                     --             2,997
  BPI                                                 406,344           169,327
  Tyree                                               498,635           212,887
                                                 ------------      ------------
Total interest expense, net                      $    765,447      $    241,345
                                                 ============      ============

13. COMMITMENTS AND CONTINGENCIES

CONTINGENCIES/LEGAL MATTERS:

Amincor and its subsidiaries are, from time to time, involved in ordinary and routine litigation. Management presently believes that the ultimate outcome of these proceedings individually or in the aggregate, will not have a material adverse effect on the Company's financial position, results of operations or cash flows. Nevertheless, litigation is subject to inherent uncertainties and unfavorable rulings could occur. An unfavorable ruling could include monetary damages and, in such event, could result in a material adverse impact on the Company's financial position, results of operations or cash flows for the period in which the ruling occurs.

AMINCOR

On July 6, 2012, SFR Holdings, Ltd., Eden Rock Finance Master Limited, Eden Rock Asset Based Lending Master Ltd., Eden Rock Unleveraged Finance Master Limited, SHK Asset Backed Finance Limited, Cannonball Plus Fund Limited and Cannonball Stability Fund, LP (collectively, the "Plaintiffs") commenced an action in the Supreme Court of the State of New York County of New York against Amincor, Inc., Amincor Other Assets, Inc., their officers and directors, John R. Rice III, Joseph F. Ingrassia and Robert L. Olson and various other entities affiliated with or controlled directly or indirectly by John R. Rice III and Joseph F. Ingrassia (collectively the "Defendants"). Plaintiffs allege that Defendants engaged in wrongful acts, including fraudulent inducement, fraud, breach of fiduciary duty, unjust enrichment, fraudulent conveyance and breach of contract. Plaintiffs are seeking compensatory damages in an amount in excess of $150,000 to be determined at trial. Litigation is pending. Management believes that this lawsuit has no merit or basis and is vigorously defending it.

BPI

In connection with a United States Department of Agriculture ("USDA") loan application, BPI had Environmental Site Assessments performed on the property where its Mt. Pleasant Street Bakery, Inc. operates, as required by the prospective lender. A Phase II Environmental Site Assessment was completed on October 31, 2011 and was submitted to the Iowa Department of Natural Resources ("IDNR") for their review. IDNR requested that a Tier Two Site Cleanup Report ("Tier Two") be issued and completed in order to better understand what

environmental hazards exist on the property. The Tier Two was completed on February 3, 2012 and was submitted to IDNR for further review. Management's latest correspondence with IDNR, dated March 21, 2012, required additional environmental remediation in order to be in compliance with IDNR's regulations. Management has retained the necessary environmental consultants to become compliant with IDNR's request. Due to the nature of the liability, the remediation work is 100% eligible for refund from IDNR's Innocent Landowner Fund. As such, there is no direct liability related to the cleanup of the hazard.

TYREE

On December 5, 2011, Tyree's largest customer, Getty Petroleum Marketing, Inc. ("GPMI") filed for Chapter 11 bankruptcy protection. As of that date, Tyree had a pre-petition receivable of $1,515,401, which was subsequently written-off due to the uncertainty of collection. Additionally, Tyree has a post-petition administrative claim for $593,709. A Proof of Claim was filed with the Bankruptcy court on Tuesday, April 10, 2012. On August 27, 2012, the United States Bankruptcy Court for the Southern District of New York confirmed GPMI's Chapter 11 plan of liquidation offered by its unsecured creditors committee. The plan provides for all of the debtors' property to be liquidated over time and for the proceeds to be allocated to creditors. Any assets not distributed by the effective date will be held by a liquidating trust and administered by a liquidation trustee, who will be responsible for liquidating assets, resolving disputed claims, making distributions, pursuing reserved causes of action and winding up GPMI's affairs. As an unsecured creditor, Tyree may never collect or may only collect a small percentage of the pre and post-petition amounts owed. To date, Tyree has not been notified of any intent by the United States Bankruptcy Court for the Southern District of New York to clawback any amounts paid to Tyree pre-petition. On April 4, 2014, Tyree sold its general and administrative claims to a third party for the aggregate sum of $553,662.

In December 2013, Tyree Environmental Corp. and Tyree Service Corp. ("Tyree entities") were sued by the liquidating trustee of GPMI for recovery of preferential transfers in the respective amounts of $1,147,154 and $2,479,755. On March 27, 2014, the bankruptcy liquidating trustee entered into forbearance agreements with the Tyree entities with respect to the preference actions until June 2014, with the understanding that the forbearance periods will be extended and the actions will ultimately be dismissed if the Tyree entities continue to not voluntarily assist Getty Realty in litigation against GPMI. Management believes that this recovery of preferential transfers has no merit or basis.

Tyree currently has 110 full-time employees and 3 part time employees, some of whom are represented by six different collective bargaining agreements. Tyree has unpaid obligations for union dues of approximately $1.2 million. Tyree management does not dispute that benefits are due and owing to the respective unions. Labor contracts expired on December 31, 2012 for five of the six bargaining units. Local 355 has entered into a 36 month payment agreement with Tyree Services, Inc., to settle Tyree's obligation. The monthly payment is $20,000 per month until paid in full. Local 200 has agreed to settle its claim

for a $25,000 down payment and monthly payments of $5,000 per month for 28 months. Tyree Services, Inc. will sign the settlement and Tyree Holdings, Inc. will act as a guarantor. Local 99 has entered into a verbal settlement agreement with Tyree Services, Inc. calling for monthly payments of $4,000 per month of which 24 payments remain. Local 138 has entered into a verbal settlement agreement with Tyree Services, Inc. which calls for monthly payments of $10,000 per month for 18 months. Local 25 has agreed to a continuance of its action against Tyree while Tyree's counsel and Local 25 counsel draft a settlement agreement. Management anticipates that the agreement will call for payments of $5,000 per month for 24 months.

A variety of unsecured vendors have filed suit for non-payment of outstanding invoices totaling approximately $2.7 million as of March 31, 2014, which are reflected as liabilities on the Company's consolidated balance sheet. Each of these actions is handled on a case by case basis, with settlement and payment plans ranging from a few months for smaller claims to up to five years for larger claims.

Tyree's services are regulated by federal, state and local laws enacted to regulate discharge of materials into the environment, remediation of contaminated soil and groundwater or otherwise protect the environment. The regulations put Tyree or Tyree's predecessor companies at risk for becoming a party to legal proceedings involving customers or other interested parties. The issues involved in such proceedings generally relate to alleged responsibility arising under federal or state laws to remediate contamination at properties owned or operated either by current or former customers or by other parties who allege damages. To limit its exposure to such proceedings, Tyree purchases, for itself and Tyree's predecessor companies, site pollution and professional liability insurance. Aggregate limits, per occurrence limits and deductibles for this policy are $10,000,000, $5,000,000 and $50,000, respectively.

EPIC SPORTS INTERNATIONAL, INC. ("ESI")

The Company discontinued the operations of ESI, a former subsidiary in 2011. Concurrently, a license agreement along with a Strategic Alliance Agreement with Samsung America CT, Inc. ("Samsung") was terminated. The licensor, Volkl, is seeking a $400,000 royalty payment. ESI has initiated counterclaims against the various parties, including but not limited to Samsung, seeking damages for, including but not limited to infringement, improper use of company assets and breach of fiduciary duty. Volkl was successful in obtaining a judgment against ESI and a confirmation of the Arbitration is presently pending in Federal Court. Management believes that this matter and the Frost matter below will eventually be settled out of court for less than the royalty and damages amounts sought.

On September 28, 2012, Sean Frost ("Frost"), the former President of Epic Sports International, Inc., filed a complaint to compel arbitration regarding breach of employment contract and related breach of labor code claims and for an award of compensatory damages in the Superior Court of the State of California, County of San Diego against Epic Sports International Inc., Amincor, Inc. and Joseph

Ingrassia (collectively, the "Defendants"). The first cause of action of the complaint is a petition to compel arbitration for unpaid compensation and benefits pursuant to Frost's employment agreement. The second cause of action of the complaint is for breach of contract for alleged non-payment of expenses, vacation days and assumption of certain debts. The third cause of action of the complaint is for violation of the California Labor Code for failure to pay wages due and owing. Frost is seeking among other things, damages, attorneys' fees and costs and expenses. As of March 31, 2014, the Defendants have answered the complaint and the lawsuit has been dismissed pending parties' agreement to arbitrate the matter. Frost initiated arbitration proceedings in April 2014. Defendants believe that this arbitration has no merit or basis and intend to vigorously defend.

IMSC/OTHER ASSETS

Capstone Business Credit, LLC, a related party, was the plaintiff (on behalf of Amincor Other Assets, Inc.) in a foreclosure action against Imperia Family Realty, LLC ("IFR"). IFR is related to the former owners of a business whose operations were discontinued in 2011. As of December 31, 2009, a mortgage related to an IFR property was assigned to Amincor, Inc. and thereafter to Amincor Other Assets, Inc. In November 2011, a Judgment of Foreclosure was granted by the court ordering that the property (the "Property") be sold at public auction.

In accordance with the Judgment of Foreclosure a public auction sale of the Property was held on January 10, 2012. Capstone Business Credit, LLC, on behalf of Amincor Other Assets, Inc., bid the amount of their lien and was the successful bidder and title to the property was transferred to Amincor Other Assets, Inc.

TULARE FROZEN FOODS, LLC ("TFF")

The City of Lindsay, California has invoiced TFF, a business whose operations were discontinued in 2011, $533,571 for outstanding delinquent real estate taxes, including a significant amount for penalties, interest and fees that have accrued. A settlement proposal, whereby the City of Lindsay would retain TFF's $206,666 deposit as settlement and release in full of all outstanding obligations was sent to the City of Lindsay for review on March 29, 2012. As of the date of this filing, no settlement has been reached.

14. SUBSEQUENT EVENTS

The Company has evaluated subsequent events up through May 15, 2014, the date which the financial statements were available to be issued. The Company had no other material subsequent events requiring disclosure.