TILDEN ASSOCIATES, INC and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1
–
Organization and Business Operations
The Company was incorporated in the state of Delaware in June 1995 and is in the business of selling automotive franchises and administering and supporting full service automotive repair centers under the name “TILDEN FOR BRAKES CAR CARE CENTERS”. The majority of franchises are currently located in New York, Florida and Colorado, with twelve states being represented and expansion plans for several additional states.
NOTE 2 - Interim Financial Statements
The unaudited financial statements as of September 30, 2010 and for the nine months ended September 30, 2010 and 2009 have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with instructions to Form 10-Q. In the opinion of management, the unaudited financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the financial position as of September 30, 2010 and the results of operations and cash flows for the periods ended September 30, 2010 and 2009. The financial data and other information disclosed in these notes to the interim financial statements related to these periods are unaudited. The results for the nine months ended September 30, 2010 is not necessarily indicative of the results to be expected for any subsequent quarter of the entire year ending December 31, 2010. The balance sheet at December 31, 2009 has been derived from the audited financial statements at that date.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to the Securities and Exchange Commission’s rules and regulations. These unaudited financial statements should be read in conjunction with our audited financial statements and notes thereto for the year ended December 31, 2009 as included in our report on Form 10-K.
NOTE 3 – Accounts and Notes Receivable
Accounts and notes receivable consisted of the following:
|
|
|
September 30,
|
|
|
December 31
|
|
|
|
|
2010
|
|
|
2009
|
|
|
Trade receivables from franchisees
|
|
$
|
711,274
|
|
|
$
|
639,982
|
|
|
|
|
|
|
|
|
|
|
|
|
Installment loan due January 1, 2011 with an interest rate of 6%
|
|
|
22,784
|
|
|
|
25,000
|
|
|
|
|
|
734,058
|
|
|
|
664,982
|
|
|
Less allowance for doubtful accounts
|
|
|
(333,012
|
)
|
|
|
(290,066
|
)
|
|
|
|
|
401,046
|
|
|
|
374,916
|
|
|
Less current portion
|
|
|
(401,046
|
)
|
|
|
(349,916
|
)
|
|
Non-current accounts and notes receivable
|
|
$
|
—
|
|
|
$
|
25,000
|
|
NOTE 4 – Property and Equipment
Property and equipment consisted of the following:
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
|
2010
|
|
|
2009
|
|
|
Machinery and shop equipment
|
|
$
|
5,704
|
|
|
$
|
5,704
|
|
|
Signage
|
|
|
5,623
|
|
|
|
5,623
|
|
|
Furniture
|
|
|
11,693
|
|
|
|
11,693
|
|
|
|
|
|
23,020
|
|
|
|
23,020
|
|
|
Less accumulated depreciation
|
|
|
(23,020
|
)
|
|
|
(23,020
|
)
|
|
Property and equipment, net of accumulated depreciation
|
|
$
|
—
|
|
|
$
|
—
|
|
Depreciation expense for the nine months ended September 30, 2010 and 2009 was $0 and $1,864, respectively.
NOTE 5 – Intangible Assets
Intangible assets consisted of the following:
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
|
2010
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
Trademarks
|
|
$
|
45,196
|
|
|
$
|
45,196
|
|
|
Franchise and market area rights
|
|
|
358,600
|
|
|
|
358,600
|
|
|
|
|
|
403,796
|
|
|
|
403,796
|
|
|
Less accumulated amortization
|
|
|
(124,586
|
)
|
|
|
(122,758
|
)
|
|
Intangible Assets, net of accumulated amortization
|
|
$
|
279,210
|
|
|
$
|
281,038
|
|
The Company incurred trademark costs of $0 and $1,097 during the nine months ended September 30, 2010 and the year ended December 31, 2009, respectively. During the year ended December 31, 2009, the Company reflected a loss on the impairment of franchise and market area rights in the amount of $40,276. The impaired rights had an original cost of $50,345 and accumulated amortization of $10,069. The Company tests the carrying value of franchise and market area rights on a franchise-by-franchise basis and identifies individual franchise rights requiring write-down. Of the intangible assets listed above, only trademarks have been amortized for the nine months ended September 30, 2010 and 2009. The amortization expense was $1,828 and $1,097 respectively.
NOTE 6 – Credit Line
In August, 2006, the Company secured a $250,000 revolving line of credit with a stated rate of interest of prime plus one percentage point. The line is secured by the assets of the Company. As of September 30, 2010, the Company has not utilized any of the available line of credit.
NOTE 7 – Deposits on Franchises
Deposits on franchises consisted of:
|
|
|
September 30,
|
|
|
|
|
2010
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
New franchises
|
|
$
|
178,000
|
|
|
$
|
193,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Repossessed franchises
|
|
|
5,000
|
|
|
|
5,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
183,000
|
|
|
$
|
198,000
|
|
The
Company, under the terms of its standard franchise agreement, typically receives a $15,000 deposit upon the signing of
a franchise agreement and the balance of the franchise fee upon the franchisee’s acceptance of a Tilden
approved franchise location. These deposits are non-refundable but can be applied to a different location identified
in the future.
NOTE 8 – Income Taxes
Tilden Associates Inc. and its subsidiaries have elected to file
a consolidated income tax return for Federal and New York State income tax purposes. Tax expense is allocated to each subsidiary based on the proportion of its taxable income to the total consolidated taxable income.
A reconciliation of the expected income tax expense (benefit) to reported income tax follows:
|
|
|
Nine Months Ended
September 30,
|
|
|
|
|
2010
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
Federal income tax (benefit) at 35% statutory income tax rate
|
|
$
|
(32,573
|
)
|
|
$
|
31,889
|
|
|
|
|
|
|
|
|
|
|
|
|
Nondeductible increase(nontaxable decrease) in allowance for doubtful accounts
|
|
|
15,031
|
|
|
|
(16,539
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Change in valuation allowance
|
|
|
17,542
|
|
|
|
(15,350
|
)
|
|
Provision for income taxes
|
|
$
|
—
|
|
|
$
|
—
|
|
Net operating loss carryovers at December 31, 2009 were approximately $575,000 and will expire in years from 2010 to 2029. The Company does not anticipate fully utilizing these carryovers in 2010.
NOTE 9 – Commitments and Contingencies
Leases
The Company, through various subsidiaries, sub-lets properties to several franchisees. Additionally, one franchisee sub-lets property from an affiliate of the Company’s President (See Note 11). Franchisees typically pay rent on these properties to the subsidiaries. In some circumstances, franchisees may pay rent directly to the lessors of the operating leases. Future minimum lease payments under these
operating leases at September 30, 2010 are as follows:
|
2010
|
|
$
|
97,052
|
|
|
2011
|
|
|
387,763
|
|
|
2012
|
|
|
397,194
|
|
|
2013
|
|
|
344,268
|
|
|
|
|
|
|
|
|
2014 and thereafter
|
|
|
1,968,661
|
|
|
|
|
|
|
|
|
|
|
$
|
3,184,938
|
|
Future minimum rental income on sub-leases are as follows:
|
2010
|
|
$
|
85,124
|
|
|
2011
|
|
|
340,494
|
|
|
2012
|
|
|
348,909
|
|
|
2013
|
|
|
297,576
|
|
|
|
|
|
|
|
|
2014 and thereafter
|
|
|
1,744,042
|
|
|
|
|
|
|
|
|
|
|
$
|
2,816,145
|
|
The Company leases an office in New York under an agreement that commenced in October 2003 and expires in September 2013. Total rent expense for the nine months ended September 30, 2010 and 2009 was $17,183 and $16,095, respectively.
The future minimum rental payments at September 30, 2010 are as follows:
|
2010
|
|
$
|
5,830
|
|
|
2011
|
|
|
23,325
|
|
|
2012
|
|
|
24,675
|
|
|
2013
|
|
|
18,675
|
|
|
|
|
|
|
|
|
|
|
$
|
72,505
|
|
Employment Agreements
The President of the Company, Mr. Robert Baskind, has an employment contract that renews annually on the first day of each year and which entitled him to a salary of approximately $171,000 during 2009. In accordance with the terms of the employment contract, he is entitled to five percent increases on a yearly basis. The employment agreement, as amended, expires in 2015. Additionally, Mr. Baskind’s agreement provides for other customary provisions.
NOTE 10 – Concentration of Credit Risk
Financial instruments that potentially subject the Company to credit risk include cash and accounts and notes receivable. At September 30, 2010 and December 31, 2009, the Company had accounts and notes receivable from franchisees of approximately $401,000 and $375,000, respectively, net of an allowance for doubtful accounts of approximately $333,000 and $290,000, respectively. Notes receivable, derived principally from sales of franchises and market areas, are collateralized by the franchise agreements to which they relate. Presently, a majority of the Company’s franchises are within the states of New York, Florida and Colorado.
NOTE 11 - Related Party Transactions
Franchise Facilities
The Company rents certain Franchise locations owned or leased by the Company’s president and affiliates, which are sublet to Franchisees. For the nine months ended September 30, 2010 and 2009, rent paid to the Company’s president and affiliates for real estate sublet was $23,478 and $20,778 respectively. Management believes that the lease payments made by the Company to the Company’s president and affiliates are at fair market value and are approximately equal to the rent charged to the Franchises occupying each facility.
NOTE 12 - Stock Options
Tilden Associates, Inc. Stock Option Plans
From May 1998 to December 2005, the Company adopted several Tilden Associates, Inc. Stock Option Plans (“the Plans”) on an annual basis. The Company may issue incentive options for a term of no greater than ten years and non-incentive stock options for a term of no greater than eleven years. The incentive stock options may be issued with an exercise price of no less than 100% of the fair market value of the stock at the time of the grant. However, in the case of employees holding greater than 10% of the Company’s common stock, the option price shall not be less than 110% of the fair market value of the stock at the time of the grant and the term of the option may not exceed five years. The non-incentive stock options may be issued with an exercise price of no less than 50% of the fair market value of the stock at the time of the grant. Additionally, options may be granted to any eligible person for shares of common stock of any value provided that the aggregate fair market value of the stock with respect to which incentive stock options are exercisable for the first time during any calendar year, shall not exceed $100,000. Additionally, the option price shall be paid in full at the time of exercise in cash or, with the approval of the Board of Directors, in shares of common stock. Further, if prior to the
expiration of the option the employee ceases to be employed by the Company, the options granted will terminate 90 days after termination of the employee’s employment with the Company.
From 1998 to 2005, the Company granted stock options to purchase a total of 7,038,300 shares of the Company’s common stock at exercise prices ranging from $0.01 per share to $3.00 per share. Through December 31, 2005, 32,500 options were exercised, 938,800 options expired or were forfeited, and 6,067,000 options remained outstanding at December 31, 2005.
On July 18, 2006, a derivative action was filed challenging the issuance of stock options by the Company to members of management and the Board of Directors between 2001 and 2005. In August of 2006, the Company rescinded the remaining 6,067,000 stock options issued in the years 2001 to 2005. On September 11, 2006, the action was settled.
On December 22, 2008, the Company granted a total of 1,150,000 stock options (600,000 options to the Company’s chief executive officer, 525,000 options to the Company’s two other directors, and 25,000 options to a Company consultant. The options are exercisable at a price of $0.02 per share and expire in five years. The $7,475 fair value of the options, which was calculated using the Black-Scholes option pricing model using the following assumptions: $0.01 stock price, $0.02 exercise price, 2% risk free interest rate and 100% volatility, was being expensed over the requisite service period of five years beginning January 1, 2009. During the year ended December 31, 2009, the Company recorded compensation expense of $1,122 on the options.
On December 17, 2009, the Company granted a total of 1,150,000 stock options (600,000 options to the Company’s chief executive officer, 525,000 options to the Company’s two other directors, and 25,000 options to a Company consultant). The options are exercisable at a price of $0.02 per share and expire in five years. The $27,485 fair value of the options, which was calculated using the Black-Scholes option pricing model using the following assumptions: $0.03 stock price, $0.02 exercise price, 2% risk free interest rate and 100% volatility, was being expensed over the requisite service period of five years beginning January 1, 2010.
At December 31, 2009, total unrecognized compensation costs relating to stock options was $33,838. The Company revised the service period covered by the options from five years to, all currently earned, at June 30, 2010. The Company recorded compensation expense of $33,838 on the options at June 30, 2010. At September 30, 2010 total unrecognized compensation costs relating to stock options was $0.
A summary of stock options activity for the years ended December 31, 2008 and 2009 and for the nine months ended September 30, 2010 are as follows:
|
Balance outstanding, January 1, 2008
|
|
|
—
|
|
|
|
|
|
|
|
|
Granted December 22, 2008
|
|
|
1,150,000
|
|
|
|
|
|
|
|
|
Balance outstanding, December 31, 2008
|
|
|
1,150,000
|
|
|
|
|
|
|
|
|
Granted December 17, 2009
|
|
|
1,150,000
|
|
|
|
|
|
|
|
|
Balance outstanding, December 31, 2009 and September 30, 2010
|
|
|
2,300,000
|
|
Stock options outstanding at September 30, 2010 consist of:
|
Date Granted
|
|
Number Outstanding
|
|
|
Number Exercisable
|
|
|
Exercise Price
|
|
Expiration Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 22, 2008
|
|
|
1,150,000
|
|
|
|
1,150,000
|
|
|
$
|
0.02
|
|
December 22, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 17, 2009
|
|
|
1,150,000
|
|
|
|
1,150,000
|
|
|
$
|
0.02
|
|
December 17, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,300,000
|
|
|
|
2,300,000
|
|
|
|
|
|
|
NOTE
13 – Franchises and Market Area Activities
Franchises
During the nine months ended September 30, 2010 and 2009, the Company sold 0 and 1 new franchise, respectively. As of September 30, 2010 and 2009, the Company had 43 and 48 active franchised locations, respectively. Throughout each year several franchises are returned to the Company’s control either through foreclosures or abandonment.
Market Areas
During the nine months ended September 30, 2010 and 2009, the Company sold no rights in 2010, and one right in 2009, to develop new market areas resulting in market area sales income of $0 and $50,000 during the respective nine month periods.
NOTE 14 – Retirement Plan
In November, 2006, the Company adopted a qualified deferred arrangement 401(k) plan where employees may contribute up to the Internal Revenue Service deferred compensation limit for 401(k) plans, which was $16,500 in 2009.
The plan allows the Company to make optional non-elective contributions into the plan for full-time employees. For the nine months ended September 30, 2010 and 2009, Company contributions to the plan (which are expensed when incurred) were $0.
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion and analysis of financial condition and results of operations should be read in conjunction with the Company’s consolidated financial statements and notes thereto included elsewhere herein. The statements disclosed herein include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. The Company’s actual results could differ materially from those projected in the forward-looking statements as a result of certain risks and uncertainties, including, but not limited to , competition in the finance industry for franchising companies and retail automobile and truck repair service, and other risks detailed from time to time in the Company’s filings with the Securities and Exchange Commission.
OVERVIEW
Tilden Associates, Inc. (the “Company”) is a Delaware Corporation. Its principal business is to sell automotive franchises and to administer and support full service automotive repair centers carrying its trademarks. The Company’s operations are based at 300 Hempstead Turnpike, West Hempstead, New York, 11552.
RESULTS OF OPERATIONS
Three Months Ended September 30, 2010 vs. Three Months Ended September 30, 2009
Revenue decreased to approximately $264,000 in the third quarter of 2010 from approximately $353,000 in the third quarter of 2009, representing a 25% decrease. The decrease in overall revenue was primarily attributed to decreases in sale of Company owned location, rental income and market area sales of approximately $55,000, $30,000 and $50,000, respectively. This was offset by an increase in royalty fees of approximately $40,000. The decrease in sale of Company owned locations was attributable to the Company’s sale of a previously repossessed location during the third quarter of 2009. The decrease in rental income in the third quarter 2010 as compared to the third quarter of 2009 is attributable to the non-performance on two subleases by franchisees who may be abandoning their locations. The decrease in market area sales was attributable to a sale of rights to develop one market area in the third quarter of 2009 compared to no rights sold in the third quarter of 2010. The increase in royalty fees recorded during the third quarter of 2010 compared with the third quarter of 2009 was attributable to 1) an increase in the number of franchisees liable to the Company for royalty fees and 2) increased royalty fees remitted per franchise due to increased sales at several of the Company’s franchised locations during the third quarter of 2010.
Cost of revenues increased to approximately $137,000 in the third quarter of 2010 from approximately $111,000 in the third quarter of 2009, representing a 24% increase. As a percentage of revenue, cost of revenues were 52% and 31%, respectively for the periods reported. The overall increase was primarily attributable to an increase in rent paid for real estate sublet of approximately $25,000. The increase in rent paid for real estate sublet was a result of an increase in the number of locations which the Company is liable for on its sublets to franchisees.
Selling, general and administrative expenses decreased to approximately $145,000 in the third quarter of 2010 from approximately $181,000 in the third quarter of 2009, representing a 20% decrease. The decrease in selling, general and administrative expenses during the third quarter was predominately attributed to decreases in bad debt expense, travel and entertainment and insurance of approximately $57,000, $5,500 and $2,400, respectively. The decrease in bad debt expense was attributable to a decrease in franchisees requiring reserve and write-off in the third quarter of 2010 as compared to the third quarter of 2009. The decrease in travel and entertainment and insurance expense in the third quarter of 2010 were attributed to normal fluctuations in periodic costs incurred. These decreases were partially offset by an increase in professional fees of approximately $9,000 and salaries and wages of approximately $19,000. The increase in professional fees was attributable to an increase in legal fees incurred through the third quarter of 2010 as compared with the corresponding period 2009. The increase in salaries and wages were primarily the result of the hiring of an additional employee to work on franchise operations and sales during the third quarter of 2010 compared to the third quarter of 2009.
Nine Months Ended September 30, 2010 vs. Nine Months Ended September 30, 2009
Revenue decreased to approximately $866,000 through the third quarter of 2010 from approximately $1,067,000 through the third quarter of 2009, representing a 19% decrease. The decrease in overall revenue was primarily attributed to decreases in rental income, market area sales and sale of company owned locations of approximately $93,000, $50,000 and $38,000, respectively. The decrease in rental income through the third quarter of 2010 as compared to the same period during 2009 is attributable to the decrease in performing subleases by the Company, to franchisees. The decrease in market area sales was attributable to a sale of rights to develop one market area in the first nine months of 2009 compared to no rights sold in the nine months of 2010. Through the nine months ended September 30, 2010, the Company has been unable to sell a new franchise or market area which it attributes primarily to the continued difficulty for small businesses to obtain credit. Although the Company believes that the auto repair business continues to present opportunities for new locations, it cannot accurately forecast when it will see an increase in sales of new franchises and market areas. The decrease in sales of Company locations is attributable to the Company’s sale of two locations through September 2009 as compared with one sale of Company locations through September 2010. The Company has not engaged in the operation of a company-owned store and has not been able to sell equipment since 2007. In prior periods the Company occasionally operated company owned locations, on a temporary basis, when it determined that such activity would enhance the potential re-sale value of its repossessed locations. The Company typically attempts to sell equipment to franchisees that open new Tilden locations and accordingly, equipment sales often correlate to initial franchise sales.
Cost of revenues decreased to approximately $416,000 through the third quarter of 2010 from approximately $450,000 through the third quarter of 2009, representing an 8% decrease. As a percentage of revenue, cost of revenues were 48% and 42%, respectively for the periods reported. The overall decrease was primarily attributable to decreases in the cost of Company owned locations sold and rent paid for real estate sublet, of approximately $25,000 and $30,000, respectively. The decrease in cost of Company owned locations sold was a result of the cost incurred in the sale of a Company owned location through the third quarter of 2009 as compared to no sales during the same comparable period of 2010. The decrease in rent paid for real estate sublease was a result of an overall decrease in the Company’s obligation for rent on locations which it sublets to franchisees.
Selling, general and administrative expenses increased to approximately $547,000 through the third quarter of 2010 from approximately $535,000 through the third quarter of 2009, representing a 2% increase. The increase in selling, general and administrative expenses through the third quarter was predominately attributed to increases in compensation and settlement costs of approximately $75,000 and $5,000, respectively. The increase in compensation was primarily the result of 1) the hiring of an additional employee to work on franchise operations and sales during the nine months of 2010 and 2) the Company’s change in the service period covered by stock options granted to employees. With the hiring of the employee the Company increased its number of employees from four to five. The increase in settlement cost which occurred during the first quarter of 2010 was attributable to the settlement of a legal matter relating to a merger and reorganization contemplated by the Company in 2008. The increases were partially offset by decreases in bad debt expense, travel and entertainment, and consulting of approximately $56,000, $8,500 and $6,000, respectively. The decrease in bad debt expense was attributable to a decrease in franchisees requiring reserve and write-off in the nine months of 2010 as compared to 2009. The decrease in consulting fees and travel and entertainment were attributable to the Company’s attempt to curtail overhead costs through the third quarter of 2010 as compared to the same period during 2009.
LIQUIDITY AND CAPITAL RESOURCES
Working capital at September 30, 2010 was approximately $349,000, compared to working capital of approximately $371,000 at December 31, 2009. The ratio of current assets to current liabilities was 1.8:1 at September 30, 2010 and 1.8:1 at December 31, 2009. Cash used for operating activities through the third quarter of 2010 and 2009 was approximately $107,000 and $17,000, respectively.
Cash and accounts and notes receivable decreased to approximately $783,000 at September 30, 2010 from approximately $864,000 at December 31, 2009, while accounts payable and accrued expenses stayed in line at approximately $204,000 at September 30, 2010 and at December 31, 2009.
Although the Company plans to continue to expand to the extent that resources are available, the Company has no firm commitments for capital expenditures in other areas of its business. The Company’s current business plan and objective is to continue expanding the number of franchises in its system through sales of new franchises, as well as through acquisitions of other franchise systems or chains similar to the acquisitions they have been able to complete in the past. The Company also remains committed to providing support for its existing franchisees.
The Company has not paid any dividends in the past and does not contemplate paying any in the foreseeable future.
Some of the Company’s subsidiaries lease properties on which franchisees are located. The franchisees typically pay rent to these subsidiaries and, in some cases, may pay rent directly to the lessor.
The Company has approximately $349,000 in working capital. The Company believes that its working capital and cash generated by operations will be sufficient to implement its business plan in the short-term. The Company will need to increase its franchise and market area in order to maintain adequate liquidity on a long-term basis.
The Company has secured a $250,000 line of credit. As of September 30, 2010, the Company has not utilized the line.
In addition, several franchisees are significantly in arrears in the payment of royalties. Management, however, has addressed these arrearages and resolutions are negotiated with the franchisees on an individual basis.
Critical Accounting Policies:
Our significant accounting policies are described in Note 1 to the financial statements contained in our annual report on Form 10-K. Our financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. The following policies, we believe, are our most critical accounting policies and are explained below.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from the estimates.
Revenue Recognition
The Company recognizes revenue in several ways: Initial fees from sale of franchises, market area sales to market developer partners, royalties (as a percentage of gross revenues) from franchisees, equipment sales, rental of premises to franchisees and the operation of Company owned automotive repair centers which are developed for potential sale to franchisees.
Franchise fee revenue for initial franchise fees and from market area sales to market developer partners is recognized upon the execution of a franchise agreement and when all material services or conditions relating to the sale have been successfully completed by the Company. Market developer partners receive a percentage of royalty fees for development and management of their market and are responsible for substantially all training and other services required in opening new franchises in their regions.
Equipment sales are recorded upon delivery and installation of equipment to franchisees.
ITEM 3. CONTROLS AND PROCEDURES
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a)
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Evaluations of disclosure controls and procedures.
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Based on an evaluation of the effectiveness of the Company’s disclosure controls and procedures as of a date within 90 days of the filing date of this quarterly report, the Chairman, Chief Executive Officer and Chief Financial Officer, who is the same person, concluded that the Company’s disclosure controls and procedures are effective in timely alerting them to material information relating to the Company required to be included in the Company’s periodic SEC filings.
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b)
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Changes in internal control.
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Disclosure controls and procedures are our controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms.
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There have been no significant changes in the Company’s internal controls or in other factors that could significantly affect these controls subsequent to the date of the evaluation.
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PART II - OTHER INFORMATION
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Item 1.
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Legal Proceedings
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None.
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Item 2.
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Changes in Securities and Use of Proceeds
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None.
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Item 3.
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Defaults Upon Senior Securities
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None.
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Item 4.
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Submission of Matters to a Vote of Security Holders
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None.
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Item 5.
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Other Information
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None.
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Item 6.
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Exhibits
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(a)
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Exhibits
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99.1 - Certification of the Chief Executive officer and Acting Chief Financial Officer pursuant to 18U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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(b)
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Reports on Form 8-K
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None.
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TILDEN ASSOCIATES, INC. AND SUBSIDIARIES
SIGNATURES
In accordance with section 13 or 15(d) of the Exchange Act, the Registrant caused this report to be signed by the undersigned, thereunto duly authorized.
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Date: November 19, 2010
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TILDEN ASSOCIATES, INC.
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By:
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/s/ ROBERT BASKIND
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Robert Baskind
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President and
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Chief Executive Officer
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In accordance with the Exchange Act, this report has been signed below by the following person on behalf of the Registrant and in the capacity and on the date indicated.
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Signatures
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Titles
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Date
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By:
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/s/ ROBERT BASKIND
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Chairman of the Board, President,
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November 19, 2010
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Robert Baskind
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Chief Executive Officer (Principal
Executive and Financial Officer)
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