MC-030

 

ATTORNEY OR PARTY WITHOUT ATTORNEY (Name, State Bar number, and address): FOR COURT USE ONLY

Tecla M. Lunak, 257090
Law Of?ces of Tecla M. Lunak, A.P.C.

 

71-780 San Jacinto Dr., Bldg. C-3
Rancho Mirage, CA 92270 I 
TELEPHONE No.: (760)834-8625 NO. (Optional): (760)834-8596 ia
E-MAIL ADDRESS (Optional): tecla@lunaklaw.com
ATTORNEY FOR (Name): Respondent, Emily Steubs 3/18
SUPERIOR COURT OF CALIFORNIA, COUNTY OF Riverside Mart'nez
STREET ADDRESS: 46-200 Oasis Street By Fax

MAILING ADDRESS:

CITYANDZIP CODE: Indio, CA 92201
BRANCH NAME: Larson Justice Center, Indio Branch, Family Law Div.

 

Justin Steubs
Emily Steubs

 

CASE NUMBER:

DECLARATION IND 1 601666

 

 

 

 

I, Emily Steubs, am the Respondent in this action and if called upon to testify as a witness I could testify to
the following facts which are within my personal knowledge.

Attached hereto is a Draft report from Les Kornblatt, CVA, CF in regards to a cash ?ow
analysis and business valuation.

I declare under penalty of perjury under the laws of the State of California that the foregoing iS true and correct.

Date: 3/19/18

Emily Steubs 22"?y

(TYPE OR PRINT NAME) (SIGNATURE OF DECLARANT)

 

 

l:l Attorney for l:l Plaintiff l:l Petitioner l:l Defendant
Respondent El Other (Specify):

 

Form Approved for Optional Use  Page 1 of 1

Judicial Council of California
MC-O30 [Rev. January 1. 2006]

 

 

 KORNBLATT co.

l-raluaiz'oa andLingatz'an Services H. Les Kornhlatt. V, CVA, CFF

March 14, 2018

Email Only

Tecla M. Lunak, Esq.
71780 San Jacinto Dr., Bldg. 
Rancho Mirage, CA 92270

Frederic S. Wieder, Esq.
44-100 Monterey Ave., Suite 203
Palm Desert, CA 92260

Re: Marriage of Steubs

Dear Tecla and Fred:

In connection with my assignments and in keeping with our telephone conference call, I
have enclosed my DISCUSSION DRAFT report in this matter. It is, by no means, a report
that is adequate for trial use. It is presented for settlement purposes only.

As you know, I believe the income tax returns and books maintained for ASSET
CREATION GROUP, INC. are unreliable. Based on my review, I do not believe they
accurately reflect the financial condition of the company as of the end of 2014 through
2017 and the results of its operations during those years. One example is the $1 million
adjusting journal entry recorded on the books in June 2017 which has not been adequately
explained. That adjustment created a liability to clients in excess of $878,000 as of
December 31, 2017. The schedules provided by Ms. Mast do not adequately support the
debt and she takes no responsibility for the $1 million adjustment. Other examples of
unreliability include inconsistent reporting of earnings and losses and inconsistent
classification of expenses. If you review schedules. 5 and 6 of the attachments, you will

see What I mean.

78828 Silver Lake Terrace It Palm Desert, CA 922] 
760.360.3303 760.360.3313 760.408.0967 

 

 

 

Tecla M. Lunak, Esq.
Frederic S. Wieder, Esq.
March 14, 2018

Page 2

In order for the valuation analyst to prepare an accurate valuation, the books and records
of the subject entity must evidence reliability. Reliability of the records does not exist in
this case. I believe I conveyed my concern during our telephone conference call.
Nevertheless, I did perform calculations based on adjustments I made which appear to
me to be appropriate. Such adjustments, I believe, creates a basis for my analysis that you
may find useful for settlement discussions.

The attachments reflect valuations as of December 31, 2015 and December 31, 2017. The
two methods employed include the adjusted net asset method and the capitalization of

income method.

The adjusted net asset method (Schedules 2 and 3) arrives at value based on the values of
tangible net assets - not income. In this case, the liabilities of the company at the two
valuation dates greatly exceeded the value of its assets. In short, the company is insolvent
on both dates. The only way the company has survived in recent years is by use of the
excess cash flow generated from property ?guests? over the actual payment of rents
collected to company clients. Sort of like a Ponzi situation; as long as the ?guest? base
continues to grow, than there is cash ?ow to meet the corresponding obligations. When
the company took a downturn in 2016 (reverse Ponzi), the loan from American Express
bailed-out the company for the near term. Unless other sources of financing becomes
available, it is doubtful that the company will be able to pay the AMEX loan when due.
My assessment is based on the recorded balance sheet amounts and if such amounts are
incorrect, my assessment will be incorrect. I have made no adjustments to property and
equipment although transportation equipment on the books may be personal assets. 

The capitalization of income method (Schedule 4) focuses on income as the driver of value.
The tax returns and financial statement (2017) portray erratic operations and considerable
use of perquisites by the owners. Based on my review of the tax returns and financial
statements, I have made numerous adjustments to the recorded amounts to arrive at
income that may be more re?ective of actual results of operations. Such adjustments
produce normalized income that translates to value.

 

 

Tecla M. Lunak, Esq.
Frederic S. Wieder, Esq.
March 14, 2018

Page 3

Finally, I have included in my attached analysis Schedule 7 which is my estimate of Mr.
Steubs cash ?ow available for the payment of support for the year ended December 31,
2017 and as adjusted for non-recurring future company expenses. As you can see, I
believe that there were significant personal expenses paid by the business. Again, because
the books are unreliable, my conclusion may prove to be inaccurate.

All things considered, I think it would be in the interest of both parties to come to an
agreement as to the value of the business and cash flow available for support. If that is
not possible, then the next course of action, if a trial ready valuation analysis is required,
is for the company to retain an accountant to analyze the books of account and prepare
an accountants? review report which would present the accurate financial position and the
results of company operations in 2014 through 2017. Such reports would serve as basis
for a reliable valuation and cash ?ow analyses.

I will be glad to meet with you to discuss my findings.

Sincerely yours, 
Wad? jib
. Les Kornb at

attachments

 

Steubs

ASSET CREATION GROUP INC

Reconciliation and Calculation of Value Summary

as of 12/31/2015

Approaches/71km 0d

Adjusted Net Assets (De?cit) Schedule 2 (774,392)

Capitalization of Income Method Schedule4 129,009
Supplemental Schedules:
Comparative Balance Sheets
Comparative Statements of Operations
Cash Flow Available for Support
DISCUSSION DRAFT

KORNBLATT CO

as 0 12/31/201 7

Schedule3 (478,264)

Schedule 4

Schedule 5
Schedule 6

Schedule 7

459,343

Schedule 1

 

 

Steubs
ASSET CREATION GROUP INC
Adjusted Net Assets
as ofDecember 31, 2015

DISCUSSION DRAFT

 

Per 77]? Adjustments A dg'usted

 

 

 

 

 

 

ASSETS
Current Assets:
Cash 8,083 8,083
Luxe Adventures Receivable
Loans to shareholders 127,602 (127,602) I
Total Current Assets 135,685 (127,602) 8,083 
Property and Equipment (at cost): 
Property and Equipment 328,146 328,146
Less accumulated depreciation (259,005) (259,005)
Net Property and Equipment 69,141 69,141
Other Assets:
Security Deposits 14,050 14,050
Intangible Assets 95,000 (95,000)
Accumulated Depreciation (24,805) 24,805
Employee Advances
Total Other Assets 84,245 (70,195) 14,050
Total Assets 289,071 197,797) 91,274

 

LIABILITIES AND STOCKH OLDER EQUITY

Current Liabilities:

 

Credit card payable 8 16,108 16,108
Due to BF 43,003 43,003
Due to SM 68,261 68,261
Merchant Fees Payable 271,172 271,172
Total Current Liabilities 398,544 398,544
468,122 468,122

Long?term Debt
Stockholder?s 

Common Stock

 

 

Accumulated De?cit (576,595) (197,797) (774,392)
Total Stockholder's De?cit (576,595) (197,797) (774,392)
Total Liabilities 

Stockholder's Equity (De?cit) 290,071 (197,797) 92,274

 

Sources: Federal income tax returns 2012 2016
2017 based on compiled balance sheet.

KORNBLATT CO Schedule 2

 

Steubs
ASSET CREATION GROUP INC
Adjusted Net Assets

 

 

 

 

 

 

 

DISCUSSION DRAFT
as of December 31, 2017
M- Adiustments Adiusted
ASSETS
Current Assets:
Cash 8 75,007 75,007
Luxe Adventures Receivable 1,059,588 1,059,588
Total Current Assets 1,134,595 1,134,595
Property and Equipment (at cost):
Property Equipment 331,846 331,846
Less accumulated depreciation (259,005) (259,005)
Net Property and Equipment 72,841 72,841
Other Assets:
Security Deposits 18,199 18,199
Intangible Assets 95,000 (95,000)
Accumulated Depreciation (24,805) 24,805
Total Other Assets 88,394 (70,195) 18,199
Total Assets 1,295,830 (70,195) 1,225,635

 

LIA TIES AND TOCKH OLDER EQUITY

Current Liabilities:

 

 

 

Accounts Payable 44,218 44,218
Credit card payable 32,573 32,573
Due to BF 26,481 26,481
Due to SM 62,183 62,183

American Express Loan 504,455 504,455

Advanced Deposits 878,585 878,585

Payroll Liabilities 16,491 16,491

Due to Owner (J) 1,000 (1,000) -
Total Current Liabilities 1,565,986 (1,000) 1,564,986

Long-term Debt 138,913 138,913
Stockholder's Equity (De?cit)

Accumulated De?cit (409,069) (69,195) (478,264)
Total Stockholder?s De?cit (409,069) (69,195) (478,264)
Total Liabilities 

Stockholder?s De?cit 1,295,830 (70,195) 1,225,635

 

Sources: Federal income tax returns 2012 - 2016
2017 based on compiled balance sheet

KORNBLATT CO Schedule 3

 

 

Steubs
ASSET CREATION GROUP INC

Normalized Income and Capitalization of Income Method of Valuation

 

 

 

 

M3. M5. .911
We
Revenues (Memo) 33 581,719 820,336 1,51 1,889 2,146,421 2,566,333 1,904,653
Taxable Income (Loss) 28,892 56,360 (14,756) (322,324) 182,921 (183,917)
Adjustments
Officer's compensation - 41,550 54,200 90,795 115,595 55,385
Replacement compensation (75,000) (100,000) (125,000) (125,000) (125,000) (125,000)
Repairs and maintenance 20,000 30,000
Rents 30,000 66,000
Interest 46,000
Depreciation amortization 9,645 8,963 155,229 62,377 62,472 -
Employee bene?ts - - 58,060 76,512 69,995 -
Automobile expenses (10,079) (158) 12,273 30,964 35,233 58,864
Computer and Internet 20,000
Contributions 2,240
Decorating 5,000
Education 2,000
Gifts - - 911 1,749 750 
Housekeeping costs 200,000
Owner's health insurance 4,000 5,000 5,000 3,000
Landscaping 7,000
Laundry cleaning 15,000
Legal professional (10,101) (12,666) 25,954 788 15,369 39,864
Marketing 30,000
Pex/Stipe (62,218)
Property expenses 103,537
Travel - 11,159 2,314 5,356 11,776 7,218
Travel agent 2,318 4,720 - - 3,350
Utilities 20,000
Website 5,844
Normalized Income (Loss) (48,481) 14,928 238,185 (1 13,783) 467,1 1 1 170,323
Calculation of Value 12/31/15 12/31/1 7
On-going Normalized Income 46,443 174,550
Pre?tax Capitalization Rate 36.0% 38.0%
Indicated Value 129,009 459,343
DISCUSSION DRAFT

KORNBLATT CO. Schedule 4

 

 

Steubs

ASSET CREATION GROUP INC

Comparative Balance Sheets

DISCUSSION DRAFT

ASSETS

 

Current Assets:

Cash

Luxe Adventures Receivable
Inventories

Loans to shareholders

Total Current Assets

Property and Equipment (at cost):
Buildings and other assets
Less accumulated depreciation

Net Property and Equipment

Other Assets:
Security Deposits
Intangible Assets
Accumulated Depreciation
Employee Advances
Total Other Assets

Total Assets

 

2012



23,674

154,610
178,284

87,577
(78,922)
8,655

95,000
(5,806)

89,194
276,133

2013

56,105

372
127,312

183,789

144,499
(133,836)
10,663

8,701
95,000
(12,139)
91,562
286,014

2014

26,115

127,312
153,427

329,888
(225,871)
104,017

14,050
95,000
(18,472)
6,563
97,141

354,585

KORNBLATT C0

8,083 6,021 75,007
3,691 1,059,588

127,602
135,685

175,214
184,926 1,134,595

329,146 347,728 331,846
(259,005) (284,135) (259,005)
70,141 63,593 72,841

14,050 21,760 18,199
95,000 95,000 95,000
(24,805) (31,138) (24,805)

84,245 85,622 88,3 94
290,071 334,141 1,295,830

Schedule 5

 

Steubs

ASSET CREATION GROUP INC

LIABILITIES AND ST OCKH OLDER OUI 

Current Liabilities:

Accounts Payable

Credit card payable

Due to BF

Due to SM

Merchant Fees Payable

American Express Loan

Advanced Deposits

Payroll Liabilities

Due to Owner (J)

Mortgages, notes, bonds less than 1 year
Mortgages, notes, bonds 1 year or more

Total Liabilities

Stockholder's Equity

Common Stock

Accumulated De?cit
Total Liabilities 

Stockholder?s Equity

Comparative Balance Sheets

DISCUSSION DRAFT

8

8

Sources: Federal income tax returns 2012 2016

 

2012

3,608
3,874
95,000
95,000
129,838

32,691
360,011

(83,878)

276,133

 

2013

2,581
84,312
84,312

167,094

32,352
370,651

(84,637)

286,014

201



5,635
56,203
80,935

271 ,172

193,512
607,457

(252,872)

354,585

2015

16,108
43,003
68,261
271,172

468,122
866,666

(576,595) (312,268)

290,071

2016

19,276
30,474
57,018
271,172

21,918
246,551

646,409

334,141

 

KORNBLATT CO


v5.4



1

44,218
32,573
26,481
62,183

504,455
878,585
16,491
1,000

138,913

1,704,899

(409,069)

1,295,830

Schedule 5

Steubs

Revenues:

Revenues
Net Gain (loss)
Total Income

Operating Expenses:
Of?cer's compensation
Saiaries and wages
Repairs and maintenance
Rents
Taxes and licenses
Interest
Depreciation
Advertising
Amortization
Employee bene?t programs
Auto and Truck
Bank Charges
Commissions
Computer Internet
Contributions
Damage Fees
Decorating
Discounts
Dues and Subscriptions
Education
Gi?s
Guest Services
Housekeeping Costs
Insurance
Workers Comp
Health Insurance
Medical Expenses
Landscaping
Laundry and Cleaning
Legal and Professional
Marketing
Materials
Meals and Entertainment
Meetings
Merchant Fees
Miscellaneous

ASSET CREATION GROUP INC
Statements of Operations

 

 

2_012 2_01_ 2.01? .2912 
$581,719 820,336 1,511,889 2,146,421 2,566,333 1,904,653
36,307 19,219 29,550
$581,719 820,336 1,548,196 2,165,640 2,595,883 1,904,653
41,550 54,200 90,795 1 15,595 55,385
276,766 354,254 640,048 1,078,961 858,677 676,135
5,884 27,841 50,059 83,999 24,727 17,302
20,100 27,792 69,337 100,067 136,035 63,372
35,922 43,938 82,127 188,431 125,634 72,189
4,069 968 23,696 9,240 2,709 49,018
3,839 2,630 148,896 56,044 56,139
16,028 2,125 55,791 74,218 32,969
5,806 6,333 6,333 6,333 6,333
58,060 76,512 69,995
4,921 14,842 27,273 45,964 50,233 73,864
654 4,988 974 3,125 1,953 6,152
10,312
13,141 11,251 20,856 20,837 29,636 48,722
2,240
8,426 5,629 6,898 3,069
5,000
2,201
667 896 2,241 3,635
3,829 362 2,923 473 5,510
911 1,749 750
120 2,667 8,245 3,207 6,619
8,249 566,993
18,116 28,531 19,043 23,192 22,946 31,636
5,435
52,257
1,353
2,175 3,210 5,275 10,01 1 1,805
18,137 6,747 457
9,899 7,334 45,954 20,788 35,369 59,864
15,480 7,588 42,968 3,003 1,739 3,731
19,179
699 978 1,151 2,675 1,505 1,345
1,596 3,881 657 148
59,904 56,522 102,840 147,748 152,969 117,285
787 123 2,325 2,120 735 3,594
KORNBLATT Schedule 6

 

Steubs
ASSET CREATION GROUP INC

Statements of Operations

 

 

 

2012 2013 2014 2015 2016 2017
Of?ce Expense 7,027 17,315 12,586 26,625 9,970
Outside Services 23,012 3,31 1 238,339 387,565
Payroll Service 1,070 4,123
PEX/Stipe Clearing (62,218)
Postage 634 1,893 4,037 1,742 1,323 1,168
Property Expenses 103,537
Supplies 6,434 42,660 47,508 1 10,428 90,433 10,274
Telephone 13,366 20,719 32,940 42,833 53,921 20,123
Travel 11,159 2,314 5,356 11,776 7,218
Travel Agent Fees 2,318 4,720 3,350
Utilities 1,160 16,571 16,661 29,766 11,656
Website 5,844
Welcome Baskets 10,928 18,827 21,525
Health Ins. Reduction (3,266) (2,552)

Total Operating Expenses 552,827 763,976 1,562,952 2,487,964 2,412,962 2,088,570
Taxable Operating Income 28,892 56,360 (14,756) (322,324) 182,921 (183,917)
DISCUSSION DRAFT

Sources: Federal income tax returns 2012 - 2016)
Sources: Luxe Vacation Homes ~2017
KORNBLATT CO Schedule 6

 

Steubs

JUSTIN STEUBS

Cash Flow Available for Support
For the Year Ended December 31, 2017

Cash low from Asset Creation Group Inc

Owner's salary is 55,385
Loss from Operations based on
Compiled Financial Statements (183,917)
Adjustments
Depreciation and amortization
Contributions 2,240
Auto expenses 58,864
Medical insurance premiums 3,000
Education 12,000
Property expenses 103,537
Travel 10,568
Other pro-forma adjustments 197,646
Total Adjustments 377,855
Adjusted Cash Flow from Operations 193,938
TOTAL CASH FLOW 249,323
AVERAGE 20,777
DISCUSSION DRAFT

Other pro?forma adjustments consist of expenditures that appear to be
non-recurring in future periods.

KORNBLATT CO Schedule 7

 

 



PROOF OF SERVICE

STATE OF CALIFORNIA, COUNTY OF RIVERSIDE

Re: Steubs V. Steubs Case No. IND1601666

I am not a party to this action, however at the time of service I was over the age of 18. My
business address is 71-7 80 San Jacinto Dr., Bldg. C-3, Rancho Mirage, CA 92270.

On March 19, 2018, I served the following documents:

0 DECLARATION OF EMILY STEUBS

on all interested parties in this action by delivering a true and correct copy to the following:

Frederic S. Wieder, Esq.
44-100 Monterey Avenue, Suite 203
Palm Desert, California 92260

By Mail I caused such envelope with postage fully prepaid to be placed in the

United States Mail at Rancho Mirage, California.
I caused such envelope with postage fully prepaid, return
receipt requested, to be placed in the United States Mail at
Rancho Mirage, California.

By Certified Mail

I caused such envelope with postage fully prepaid to be

By Overnight Courier
sent by overnight delivery (Federal express Mail).

I caused such envelope to be delivered by hand to the
address(es) designated above.

By Personal Service

I caused each document to be sent by Automatic Telecopier

By Telecopier
to the Facsimile numbers listed above.

I declare under penalty of perjury under the laws of the State of California that the above is
true and correct, and that I am employed in the of?ce of a member of the Bar of this Court at

whose direction the service was made.

.73" 

Executed on March 19, 2018, Miragglgalifornia.

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