BDO PUERTO RICO, PSC BDO USVI, LLC 1302 Ponce De Leon Ave. Foothills Professional Building Suite 101 9151 Estate Thomas, Suite 201 San Juan, Puerto Rico 00907 St. Thomas, V1 00802 Tel: 787-754-3999 Tel: 340-776-0640 Fax: 787-754?3105 Fax: 340-779?8653 DEPTO. ESTADO INDEPENDENT REPORT ON BALANCE SHEET FILED WITH THE DEPARTMENT OF STATE To the Stockholder of Carrion, Laffitte Casellas, lnc.: Report on the Financial Statement We have audited the accompanying financial statement of Carrion, Laffitte Casellas, Inc. (the ?Company?) (a wholly-owned subsidiary of Hub International Limited), which comprise the balance sheet as of December 31, 2016, and the related notes to the financial statement. Management?s Responsibility for the Financial Statement Management is responsible for the preparation and fair presentation of this financial statement in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of the financial statement that is free from material misstatement, whether due to fraud or error. Auditors? Responsibilities Our responsibility is to express an opinion on this financial statement based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statement. The procedures selected depend on the auditor?s judgment, including the assessment of the risks of material misstatement of the financial statement, whether due to fraud or error. In making those risk assessments; the auditor considers internal control relevant to the entity?s preparation and fair presentation of the financial statement in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity?s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statement. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. BDO, Puerto Rico, PSC, a Puerto Rico Professional Services Corporation, and BBC) USVI, LLC, a United States Virgin Island's limited liability Company, are members of BBC International Limited, a UK company limited by guarantee, and form part of the international BDO network of independent member ?rms. BBC is the brand name for the BBQ network and for each of the BBQ Member. IBDO To the Stockholder of Carrion, Laffitte Casellas, Inc. Page 2 Basis for Qualified Opinion As described in Note 1 to the financial statement, for statutory reporting purposes, the Company carries its investment in wholly-owned subsidiary, under the equity method. Accounting principles generally accepted in the United States of America require the consolidation of all wholly-owned subsidiaries. Qualified Opinion In our opinion, except for the effects on the financial statement of not consolidating the accounts of its wholly-owned subsidiary as discussed in the preceding paragraph, the balance sheet referred to in the first paragraph, presents fairly, in all material respects, the financial position of the Company at December 31, 2016, in accordance with US. generally accepted accounting principles. Emphasis of Matter As discussed in Note 10 to the accompanying financial statement, a portion of the Company's business reflects transactions with related parties, and may not be necessarily indicative of the conditions that would have existed or the results of operations had the Company operated as an unaffiliated company. Our opinion is not modified with respect to this matter. Restriction on Use This report is intended solely for the information and use of the Stockholder, the Company?s management and the Department of State of Puerto Rico responsible for the administration of the annual reports and is not intended to be and should not be used by anyone other than these specified parties. We certify that none of our shareholders is a shareholder or employee of the above Company. E264550 DE .eLcc-s muonmuox - BBO Paulo/La?sc By, EMA San Juan, Puerto Rico 800 7 ountanls License No. 2881 April 10, 2017 License No. 53 Expires December 1, 2018 BDO, Puerto Rico, PSC, a Puerto Rico Professional Services Corporation, and BBQ USVI, LLC, a United States Virgin Island?s limited liability Company, are members of BBC international Limited. a UK company limited by guarantee, and form part of the international BDO network of independent member ?rms. 800 is the brand name for the BDO network and for each of the BBC Member. CARRION, LAFFITTE CASELLAS, INC. Balance Sheet December 31, 2016 Assets Current Assets: Cash 33 8,013,124 Trust cash 295,614 Accounts and other receivable, net 2,333,022 Prepaid expenses 108,022 Total Current Assets 10,749,782 Deferred income tax assets 1,1 15,077 Goodwill 14,583,552 Intangible assets, net 8,740,590 Investment in and advances to subsidiary 10,508 Property and equipment, net 591,152 Total Assets 35,790,661 Liabilities and Stockholder's Equity Current Liabilities: Accounts payable and accrued liabilities 1,908,925 Income taxes payable 131,319 Due to parent company 1,232,868 Total Current Liabilities 3,273,1 12 Other liabilities 68,778 Total Liabilities 3 ,341, 890 Stockholder's Equity: Common stock, $1 par value. 1,000 shares authorized; 1,000 shares issued and outstanding 1,000 Additional paid?in capital 32,888,93 8 Accumulated de?cit (441,167) Total Stockholder's Equity 32,448,771 Total Liabilities and Stockholder's Equity 35,790,661 See accompanying notes to ?nancial statements. (1) CARRION, LAFFITTE CASELLAS, INC. Notes to Financial Statements December 31, 2016 Organization and Summary of Signi?cant Accounting Policies Organization Carrion, Laf?tte Casellas, Inc. (the ?Company?) was organized under the laws of the Commonwealth of Puerto Rico on December 24, 2003. The Company provides insurance brokerage and risk management services in Puerto Rico. The Company is a wholly-owned subsidiary of Hub International Limited (?Hu with headquarters in Chicago Illinois. During 2015, the Company established a wholly-owned subsidiary called Hub International CLC Human Resources Consulting LLC Consulting?) which provides human resources consulting and related services to clients. Estimates The preparation of the ?nancial statements in conformity with accounting principles generally accepted in the United States of America requires the company management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results may differ ??om use estimates. Trust cash Trust cash is de?ned as funds collected from clients and insurance carriers that are held in a ?duciary capacity for the future payment of ?duciary liabilities. Fiduciary liabilities primarily represent premiums due to carriers and return premiums due to clients. The payment of ?duciary liabilities is generally governed by the contractual terms contained in broker-carrier agreements and regulations within the states in which we operate. The Company invests trust cash balances in non? interest bearing accounts. Accounts and Other Receivable In its capacity as an insurance broker, the Company may collect premiums from clients and, after deducting commissions, remit those premiums to the respective insurance carrier. The Company may also collect claims or premium refunds from insurance carriers on behalf of clients. Uncollected premiums from clients are recorded as accounts receivable on the balance sheet. As required by law and various contractual obligations, unremitted insurance premiums and claims are held in a ?duciary capacity as trust cash. The obligation to remit these funds is recorded as accounts payable on the balance sheet. The period for which the Company holds these funds is generally dependent upon the time between the date the client remits the payment to us and the date we are contractually required to forward such payment to the insurance carrier. Accounts and other receivable are recorded at net realizable value. An allowance for possible cancellations is the Company?s best estimate of the amount of probable cancellations in the Company?s existing accounts receivable. CARRION, LAFFITTE CASELLAS, INC. Notes to Financial Statements December 31, 2016 Income axes The Company recognizes deferred income tax assets and liabilities based upon the expected future income tax consequences of temporary differences between the carrying amounts of assets or liabilities and their tax bases by applying statutory income tax rates expected to be in effect when the asset or liability is settled. The carrying amount of deferred income tax assets, including the expected future bene?t of operating loss carry forwards, is reduced by a valuation allowance if it is more likely than not that some portion of the deferred income tax asset will not be realized. If applicable, we record interest and penalties related to unrecognized tax bene?ts within the provision for income taxes in statement of earnings. During the year ended December 31, 2016, the Company early adopted FASB Accounting Standards Update No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classi?cation of Deferred Taxes No. 2015-17?) to eliminate the guidance in Topic 740, Income Taxes, that required an entity to separate deferred tax assets and liabilities between current and noncurrent amounts in a classi?ed balance sheet. The amendments require that all deferred tax assets and liabilities of the same tax jurisdiction or a tax ?ling group, as well as any related valuation allowance, be offset and presented as a single noncurrent amount in a classi?ed balance sheet. Property and Equipment, Net Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are provided by the use of the straight?line method using estimated useful lives of the respective asset. Goodwill Goodwill represents the excess of cost over fair value of identi?able net assets acquired through business acquisitions. Goodwill is not amortized, but instead is reviewed for impairment on at least an annual basis by applying a fair-value?based test. In evaluating the recoverability of the canying value of goodwill the Company determines if an indicator of goodwill impairment exists by comparing the carrying value of the reporting units with the estimated fair value. If the Company determines that an indicator of goodwill impairment exists, the Company quanti?es the actual goodwill impairment charge, if any, by comparing the carrying value of goodwill to its estimated fair value, based on the fair value of the reporting unit?s assets and liabilities as of the impairment test date. No such loss was incurred during the year ended December 31, 2016. Lou g-Jived Assets Long-lived assets, such as property and equipment, and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Events or circumstances that would result in an impairment review primarily include operating losses, a signi?cant change in the use of an asset, or the planned disposal or sale of the asset. The asset would be considered impaired when the future net undiscounted cash ?ows generated by the CARRION, LAFFITTE CASELLAS, INC. Notes to Financial Statements December 31, 2016 asset are less than its carrying value. An impairment loss would be recognized based on the amount by which the canying value of the asset exceeds its fair value. No such loss was incurred during the year ended December 31, 2016. Investment in Subsidiary The investment in CLC Consulting is accounted for under the equity method of accounting. For investments accounted under the equity method of accounting, the initial investment is recorded at cost, increased or decreased by the Company?s share of the subsidiaries? operating results, and reduced by distributions received. Accounting principles generally accepted in the United States of America require that the financial statements of controlled subsidiaries be consolidated with those of its parent company. The fmancial statements of CLC Consulting have not been consolidated since the purpose of the accompanying ?nancial statements is to present the fmancial position, results of operations, and cash flows of the Company as parent company only for statutory reporting purposes. Revenue Recomition The Company?s revenue is primarily derived from commissions collected from insurance carriers or agencies with whom insurance policies are placed on behalf of our clients. Commission Income. Revenue recognition for commission income is primarily based on the billing arrangement for the underlying client policy. The Company has two primary types of billing arrangements: (1) agency billed commissions and (2) direct billed commissions. Agency Bill Commissions. In an agency bill arrangement, the Company is responsible for billing and collecting premiums and fees due from clients for insurance policies. The Company generally bill clients on or before the effective date. The Company subsequently remits client premiums, net of commission income earned, to the applicable insurance carrier or agency. The Company recognizes commission income on agency bill arrangements upon the placement of insurance, which generally coincides with the effective date of the policy unless at that time we are unable to reasonably determine the actual policy premium. In these circumstances, the Company defers the recognition of commission income until we are able to reasonably determine the amount of commission earned on the policy, which generally occurs on the date that the client is billed for the policy. Direct Bill Commissions. In a direct bill arrangement, the client is billed by the insurance carrier or agency directly for any premiums and fees related to the policy. The Company is subsequently paid the commission by the insurance carrier or agency for the brokerage services. Accordingly, we do not hill or collect premiums or fees directly from clients. The Company recognizes commission income on direct bill arrangements upon the placement of insurance with an insurance carrier or agency, which generally coincides with the effective date of the policy, unless it is unable to reasonably determine the amount of the commission earned on the policy. In which case commission income related to the policy is recognized when information becomes available and the revenue can reasonably be determined. (2) CARRION, LAFFITTE CASELLAS, INC. Notes to Financial Statements December 31, 2016 The Company is entitled to commission income for a policy as of its effective date as our earnings process is substantially complete, because we have performed all contracted services for the clients and substantially all of the related costs to produce, market, and place the coverage have been incurred. In addition, as of the effective date, the Company becomes entitled to the commission, net of any allowance for cancellation, because the insurance coverage has been placed with the insurance carrier and the premium is owed by the client. Subsequent changes to commission income, including, but not limited to those related to changes in commission rates, are recognized during the period that they occur. The Company also recognizes co?broker commission and fees expense concurrent with the recognition of the related commission income. Co-broker commission and fee expense represents amounts paid by the Company to third?party insurance brokers who provide us referral and assistance with clients. During the year ended December 31, 2016, co-broker commission and fees expense amounted to $2,048,079. Consulting Fees. Consulting fees are recognized as revenue based on the arrangements in place with the consulting client. Consulting fees are recorded when the services are performed and the amounts are reasonably estimable. Subseguent Events Management evaluated subsequent events through April 10, 2017 the date the Company?s financial statements were available to be issued. Based on this evaluation, the Company has determined that no subsequent events have occurred which require adjustment or disclosure in these ?nancial statements. Acquisition of Businesses During 2016, the Company entered into two asset purchase agreements with certain counterparties for the acquisition of their insurance brokerage businesses and certain operating assets. The counterparties are insurance brokers providing a broad array of property, casualty, risk management, life and health products, and employee benefits in Puerto Rico. The Company has accounted for the business acquisitions using the acquisition method, whereby the results of operations are included in the Company?s financial results from the date of acquisition going forward. In connection with the business acquisitions, the Company allocated the total purchase price to the estimated fair values of acquired tangible and intangible assets. No liabilities were assumed by the Company as of the date of the acquisitions. The Company determined the fair value of acquired tangible and intangible assets and assumed liabilities using various valuation methods, including, but not limited to, net realizable values, quoted market prices, and discounted cash ?ows. In connection with acquisitions, the Company entered into agreements with the counterparties to pay 10 CARRION, LAFFITTE CASELLAS, Notes to Financial Statements December 31, 2016 consideration that is contingent on maintaining or achieving speci?ed ?nancial performance measures in future periods. The Company recorded such contingent consideration as part of the total purchase price at fair value based on management?s best estimate of the future eamout payment as of the acquisition date. When the contingency is earned, the consideration is paid. The agreement further provides for the Withholding of certain escrow and reserve amounts relating to particular contingencies. The accompanying ?nancial statements include the obligation resulting from the earnout provisions of the asset purchase agreements. Such liability amounting to $247,041 is recognized in Accounts Payable and Accrued Liabilities. The Company recorded the purchase price of $55 5,291 to Customer Relationships intangible. (3) Accounts and Other Receivable, Net Accounts and other receivable, net are composed of the following at December 31, 2016: Direct bill receivable $2,523 ,715 Agency bill receivable 25,640 Other receivable 35.479 2,584,834 Less: allowance for bad debts 7,905 Less: allowance for policy cancellations 243,907 Accounts receivable, net $2333.02 (4) Preperty and Equipment, Net A detail of property and equipment, net as of December 31, 2016 is as follows: Accumulated Useful life Depreciation and Net Book (yr_s) Amortization Furniture and ?xtures 4-7 $23 2,427 $122,502 $109,925 Equipment 3-5 170,897 162,088 8,809 Leasehold improvement 1?3 407,990 112,937 295,053 Construction in progress 177,3 65 177,365 mam $259442 11 (5) CARRION, LAFFITTE CASELLAS, INC. Notes to Financial Statements December 31, 2016 Intangible Assets, Net Intangible assets, net as of December 31, 2016 consist of the following: Gross Carrying Accumulated Net Carrying Amount Amortization Amount Customer relationships $17,63 5,292 $9,353,252 $8,282,040 Non-compete agreements 2,103,000 1,787,550 315,450 Trade name 954,000 810,900 143,100 Intangible assets, net $20,692,292 $11,951,702 $8.740,5 90 Amortization expense of each class of intangible assets during the year ended December 31, 2016 is as follows: Customer relationships $1,667,954 Non-compete covenants 420,600 Trade name 190,800 Intangible amortization expense $2,279.3 5 4 Estimated total future amortization expense of intangible assets is as follows: Year Ending December 3 I, 2017 $1,849,725 2018 1,250,713 2019 1,053,442 2020 891,208 2021 678,457 Thereafter 3,017,045 $8.740; 90 Customer Relationships. The Company utilizes an accelerated amortization methodology for its customer relationship asset. The accelerated amortization methodology aligns the amortization of customer relationship asset with the accelerated pattern of consumption of the expected bene?ts derived from client relationships existing as of the date of the acquisition. The Company amortizes customer relationship assets over a maximum of 16 years. The determination of the useful life for customer relationship asset is based upon the estimate of the timeframe over which the acquired customer relationship is expected to contribute directly or indirectly to the future cash flows of the Company. Non-compete Covenants. The Company amortizes non-compete covenant assets on a straightdine basis over the estimated useful life of 5 years. The estimated useful life generally includes, for each applicable employee who is subject to a non~competition covenant, (1) his or her effective term of 12 (6) (7) CARRION, CASELLAS, INC. Notes to Financial Statements December 31, 2016 employment plus (2) a contractually determined period, which typically ranges from one year to three years, after his or her employment is terminated. Upon the employee?s termination, we amortize the net book value of the related non-competition-covenant on a straight-line basis over the applicable contractual period. rade name. The Company speci?cally identified tradename intangible assets subject to amortization. Tradename is amortized on a straight-line basis over the applicable estimated useful life of 5 years. Accounts Payable and Accrued Expenses Accounts payable and accrued expenses as of December 31, 2016 are as follows: Accounts payable 453,629 Due to producers 161,674 Due to insurance companies 596,490 Deferred income 1,346 Accrued expenses 695,786 $1,908,925 Income Taxes The Company is subj ect to income taxes in Puerto Rico, which range from 20% to 39% depending on the level of taxable income. The following table sets forth components of provision for income taxes during the year ended December 31, 2016: Current income taxes $880,652 Deferred income taxes 71,498 Provision for income taxes $952,150 The following table presents a reconciliation of expected income taxes to the actual provision for income taxes during the year ended December 31, 2016: Expected income taxes $63 6,089 Non-deductible expenses 336,73 5 Effect of progressive tax rates (20,250) Other 424 Provision for income taxes 8952.150 13 CARRION, LAFFITTE CASELLAS, INC. Notes to Financial Statements December 31, 2016 The components of deferred income tax assets and liabilities at December 31, 2016 are as follows: Deferred tax assets: Allowance for policy cancellations 95,124 Allowance for bad debts 3,083 Stock-based compensation 3 8,324 Intangible assets 2,452,162 Investment in subsidiary 3,990 Deferred rent 26,823 Deferred revenue 525 Net capital loss carry forward 17,257 Deferred tax assets gross 2,63 7,288 Valuation allowance 1 17,25 7 1 Deferred tax assets net 2,620,031 Deferred tax liability - Goodwill 1 1,504,954) Net deferred tax assets ELI 15,077 The Company evaluates its deferred income tax assets to determine if they may be realized. Deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not (a likelihood of more than 50%) that some portion or the entire balance of the deferred income tax assets will not be realized. In making such assessment, signi?cant weight is given to evidence that can be objectively verified, including both positive and negative evidence. Consideration must be given to all sources of taxable income available to realize the deferred tax assets, including the future reversal of existing temporary differences, future taxable income exclusive of the reversal of temporary differences and carry forwards, taxable income in carry back years, and tax planning strategies. The determination of a valuation allowance requires judgment based on the weight of all available evidence and considering the relative impact of negative and positive evidence. As a result, the Company has recognized a valuation allowance as of December 31, 2016 of $17,257 resulting from the net capital loss carry forward arising from the transfer in 2012 of its investment in CLC Risk Services, Inc. There has been no change in the valuation allowance during the year ended December 31, 2016. As of December 31, 2016, the Company had $115,050 in net capital loss carry forward which are available through 2017 to offset future net capital gains. The Company has no unrecognized income tax benefits or provisions due to uncertain income tax positions. The Company?s income tax return is subject to audit by the Puerto Rico Department of Treasury. Audit periods remain open for review until the statute of limitations has passed. The statute of limitations under the Puerto Rico Internal Revenue Code is four years in which the Company?s 14 (3) (9) (10) CARRION, LAFFITTE CASELLAS, INC. Notes to Financial Statements December 31, 2016 income tax returns 2012-2015 remain open. The completion of an audit by the taxing authorities or the expiration of the statute of limitations for a given audit period could result in an adjustment to the Company?s liability for income taxes. Any such adjustment could be material to results of operations for any given year based, in part upon the results of operations for the given year. Operating Leases The Company conducts their operations from leased premises. The leases are classi?ed as an operating lease. Rent expense related to leased premises and other prOperty for the year ended December 31, 2016 amounted to $555,769. Future annual rental commitments related to the leased premises and other prOperty are as follows: Year Ending December 31, 2017 488,514 2018 501,948 2019 515,752 2020 86 344 $1.592 558 The Company recognizes rent expense based on a straight-line method over the lease term. The difference between the amount paid and the rent expense is recorded as deferred rent. As of December 31, 2016 the Company had recorded $68,778 in deferred rent and is included in Other Long-Tenn Liabilities in the accompanying Balance Sheet. Retirement Plan The Company has Section 1081.01 (formerly Section 1165(6)) retirement plan covering substantially all employees meeting certain minimum eligibility requirements. Participants may make salary deferral contributions to the Plan up to $15,000 the limit as established in the Puerto Rico Internal Revenue Code Section 1081.01; Whereas, the employer matching contribution is determined solely at management?s discretion. Employer contributions are 100% vested after 3 years of service. Retirement plan expense during the year ended December 31, 2016 amountedto $105,063 and is included in Compensation Expense in the accompanying Statement of Earnings. Related Party Transactions On October 2, 2013, Hub was acquired by funds advised by Helhnan Friedman LLC, a leading private equity ?rm. This buyout transaction has been accounted by Hub for using the acquisition method. However, any adjustments resulting from the purchase price allocations of the estimated fair values of acquired tangible and intangible assets and liabilities assumed have not been recorded in the accompanying financial statements of the Company. Hub charges a management fee to reimburse them for certain corporate expense incurred for the bene?t of the Company. Such management fee, which included in Selling, Occupancy and 15 CARRION, LAFFITTE CASELLAS, INC. Notes to Financial Statements December 31, 2016 Administrative Expenses in the accompanying Statement of Earnings, is based on a stated percentage of commission and fees and amounted to $1,572,636 during the year ended December 31, 2016. The Company participates in the Class Unit Award Plan of Hockey Parent Holding L.P. (?Hockey Parent?), the ultimate parent company of Hub. Hockey Parent awarded in prior year 1,166 Class units to certain executives of the Company'with a unit price of $789. The units awarded are subject to time-based and performance-based vesting requirements. An additional 60 Class units were awarded in prior years with unit prices ranging ?om $830 to $978 and subject to time-based vesting requirements. During the year ended December 31, 2016, 30 Class units were awarded with a unit price of $1,155 and subject to time?based vesting requirements. Upon the occurrence of a change in control, time?based vesting requirements will be accelerated for awards issued under the Plan. As of December 3 2016, 466 unites are vested and exercisable. No awards have been forfeited as of December 31, 2016. The Company recognizes compensation expense of the time-based awards based on the estimated fair value of the equity instrument awarded over the estimated service period using a straight~line method. Compensation expense of the performance? based awards is recognized when it is probable the performance condition will be achieved based on the estimated fair value of the equity instrument awarded over the remaining estimated service period. The fair value of the award grants is estimated on the date of grant using a binomial?lattice model and is affected by assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, expected equity price volatility and the expected life of the awards. Forfeitures of share-based awards are estimated at the time of grant and revised in subsequent periods if actual forfeitures differ from those estimates. The fair value at grant date of the Class units awarded was $257-$402 with the following assumptions: dividend yield risk free rate volatility 35%-45%; expected life 2.4lyears-4.54 years. Risk??ee interest rates are interpolated using the grant time to maturity and US. Treasury yields as of each grant date. Volatility is calculated based on a combination of the actual historical daily prices and implied exchange traded options for the common shares of certain publicly traded insurance brokerage companies. Expected life is calculated based on management?s estimate of the expected time from the grant date of a share?based award to the date that a quali?ed change of control or other liquidating event takes place. The Company recognized stock-based compensation of $65,408 and is included in Compensation Expense in the accompanying Statement of Earnings Hub is obligated under a Senior Secured Credit Agreement with a syndicate of institutional lenders and ?nancial institutions. This credit agreement is collateralized, among other instruments, with a portion of the outstanding shares of the Company. 16 CARRION, LAFFITTE CASELLAS, INC. Notes to Financial Statements December 31, 2016 (11) Investment in Subsidiary The following table sets forth balance sheet as of December 31, 2016 and statement of earnings information for the year then ended of CLC Consulting (unaudited): Balance Sheet Information Cash $20,309 Accounts receivable 1,3 10 Current assets 21,619 Intangible asset, net 24,659 Property and equipment 827 Total assets I $47,105 Accounts payable and accrued expenses 14,987 Due to Hub International Limited 21,610 Due to Carrion, Laf?tte Casellas, Inc. 54,651 Current liabilities 91,248 Member?s equity 144,143 1 $47,105 Statement of Earnings Information Revenue $52,824 Operating expenses 1 16,722 Net loss l?63,8981 (12) Concentration of Credit Risk Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of cash, and accounts and other receivables. The Company maintains a policy providing for the diversi?cation of cash and places its cash in a number of high quality ?nancial institutions to limit the amount of credit risk exposure. Concentrations of credit risk with respect to receivables are generally 1imited due to the large number of clients and markets in which the Company does business. Account receivable balances ?om two carriers amounting to 33% in the aggregate exceeded each 10% of receivables as of December 31, 2016. The Company has, however, one client in the ?nancial services industry that exceeds 10% of revenue as of December 31, 2016. The Company attempts to limit concentration of credit risk due to cash in bank accounts, however its deposit balances may, at times, exceed federally insured limits of $250,000. The Company has not experienced any losses on such accounts. 17 CARRION, LAFFITTE CASELLAS, INC. Notes to Financial Statements December 3 l, 2016 (13) Contingencies The Company is party to litigation and other claims arising from the ordinary course of business. The Company is vigorously defending itself from these claims. Management believes that the ?nal disposition of these matters will not have a material adverse effect on the Company?s ?nancial position or results of operations. 18