UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

☒     Quarterly Report PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2017

 

☐    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from __________ to __________

 

Commission File Number: 333-173702

 

Excel Corporation

(Exact name of registrant as specified in its charter)

 

Delaware   27-3955524

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification Number)

 

6363 North State Highway 161, Suite 310,

Irving, Texas

  75038
(Address of principal executive offices)   (Zip Code)

 

Registrant’s telephone number, including area code: 972-476-1000

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☐  No ☒

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☐ (Do not check if a smaller reporting company) Smaller reporting company ☒
  Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☐   No ☒

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  ☒

 

As of May 15, 2017, there were 97,860,336 shares of Company’s common stock, par value $0.0001 per share, issued and outstanding.

 

 

 

 

 

 

EXCEL CORPORATION

 

TABLE OF CONTENTS

 

PART I. FINANCIAL INFORMATION  
   
ITEM 1. FINANCIAL STATEMENTS  
   
Consolidated Balance Sheets as of March 31, 2017 (unaudited) and December 31, 2016 1
   
Consolidated Statements of Operations for the three months ended March 31, 2017 and 2016 (unaudited) 2
   
Consolidated Statements of Cash Flows for the three months ended March 31, 2017 and 2016 (unaudited) 3
   
Notes to Unaudited Consolidated Financial Statements 4
   
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
   
Overview 11
   
Results of Operations 11
   
Liquidity and Capital Resources 12
   
Significant Accounting Policies 13
   
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 14
   
ITEM 4. CONTROLS AND PROCEDURES 14
   
PART II. OTHER INFORMATION  
   
ITEM 1. LEGAL PROCEEDINGS 15
   
ITEM 1A. RISK FACTORS 15
   
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 15
   
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 15
   
ITEM 4. MINE SAFETY DISCLOSURE 16
   
ITEM 5. OTHER INFORMATION 16
   
ITEM 6. EXHIBITS 16

 

 

 

 

 

Excel Corporation and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

 

    March 31,     December 31,  
ASSETS   2017     2016  
Current Assets            
Cash and cash equivalents   $ 1,257,170     $ 1,586,207  
Accounts receivable     1,095,963       1,220,759  
Note receivable     675,000       675,000  
Prepaid expenses     49,313       105,995  
Other current assets     89,050       89,050  
Total current assets     3,166,496       3,677,011  
                 
Other Assets                
Fixed assets, net of depreciation     192,039       170,442  
Goodwill     7,914,269       7,914,269  
Equity investment     175,790       171,469  
Residual portfolios     2,056,749       2,147,488  
Other long term assets     679,434       631,271  
Total other assets     11,018,281       11,034,939  
Total assets   $ 14,184,777     $ 14,711,950  
                 
LIABILITIES & STOKHOLDERS’ DEFICIT                
Current Liabilities                
Accounts payable   $ 657,770     $ 577,220  
Accrued compensation     1,142,632       1,054,532  
Other accrued liabilities     531,807       551,447  
Notes payable - current portion, net of deferred financing costs     12,845,667       12,809,252  
Accrued costs of disposal of discontinued operations     -       50,000  
Total current liabilities     15,177,876       15,042,451  
                 
Long-term liabilities                
Other long term liabilities     39,508       41,705  
Total long-term liabilities     39,508       41,705  
Commitments and contingencies                
STOCKHOLDERS’ DEFICIT                
Preferred stock, $.0001 par value, 10,000,000 shares  authorized, none issued and outstanding     -       -  
Series B preferred stock, $.0001 par value 4,600,000 issued and outstanding as of March 31, 2017 and December 31, 2016, respectively     460       460  
Common stock, $.0001 par value, 200,000,000 shares authorized 97,860,336 and 97,759,070 shares issued and outstanding as of March 31, 2017 and December 31, 2016, respectively     9,786       9,776  
Additional paid-in capital     4,824,339       4,814,348  
Accumulated deficit     (5,867,192 )     (5,196,790 )
Total stockholders’ deficit     (1,032,607 )     (372,206 )
Total Liabilities and Stockholders’ Deficit   $ 14,184,777     $ 14,711,950  

   

See notes to unaudited consolidated financial statements.

 

  1  

 

 

Excel Corporation and Subsidiaries

Consolidated Statements of Operations

(Unaudited)

  

    Three Months Ended  
    March 31,  
    2017     2016  
Revenues            
Transaction and processing fees   $ 3,921,458     $ 3,965,853  
Merchant cash advance revenue and other     92,590       53,805  
Total revenues     4,014,048       4,019,658  
Costs and expenses                
Processing and servicing costs     1,967,141       1,626,254  
Salaries and wages     971,810       976,272  
Outside commissions     595,411       523,716  
Other selling general and administrative expenses     465,101       348,524  
Total costs and expenses     3,999,463       3,474,766  
                 
Income from operations     14,585       544,892  
                 
Interest expense, net     684,987       328,616  
                 
Net income (loss) from continuing operations before income taxes     (670,402 )     216,276  
Income tax expense (benefit)                
Current     (248,048 )     80,022  
Deferred     248,048       (80,022 )
Income tax expense     -       -  
                 
Net income (loss) from continuing operations     (670,402 )     216,276  
                 
Loss from discontinued operations, net of tax     -       (1,347,029 )
Loss on disposal of operations     -       (840,641 )
Net loss   $ (670,402 )   $ (1,971,394 )
                 
Basic earnings per share                
Income (loss) from continuing operations   $ (0.007 )   $ 0.002  
Loss from discontinued operations, net of tax     -       (0.022 )
Net loss   $ (0.007 )   $ (0.020 )
                 
Diluted earnings per share                
Income (loss) from continuing operations   $ (0.007 )   $ 0.002  
Loss from discontinued operations, net of tax     -       (0.022 )
Net loss   $ (0.007 )   $ (0.020 )
                 
Weighted Average Shares Outstanding                
Basic     97,760,195       97,055,773  
Diluted     97,760,195       97,662,366  

 

See notes to unaudited consolidated financial statements.

  2  

 

 

Excel Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

 

    Three Months Ended  
    March 31,  
    2017     2016  
Operating activities:                
Net loss   $ (670,402 )   $ (1,971,394 )
Adjustments to reconcile net loss to net cash used in operating activities:                
Depreciation and amortization     201,970       136,118  
Paid in kind interest     170,868       -  
Stock based compensation     10,001       67,787  
Income in investment accounted for under the equity method     (4,321 )     (40,000 )
Loss on disposal of operations     -       840,641  
Changes in operating assets and liabilities:                
Decrease (increase)                
Accounts receivable     124,796       185,539  
Prepaid expenses     56,682       19,918  
Other current assets     -       (96,035 )
Other long term assets     (48,163 )     89,642  
Increase (decrease)                
Accounts payable     80,550       (606,909 )
Accrued compensation     88,100       224,376  
Other accrued liabilities     (19,640 )     219,626  
Other long-term liabilities     (2,197 )     697,575  
                 
Net cash used in operating activities     (11,756 )     (233,116 )
                 
Cash flows from investing activities:                
Purchase of property and equipment     (42,658 )     (5,504 )
Payments from disposal of operations     (50,000 )     -  
                 
Net cash used in investing activities     (92,658 )     (5,504 )
                 
Cash flows from financing activities:                
Deferred financing costs     (224,623 )     -  
Issuance of preferred stock     -       230,000  
Note and debt payments     -       (102,950 )
                 
Net cash provided by (used in) financing activities     (224,623 )     127,050  
                 
Net decrease in cash   $ (329,037 )   $ (111,570 )
                 
Cash - Beginning   $ 1,586,207     $ 362,130  
                 
Cash - Ending   $ 1,257,170     $ 250,560  
                 
Supplemental disclosure of cash flow information                
Cash paid for interest   $ 444,258     $ 328,616  

   

See notes to unaudited consolidated financial statements.

 

  3  

 

 

Excel Corporation and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2017

Unaudited

 

1. ORGANIZATION AND OPERATIONS

 

Excel Corporation (the “Company”) was organized on November 13, 2010 as a Delaware corporation. The Company has three wholly owned subsidiaries, Excel Business Solutions, Inc. (d/b/a eVance Capital), Payprotec Oregon, LLC (d/b/a Securus Payments), (“Securus”), and eVance Processing Inc. (“eVance”).

 

We sell integrated financial and transaction processing services to businesses throughout the United States. We provide these services through our wholly-owned subsidiaries, eVance and Securus. Through our eVance subsidiary, we provide an integrated suite of third-party merchant payment processing services and related proprietary software enabling products that deliver credit and debit card-based internet payments processing solutions primarily to small and mid-sized merchants operating in physical “brick and mortar” business environments, on the internet and in retail settings requiring both wired and wireless mobile payment solutions. We operate as an independent sales organization (“ISO”) generating individual merchant processing contracts in exchange for future residual payments. As a wholesale ISO, eVance has a direct contractual relationship with the merchants and takes greater responsibility in the approval and monitoring of merchants than do retail ISOs and we receive additional consideration for this service and risk. Securus operates as a retail ISO and receives residual income as commission for merchants it places with third party processors.

 

On November 30, 2015, eVance entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Calpian, Inc. (“Calpian”), Calpian Residual Acquisition, LLC (“CRA”) and Calpian Commerce, Inc., a wholly owned subsidiary of Calpian (“CCI,” and collectively with Calpian and CRA, the “Sellers”). Pursuant to the Purchase Agreement, eVance acquired substantially all of the U.S. assets and operations of the Sellers. In consideration for the acquired assets, eVance assumed certain of the Sellers’ liabilities, including an aggregate of $9,000,000 of notes payable and certain of the Sellers’ outstanding contractual obligations.

 

On April 12, 2016, eVance entered into an agreement with the Sellers and a cancellation of securities acknowledgement with one of eVance’s note-holders whereby the noteholder cancelled its note in the amount of $720,084 and Calpian issued eVance a note in the amount of $675,000 in exchange for eVance and the Sellers mutually waiving any claims either party has or could have under the Purchase Agreement against the other. The $675,000 note bears simple interest of 12% per annum payable monthly and matures on November 30, 2017. As part of the Purchase Agreement, eVance acquired several residual portfolios including the supporting contracts (residual purchase agreements). eVance, as successor under one of these residual purchase agreements, has sued a third party for breach of contract on the residual purchase agreement between the third party and Seller and claimed damages in excess of $1,500,000. eVance has agreed to apply any recovery from such litigation (less costs) against the principal balance of the $675,000 note up to a maximum of $675,000. The Company reflected the reduction in the assumed debt by $720,084 as a reduction in goodwill and a reduction in the debt assumed. In addition, the noteholder returned a warrant to purchase 360,042 shares of the Company’s common stock. As a result of this agreement, the $9,000,000 of notes payable was reduced to $8,279,916.

 

On April 30, 2016, Securus entered into a Purchase and Sale Agreement (the “2016 Purchase Agreement”) with Chyp LLC (“Chyp”). In connection with the 2016 Purchase Agreement, Chyp executed a three-year preferred marketing agreement with eVance. Chyp acquired substantially all of the operations of Securus including its sales and marketing operations located in Portland, Oregon and West Palm Beach, Florida. Securus retained the approximately 5,000 merchants and related merchant processing residual portfolios.

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and the instructions to Rule 10-01 of Regulation S-X of the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, these unaudited consolidated financial statements contain all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of the results of the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full year ending December 31, 2017. These unaudited consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.

 

Principles of Consolidation

 

The consolidated financial statements include the accounts of Excel Corporation and subsidiaries in which the Company has a controlling financial interest. All intercompany transactions and account balances between Excel Corporation and its subsidiaries have been eliminated in consolidation. Transactions with its consolidated subsidiaries are generally settled in cash. Investments in unconsolidated affiliated entities are accounted for under the equity method and are included in “Equity investment” in the accompanying consolidated balance sheets.

 

  4  

 

 

Excel Corporation and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2017

Unaudited

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

 

Reclassification

 

Certain prior period amounts have been reclassified to conform to the current period’s presentation.

 

Use of Estimates in the Preparation of Financial Statements

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Material estimates that are particularly susceptible to significant change relate to the evaluation of deferred tax assets, purchase accounting, allowances, and equity investments.

 

3. RECENT ACCOUNTING PRONOUNCEMENTS

 

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers Topic 606 (“ASU 2014-09”) which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. Revenue recorded under ASU 2014-09 will depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance is effective for the Company’s fiscal year beginning January 1, 2018 and early adoption is not permitted. The Company is currently evaluating the potential effect of this standard on its consolidated financial statements.

  

  5  

 

 

Excel Corporation and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2017

Unaudited

 

3. RECENT ACCOUNTING PRONOUNCEMENTS (Continued)

 

In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes. ASU 2015-17 eliminates the requirement to bifurcate deferred taxes between current and noncurrent on the balance sheet and requires that deferred tax assets and liabilities be classified as noncurrent on the balance sheet. The guidance in the ASU is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The Company had a 100% valuation allowance on the deferred tax assets at March 31, 2017, as such this standard does not impact the financial position at March 31, 2017.

 

In February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842) (“ASU 2016-02”), which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract. The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases. ASU 2016-02 supersedes the previous leases standard, Leases (Topic 840). The standard is effective on January 1, 2019, with early adoption permitted. The Company is currently evaluating the potential effect of this standard on its consolidated financial statements.

 

On August 26, 2016, the FASB issued ASU 2016-15, “ Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments (Topic 230) .” This ASU is intended to reduce the diversity in practice around how certain transactions are classified within the statement of cash flows. The ASU’s amendments add or clarify guidance on eight cash flow issues:

 

  ● Debt prepayment or debt extinguishment costs.
  ● Settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing.
  ● Contingent consideration payments made after a business combination.
  ● Proceeds from the settlement of insurance claims.
  ● Proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies.
  ● Distributions received from equity method investees.
  ● Beneficial interests in securitization transactions.
  ● Separately identifiable cash flows and application of the predominance principle.

 

The guidance in the ASU is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company has evaluated the potential effect of this standard on its consolidated financial statements and determined this standard does not impact the financial position at March 31, 2017.

  

In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350) (“ASU 2017-04”), which currently requires an entity that has not elected the private company alternative for goodwill to perform a two-step test to determine the amount, if any, of goodwill impairment. In Step 1, an entity compares the fair value of a reporting unit with its carrying amount, including goodwill. If the carrying amount of the reporting unit exceeds its fair value, the entity performs Step 2 and compares the implied fair value of goodwill with the carrying amount of that goodwill for that reporting unit. An impairment charge equal to the amount by which the carrying amount of goodwill for the reporting unit exceeds the implied fair value of that goodwill is recorded, limited to the amount of goodwill allocated to that reporting unit.

 

To address concerns over the cost and complexity of the two-step goodwill impairment test, the amendments in this Update remove the second step of the test. An entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit's carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The new guidance does not amend the optional qualitative assessment of goodwill impairment. The guidance in the ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, early adoption is permitted. The Company is currently evaluating the potential effect of this standard on its consolidated financial statements.

 

Accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company’s consolidated financial statements upon adoption.

 

  6  

 

 

Excel Corporation and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2017

Unaudited

 

4. DISCONTINUED OPERATIONS

 

On April 30, 2016, Securus entered into the 2016 Purchase Agreement with Chyp. In connection with the 2016 Purchase Agreement, Chyp executed a three-year preferred marketing agreement with eVance.

 

Pursuant to the 2016 Purchase Agreement, Chyp acquired substantially all of the operations of Securus including its sales and marketing operations located in Portland, Oregon and West Palm Beach, Florida. Securus retained its approximately 5,000 merchants and related merchant processing residual portfolio. Securus also retained substantially all of its liabilities, including but not limited to, its note payable with Blue Acre Ventures (BAV), trade payables as well as liabilities to merchants.

 

Pursuant to the 2016 Purchase Agreement, Securus provided financial assistance to Chyp in the form of a forgivable loan to support the transition of Securus’ operations to Chyp. Securus advanced Chyp $500,000 during 2016 and $50,000 in January 2017 for a total of $550,000. Accordingly, Chyp executed a $550,000 promissory note (the “Chyp Note”) in favor of Securus. The Chyp Note bears an interest rate of 12% per annum with both the principal and interest due on May 1, 2017. The Company does not believe that Chyp was in material compliance with the 2016 Purchase Agreement and has not cancelled the Chyp Note. The Company and Chyp are in discussions concerning a resolution of the matter. Securus will also reimburse Chyp for commissions payable to Chyp employees and agents on Securus’ residual portfolio as if those agents and employees were still employed by Securus. Chyp is owned by Steven Lemma and Mychol Robirds, who are former executives of Securus.

 

We accounted for the sale of the Securus operations to Chyp in accordance with ASC 205-20-45-1 and have classified the assets and operations sold to Chyp as discontinued operations. In 2016, the Company recorded a loss on disposal of $840,641 related to the transaction. The charge includes a $290,641 write-off of the net assets acquired by Chyp and $550,000 for the financial assistance to be provided to Chyp.

 

A summary of results of discontinued operations is as follows:

 

    Three Months  
    Ended  
  March 31, 2016  
       
Revenues   $ 1,683,135  
Operating expenses     (3,030,164 )
Pre-tax loss from discontinued operations     (1,347,029 )
Loss from discontinued operations, net of tax   $ (1,347,029 )

  

5. PROPERTY AND EQUIPMENT

 

Property and equipment consists of the following as of March 31, 2017 and December 31, 2016:

    March 31,
2017 		    December 31,
2016 		 
Computer software   $ 63,692     $ 38,607  
Equipment     181,202       163,394  
Furniture & fixtures     38,682       38,882  
Leasehold improvements     16,503       16,538  
Total cost     300,079       257,421  
Less accumulated depreciation     (108,040 )     (86,979 )
Property and equipment – net   $ 192,039     $ 170,442  

 

  7  

 

 

Excel Corporation and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2017

Unaudited

 

6. LEASES

 

The Company executed a lease for its corporate offices in Irving Texas. The lease began on November 1, 2014 and has a term of 63 months with monthly payments ranging from $0 to $6,428.

 

eVance leases its Georgia office facilities under an operating lease expiring in November 2019. Monthly lease payments range from $8,278 to $9,046 throughout the term of the lease.

 

Total rent expense for the period ended March 31, 2017 was $50,648, compared to $132,623 for the period ended March 31, 2016.

 

The future minimum lease payments required under long-term operating leases as of March 31, 2017 are as follows:

 

2017   $ 131,775  
2018     179,489  
2019     174,946  
2020     6,430  
2021 and after     -  
Total   $ 492,640  

  

7. NOTES PAYABLE

 

The following summarizes the Company’s outstanding notes payable: 

 

    March 31, 2017     December 31, 2016  
             
Term Loan due November 2019, bearing interest at 18%, secured by substantially all of the assets of the Company     12,845,667       12,809,252  
                 
Less current portion     (12,845,667 )     (12,809,252 )
                 
Long-term portion of notes payable   $ -     $ -  

  

On November 2, 2016, the Company and certain of the Company’s subsidiaries entered into a Loan and Security Agreement (the “Loan Agreement”) with GACP Finance Co. LLC as administrative agent (“Agent”) and the other lenders as from time to time party thereto. The Loan Agreement has a three-year term and provides for term loan commitments of up to $25,000,000 consisting of an Initial Term Loan in the amount of $13,500,000 and a Delayed Draw Term Loan in the amount of $11,500,000 (each a “Loan” or together “Loans”). The Company used the proceeds from the Initial Term Loan to repay all of its existing secured debt.

 

Before the default described below, the Loan accrued interest of 18% per annum of which 13% was payable in cash monthly and 5% is payable in kind (PIK). The cash interest has been increased from 13% to 16%. Pursuant to the Loan Agreement, the Loan is secured by substantially all of the assets of the Company including but not limited to the Company’s residual portfolios. In addition, certain of Excel’s subsidiaries are guarantors under the Loan Agreement. 

 

The Company incurred financing costs in the amount of $1,075,369 in connection with the Loan Agreement. These costs are shown as a reduction of the loan amount on the accompanying consolidated balance sheet as of March 31, 2017, and are being amortized as interest expense over the term of the Loan. In addition, the interest that is payable in kind is added to the Loan balance. The following chart summarizes the amount outstanding under the Loan.

 

  8  

 

 

Excel Corporation and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2017

Unaudited

 

7. NOTES PAYABLE (Continued)

 

    March 31,
2017 		 
Term Loan   $ 13,500,000  
Net deferred financing costs     (937,935 )
Accrued interest payable in kind     283,602  
Note payable   $ 12,845,667  

 

The Loan Agreement contains customary events of default, non-payment of principal or other amounts under the Loan Agreement, breach of covenants and certain voluntary and involuntary bankruptcy events. The Loan Agreement also contains certain financial covenants including maintenance of certain EBITDA levels and minimum liquidity. If any event of default occurs and is continuing, the Lender may declare all amounts owed to be due (except for a bankruptcy event of default), in which case such amounts will automatically become due and payable. On May 5, 2017, the Company received written notice that it was in default under the Loan Agreement for a breach of covenants. As a result of the default, the Lender increased the cash interest payable on the loan from 13% per annum to 16% per annum (the “Default Rate”). In addition, as of April 30, 2017, the principal due under the Loan Agreement was $13,783,602. The April 30, 2017 loan balance was in excess of the borrowing base as calculated under the Loan Agreement and the Company made a principal payment on May 8, 2017 of $512,583 to reduce the loan balance to be within the borrowing base. The Lender has also terminated its commitment to lend funds or extend credit to the Company. As such, the note is classified as current on the accompanying consolidated balance sheets in accordance with ASC 470-10-45. In accordance with ASU 205-40, the classification of the debt as current raises substantial doubt about the Company’s ability to continue as a going concern. Management has evaluated its financial position and future planned operating results with respect to the breach of covenants and determined that it is not probable that the Lender will declare all amounts due and payable and that in the improbable case that if the Lender declares all amounts under the Loan Agreement due and payable that the Company would be able to satisfy the obligations. The Company is discussing a resolution of the default with the Lender and believes that it will be able to do so. The Company is currently able to meet its debt service requirements and operating expenses out of its cash flows from operations and expects to be able to do so for at least the next twelve months. The Company’s strategy includes acquisitions of residual portfolios and the execution of any such portfolio would likely be accretive to earnings and improve the Company’s cash flow and debt service capabilities. In the event that the Lender accelerates all amounts due or requested that the Company reduce the outstanding debt, management currently believes that it would be able to satisfy such obligations by selling a portion of its residual portfolio of monthly recurring revenue without disrupting its operations. Management also believes that if required, the debt outstanding under the Loan Agreement could be refinanced with another lender. There can be no assurance that the Company will be able to resolve the matter with the Lender or execute on its contingency plans in the event it is unable to resolve the matter with the Lender.

 

8. INCOME TAXES

 

The Company accounts for income taxes in accordance with FASB Accounting Standards Codification Topic 740-10 which requires the Company to provide a net deferred tax asset/liability equal to the expected future tax benefit/expense of temporary reporting differences between book and tax accounting methods and any available operating loss or tax credit carryforwards. At March 31, 2017 and December 31, 2016, the Company had available unused operating loss carryforwards of $4,772,677 and $4,194,335, respectively, which generated a deferred tax benefits of $1,765,890 and $1,551,904, respectively. The Company had a 100% valuation allowance on the deferred tax assets at March 31, 2017. The net operating loss carryforwards will begin to expire in 2036. After analyzing our forecasted tax position at March 31, 2017, we currently expect to utilize all of our net operating loss carryforwards prior to their expiration dates.

 

The Company accounts for uncertainties in income taxes in accordance with FASB ASC Topic 740 “Accounting for Uncertainty in Income Taxes”. The Company has determined that there are no significant uncertain tax positions requiring recognition in its financial statements.

 

In the event the Company is assessed for interest and/or penalties by taxing authorities, such assessed amounts will be classified in the financial statements as income tax expense. Tax years 2014 through 2016 remain subject to examination by Federal and state taxing authorities. 

 

  9  
 

 

Excel Corporation and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2017

Unaudited

 

9. STOCKHOLDERS’ EQUITY

 

On March 18, 2016, the Company issued 2,300,000 Shares of Series B Convertible Preferred Stock (“Series B Shares”) to each of Thomas A. Hyde Jr. and Robert L. Winspear (each a “Holder” and collectively the “Holders”) at a price of $0.05 per share pursuant to subscription agreements between the Company and the Holders. Mr. Hyde is the President, Chief Executive Officer and a Director of the Company. Mr. Winspear is the Chief Financial Officer of the Company.

 

The Series B Shares are convertible into shares of the Company’s common stock par value $0.0001 (“Common Stock”) on a ratio of 1-to-1, subject to adjustment for stock splits and stock dividends. The Series B Shares rank senior to the Common Stock and other preferred shares and carry a liquidation preference of $.05 per share. Holders of the Series B Shares are entitled to receive dividends declared on the Company’s Common Stock on an as converted basis. Each Series B Share entitles the Holder thereof to 20 votes per share on all matters subject to voting by holders of the Company’s Common Stock. The issuance of a total of 4,600,000 shares of Series B Shares, entitles the Holders thereof to a combined 92,000,000 votes. Under the terms of the Series B Shares, the Company has the right to require a Holder to convert the Series B Shares into Common Stock at any time after the Holder resigns, is terminated or otherwise ceases to be an officer of the Company. In addition, the Company has the right at any time after July 18, 2016 to repurchase and retire all but not less than all of the Series B Preferred Stock for $0.05 per share provided that it gives notice to the Holder of the Company’s intent to redeem the shares and the Holder does not elect to convert the Series B Shares into Common Stock in lieu of the redemption. 

 

In connection with the issuance of the Series B Shares, the Company and the Holders executed a Stockholders Agreement (the “Agreement”) whereby the Holders agreed not to initiate directly or indirectly any stockholder vote or action, by written consent or otherwise, to increase the size or structure of the Company’s board of directors or remove any existing director, nor initiate directly or indirectly any stockholder vote or action by written consent or otherwise, to affect Holders’ executive compensation, bonus criteria and amounts, or other similar action. The Holders also agreed to convert the Series B Shares immediately upon termination, whether voluntary or involuntary, or upon their resignation for any reason. 

 

The table below lists outstanding warrants as of March 31, 2017:

 

    Shares     Exercise Price     Warrants
Expire
Warrants issued November 30, 2015     5,452,458     $ 0.05     November 30, 2025
Warrants issued April 12, 2016     500,000     $ 0.06     October 12, 2017
Warrants outstanding March 31     5,952,458       —      

 

The Company has no stock options outstanding as of March 31, 2017.

 

  10  

 

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The following discussion and analysis of our results of operations and financial condition for the three months ended March 31, 2017 and 2016 should be read in conjunction with our interim financial statements and the notes to those financial statements that are included elsewhere in this Quarterly Report on Form 10-Q. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the “Risk Factors,” “Cautionary Notice Regarding Forward-Looking Statements” and “Description of Business” sections and included in our Annual Report on Form 10-K for the year ended December 31, 2016. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” “predict,” and similar expressions to identify forward-looking statements. Although we believe the expectations expressed in these forward-looking statements are based on reasonable assumptions within the bounds of our knowledge of our business, our actual results could differ materially from those discussed in these statements. We undertake no obligation to update publicly any forward-looking statements for any reason even if new information becomes available or other events occur in the future .

  

Current Overview

 

We sell integrated financial and transaction processing services to businesses throughout the United States. We provide these services through our wholly-owned subsidiaries, eVance and Securus. Through our eVance subsidiary, we provide an integrated suite of third-party merchant payment processing services and related proprietary software enabling products that deliver credit and debit card-based internet payments processing solutions primarily to small and mid-sized merchants operating in physical “brick and mortar” business environments, on the internet and in retail settings requiring both wired and wireless mobile payment solutions. We operate as an ISO generating individual merchant processing contracts in exchange for future residual payments. As a wholesale ISO, eVance has a direct contractual relationship with the merchants and takes greater responsibility in the approval and monitoring of merchants than do retail ISOs and we receive additional consideration for this service and risk. Securus operates as a retail ISO and receives residual income as commission for merchants it places with third party processors.

 

On April 30, 2016, Securus entered into the 2016 Purchase Agreement with Chyp. In connection with the Purchase Agreement, Chyp executed a three-year preferred marketing agreement with eVance.

 

Chyp acquired substantially all of the operations of Securus including its sales and marketing operations located in Portland Oregon and West Palm Beach Florida. Securus retained its approximately 5,000 merchants and the related merchant processing residual portfolios. Securus also retained substantially all of its liabilities, including its note payable with Blue Acre Ventures, trade payables as well as liabilities to merchants. As a result of this transaction, the Company classified the revenues and expenses of Securus that were not directly attributable to the residual portfolios as discontinued operations. 

 

During 2015, we began offering merchant cash advances and loans through our Excel Business Solutions Inc. subsidiary, doing business as eVance Capital. We act as an ISO providing alternative financing and working capital solutions to small and medium sized businesses using a variety of third party funding sources. As an ISO we do not provide capital directly or take credit risk. We earn commissions from independent third parties by placing their financial products with our merchant customers. This portion of our business does not yet represent a significant portion of our revenues, costs or assets.

 

Prior to the acquisition of Securus in April 2014, we were considered a developmental stage company. With the acquisition of Securus, we are no longer in a development stage and maintain as our primary business operations the sale of merchant processing and servicing, as well as a limited number of merchant cash advance transactions on behalf of our merchant customers. We are actively seeking additional acquisition opportunities in related industries including, but not limited to, merchant services and merchant cash advance companies. Although management believes that there are multiple acquisition opportunities, there can be no assurance that the Company will be able to complete any such transactions.

   

Results of Operations

 

Revenues

 

During the three months ended March 31, 2017, we had revenues of $4,014,048 compared to revenues of $4,019,658 for the three months ended March 31, 2016. Revenues for the three months ended March 31, 2017 were negatively impacted by chargebacks of approximately $92,000 resulting from fraudulent transactions processed by a single merchant. The Company is pursuing collection from the merchant but there can be no assurance that it will be successful in its efforts. The Company’s revenues were also reduced by approximately $65,000 due to an unknown third party imitating the Company’s merchants in what our industry terms a “mid probing attack”. The Company has implemented additional security tools to prevent further “mid probing attacks” and expects to have new software implemented in the second quarter that will improve its ability to identify and detect merchant fraud. In addition, the Company has upgraded it risk and underwriting personnel.

  

  11  

 

 

Costs and Expenses

 

Our operating costs and expenses were $3,999,463 for the three months ended March 31, 2017 as compared to $3,474,766 for the three months ended March 31, 2016. Processing and servicing costs were $1,967,141 or 49.0% of total revenue for the three months ended March 31, 2017 as compared to $1,626,254 or 40.5% of total revenue for the three months ended March 31, 2016 as a result of a larger mix of commissionable revenue in 2017. Salaries and wages decreased slightly from $976,272 in 2016 to $971,810 in 2017. Other selling general and administrative costs increased by $116,577 to $465,101 as a result of higher professional fees and software expenses. Corporate overhead accounted for $628,360 for the three months ended March 31, 2017 as compared to $732,853 for the three months ended March 31, 2016 due primarily to lower salaries and wages.

 

Interest expense

 

Interest expense was $684,987 for the three months ended March 31, 2017 as compared to $328,616 for the three months ended March 31, 2016. The increase was due to higher borrowing levels, increased interest rates and amortization of debt issuance costs.

 

Net Losses 

 

Net income (loss) from continuing operations was $(670,402) and $216,276 for the three months ended March 31, 2017 and 2016, respectively. The loss in 2017 was due to the lower operating income and higher interest expense. Net loss for 2016 was $1,971,394 including the loss on disposal of $840,641 and loss from discontinued operations of $1,347,029.

  

Liquidity and Capital Resources

 

The following summarizes our cash flows:

 

    Three months ended
March 31, 		 
    2017     2016  
Net cash used in operating activities   $ (11,756 )   $ (233,116 )
Net cash used in investing activities     (92,658 )     (5,504 )
Net cash provided by (used in) financing activities     (224,623 )     127,050  
Net decrease in cash   $ (329,037 )   $ (111,570 )

 

Net cash used in operating activities for the three months ended March 31, 2017 was $11,756 as compared with net cash used in operating activities $233,116 in 2016. Lower losses in 2017 were partially offset by smaller increases in operating liabilities and the $840,641 loss on discontinued operations in 2016.

 

Net cash used in investing activities was $92,658 for the three months ended March 31, 2017 as compared to $5,504 used in investing activities for the three months ended March 31, 2016. The higher capital expenditures in 2017 were primarily for computer software.

 

Net cash used in financing activities was $224,623 for the three months ended March 31, 2017 as compared to net cash provided by financing activities $127,050 for the three months ended March 31, 2016. The Company capitalized costs related to its Loan Agreement in the amount of $224,623 in 2017. In 2016, the Company made note payments of $102,950 which were offset by proceeds from the sale of Series B Preferred Stock of $230,000.

 

As of March 31, 2017, we had cash and cash equivalents of $1,257,170, total current assets of $3,166,496 and total current liabilities of $15,177,876.

 

On November 2, 2016, the Company and certain of the Company’s subsidiaries entered into the Loan Agreement with the Agent. The Loan Agreement has a three-year term and provides for term loan commitments of up to $25,000,000 consisting of an Initial Term Loan in the amount of $13,500,000 and a Delayed Draw Term Loan in the amount of $11,500,000 (each a “Loan” or together “Loans”). The Company used the proceeds from the Initial Term Loan to repay all of its existing secured debt. 

The Company received written notice from the Lender that it was in default of the Loan Agreement. The Company is in discussions with the Lender on a resolution to default. The Company believes that, if required by the Lender, it would be able to refinance the Loan with a different lender. The Company also has identified potential transactions and acquisitions which, if completed, would be expected to improve income from operations and the ability to service debt. In addition, the Company could also sell a portion of its residual portfolio and use the proceeds to pay down all or a portion of the Loan. Although the Company believes that it will be able to resolve the default with the Lender or if it is unable to do so, either refinance the Loan or sell a portion of its residual portfolio to repay the Loan or some combination of all of these options, there can be no assurance that it will be to do so. See Part II Item 3 of this Quarterly Report for additional information with respect to the default.

 

  12  

 

 

Off-Balance Sheet Financing Arrangements

 

We do not have any off-balance sheet financing arrangements.

 

Significant Accounting Policies

 

Basis of Presentation

 

The accompanying consolidated financial statements are prepared in accordance with U.S. GAAP, which require us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. Actual results could differ from those estimates. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our financial statements. The accompanying unaudited consolidated financial statements reflect the results of operations, financial position and cash flows of the Company, and include the accounts of the Company and subsidiaries, after elimination of all intercompany transactions in the consolidation.

Business Combinations

 

Acquisitions are accounted for using the acquisition method of accounting. The purchase price of an acquisition is allocated to the assets acquired and liabilities assumed using the estimated fair values at the acquisition date. Transaction costs are expensed as incurred.

 

Revenue Recognition

 

The Company receives a percentage of recurring monthly transaction related fees comprised of credit and debit card fees charged to merchants, net of association fees, otherwise known as Interchange, as well as certain service charges and convenience fees, for payment processing services, including authorization, capture, clearing, settlement and information reporting of electronic transactions. Fees are calculated on either a percentage of the dollar volume of the transaction or a fixed fee or a hybrid of the two and are recognized at the time of the transaction. In the case of “wholesale” residual revenue in which the Company is a primary party to the merchant contract, bears risk of chargebacks and performs underwriting on the merchants, the Company records the full discount charged to the merchant as revenue and the related interchange and other processing fees as expenses. In cases of residual revenue where the Company is not responsible for merchant underwriting and has no chargeback liability, the Company records the amount it receives from the processor net of interchange and other processing fees as revenue.

 

Cash and Cash Equivalents

 

The Company considers all cash accounts, which are not subject to withdrawal restrictions or penalties, and all highly liquid debt instruments purchased with a maturity of three months or less as cash and cash equivalents. The carrying amount of financial instruments included in cash and cash equivalents approximates fair value because of the short maturities for the instruments held. 

 

Income Taxes

 

Income taxes are provided for the tax effects of the transactions reported in the financial statements and consist of taxes currently due plus deferred taxes related primarily to tax net operating loss carryforwards. The deferred tax assets and liabilities represent the future tax return consequences of these differences, which will either be taxable or deductible when assets and liabilities are recovered or settled, as well as operating loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established against deferred tax assets when in the judgment of management, it is more likely than not that such deferred tax assets will not become available. Because the judgment about the level of future taxable income is dependent to a great extent on matters that may, at least in part, be beyond the Company’s control, it is at least reasonably possible that management’s judgment about the need for a valuation allowance for deferred taxes could change in the near term.

  13  

 

 

 

  Use of Estimates in the Preparation of Financial Statements

 

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Recent Accounting Pronouncements

 

Management does not currently believe that any recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not applicable.

 

ITEM 4. CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in the reports 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, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

 

Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2017 and found them to be effective.

 

Changes in Internal Control over Financial Reporting

 

There were no changes (including corrective actions with regard to significant deficiencies or material weaknesses) in our internal control over financial reporting that occurred during the fiscal quarter ended March 31, 2017 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

  14  

 

 

PART II - OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

None.

 

ITEM 1A. Risk Factors 

 

Factors that could cause our actual results to differ materially from those in this report are any of the risks described in our Annual Report on Form 10-K for the year ended December 31, 2016 filed with the SEC on April 13, 2017. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations.

 

Default Under Loan Agreement

 

On May 5, 2017, the Company received a written notice from GACP Finance Co. (“GACP”) that it was in default under the terms of the Loan Agreement. The Lender also terminated its commitment to lend or extend credit under the Loan Agreement. As a result of the default, the Lender may declare all amounts under the Loan Agreement due and payable. The Company’s business strategy includes acquisition of residual portfolios which the Lender has no obligation to finance. There can be no assurance that the Company can find alternative sources of capital if the Lender elects not to extend credit.

 

As of the date of this Report, except as described above, there have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2016, except we may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

       None

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

On May 5, 2017, the Company received a written notice from GACP that it was in default under the terms of the Loan Agreement. The Lender also terminated its commitment to lend or extend credit under the Loan Agreement. As a result of the default, the Lender may declare all amounts under the Loan Agreement due and payable. As of May 15, 2017, the Lender has not accelerated the remaining principal balance.

 

As of April 30, 2017, the principal due under Loan Agreement was $13,783,602. The April 30, 2017 loan balance was in excess of the borrowing base as calculated under the Loan Agreement. The Company made a principal payment on May 8, 2017 of $512,583 to reduce the loan balance to be within the borrowing base. In addition, the Lender increased the cash interest payable on the loan from 13% per annum to 16% per annum (the “Default Rate”). In addition, to cash interest, borrowings under the Loan Agreement have payable-in-kind interest of 5% which remains unchanged.

 

The Company is currently in discussions with GACP regarding a forbearance agreement. There can be no assurances that the Company will be able to enter into a forbearance agreement with GACP.

 

  15  

 

 

ITEM 4. Mine Safety Disclosures.

 

Not applicable. 

 

ITEM 5. OTHER INFORMATION

 

None

 

ITEM 6. EXHIBITS

 

The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.

 

Exhibit Number   Description
     
31.1*   Certification of the Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) .
     
31.2*   Certification of the Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a ).
     
32.1*   Certification of the Chief Executive Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350 .
     
32.2*   Certification of the Chief Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350 .
     
101.INS**   XBRL Instance Document
     
101.SCH **   XBRL Taxonomy Extension Schema Document
     
101.CAL **   XBRL Taxonomy Extension Calculation Linkbase Document
     
101.DEF **   XBRL Taxonomy Extension Definition Linkbase Document
     
101.LAB **   XBRL Taxonomy Extension Label Linkbase Document
     
101.PRE **   XBRL Taxonomy Extension Presentation Linkbase Document

 

* Filed herewith.
** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

 

  16  

 

 

SIGNATURES

 

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  EXCEL CORPORATION
   
Dated: May 15, 2017 /s/ Thomas A. Hyde, Jr.
 

Thomas A. Hyde, Jr.

Chief Executive Officer

(Principal executive officer)

 

Dated: May 15, 2017 /s/ Robert L. Winspear
 

Robert L. Winspear

Chief Financial Officer

(Principal financial and accounting officer)

 

 

17

 

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