6) The Company has experienced a lot of non-recurring activities in the past years to restate previously filed financial statements. Since August 2016, the Company has experienceda substantial and disruptive diversion of management resources to address various accounting, financial reporting and financial issues. During that time, the Company determined that it was necessary to restate financial results for 2014 and 2015 as well as the first quarter of 2016 and, since then, has also focused on becoming timely on all of its SEC financial reporting requirements, which is achieved with the filing of this Annual Report on Form 10-K for the year ended December 31, 2019. Additionally, the SEC and the USAO (DOJ) are conducting investigations into the Company's financial reporting, revenue recognition practices and related conduct. The Company's financial statements of years 2015-2017 are presented in Appendices G, H and I. Comment on the impact of these past events on the Company's "normalization" of 2018 and 2019 numbers CONSOUDATED INCOME STATEMENTS (la thousands, Geoporthore amounts) 2017 2016 2014 {Restated) 347,580 416,616 365,623 50,993 2015 (Restated) 362,387 311,148 51,239 339,465 310,276 29,189 64,040 19,944 18,961 23,574 19,305 44,256 28,522 28,837 23,142 11.686 4,838 1,614 5,716 (283) 54,530 310 1.013 3.840) 39.930 69,039 (18.046) (23) 68,656 117,417) Net sales Cost of sales Gross profit Operating expenses: Research, development and engineering expenses Selling, general and administrative expenses including restatement-related expenses, $24,200 million in 2018. $13,300 in 2017) Asset impairment charges Amortization of intangible assets Contingent consideration Total operating expenses Operating floss) income Other expense (income): interest expense Loss gain) from change in fair value of warrants Loss on debt extinguishment and modifications Other expense (income), nel Total other expense (income) (Loss) income before income taxes Income tax expense benefit Net (loss) income Deemed dividend on Series B preferred Stock Net loss) incomevaliable to common stockholders 10,841 4320 19,300 16,170) 352 1444 361 123 20.518 1283) 5. 111) 112,593) 1547,612) 1974721 237 860) 152,893) (Loss) earning per common share Basic Diluted 156201 150.27) Appendio CONSOLIDATED BALANCE SHEETS in thousands As of December 31, 2017 2016 2015 2014 (Restated) (Restated) 6,561 76,266 $- 2,292 68,660 60,336 1,018 7,127 86,724 100,548 14,359 13,644 8,445 70,532 5,265 162,095 2,703 106,250 4.840 170,761 183,947 18,960 20,127 21,491 26,029 29,835 29,835 249,040 22,809 31,745 29,835 17,657 2.751 353,837 202.469 17,954 21,192 23,414 13 1.909 266.945 5,972 4,681 247,019 264,619 51.225 29,823 67.73 ASSETS Current assets Cash and cash equivalents Accounts receivable, net of allowances of $1,820, $1,045, 5816 Income tax receivable Inventories, net Prepaid expenses and other current assets Deferred income taxes Total current assets Property, plant and equipment, net Intangible assets, net Goodwill Deferred income taxes Other noncurrent assets TOTAL ASSETS LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable Current maturities of long-term debt Contingent consideration Revolving line of credit, currea Other accrued abilities Total current abilities Revolving line of credit Deferred to come taxes Warrants Long term debt, less current matunties et Other nancurrent abilities TOTAL LIABILITIES STOCKHOLDERS' EQUITY Preferred stock 50.00F par value: Shares theted 5.000 N Common stock 50001 pat value 50 sharesized Additional paid in capitan Accumulated deficit retained earnings Treasury stack at cost: 64 bits 6677 stresat TOTAL STOCKHOLDERS' EQUITY TOTAL LABILITIES AND STOCKHOLDERS' EQUITY 53,588 750 37,055 28 362 126.654 12376 32 507 99.545 105,944 97,299 87.562 1 482 11.036 703 2400 54,39 119,392 8.751 214 3472225959 268,364 180.162 12 123818 31246 22.932 2006 24019268 69 34873 35382 oped 2013 5.287 4,030 19.100 1561 2:520 161202 87 29.05 11686 Egu 123 288 1712 125 581 CONSOLIDATED STATES O CON RWS On thousand for the Decor 2017 - powded by opening Net oss) Income 147A72 Adjustments to reconcile et poss) income to net cashed in provided by operating activities Amortization of intangible sets 5.716 Depreciation Change in valuation of warrant 4000 Stock compensation experte Amortization of financing fees 3.048 Deferred income taxes 239 18.121 Lesson textinguishment of debe 11.921 357 Asset impairment charges 1 1.614 Tax benefit from exercise of stock-based compensation Change in valuation of contingent consideration Provision for doubtful accounts 80 Provision for inventory obsolescence 5.341 toss gainon disposal of fixed assets Other source 13 Changes in operating assets and liabilities Trade accounts receivable, net 10.116 Inventory.net 13.366 Presidend others Trade accounts payable Income taves retunde 6.508 Acerved LEE 15.209 Other notes 1601 Netcash used in provided by operating activities 22 Cash flows from investing activities Capital expenditures Proces from disposat assets 22466 Acquisitions of businesses, et sacred Other use Nel cas used in investing activities Cash flows from financing acts Proceeds contemdirbt Repayments of longer det anongres Net proces and was Proceeds for Remy of sau com Sant Ta benefit from herine het cash provided by used in financing These ch 2293 the year 6) The Company has experienced a lot of non-recurring activities in the past years to restate previously filed financial statements. Since August 2016, the Company has experienceda substantial and disruptive diversion of management resources to address various accounting, financial reporting and financial issues. During that time, the Company determined that it was necessary to restate financial results for 2014 and 2015 as well as the first quarter of 2016 and, since then, has also focused on becoming timely on all of its SEC financial reporting requirements, which is achieved with the filing of this Annual Report on Form 10-K for the year ended December 31, 2019. Additionally, the SEC and the USAO (DOJ) are conducting investigations into the Company's financial reporting, revenue recognition practices and related conduct. The Company's financial statements of years 2015-2017 are presented in Appendices G, H and I. Comment on the impact of these past events on the Company's "normalization" of 2018 and 2019 numbers CONSOUDATED INCOME STATEMENTS (la thousands, Geoporthore amounts) 2017 2016 2014 {Restated) 347,580 416,616 365,623 50,993 2015 (Restated) 362,387 311,148 51,239 339,465 310,276 29,189 64,040 19,944 18,961 23,574 19,305 44,256 28,522 28,837 23,142 11.686 4,838 1,614 5,716 (283) 54,530 310 1.013 3.840) 39.930 69,039 (18.046) (23) 68,656 117,417) Net sales Cost of sales Gross profit Operating expenses: Research, development and engineering expenses Selling, general and administrative expenses including restatement-related expenses, $24,200 million in 2018. $13,300 in 2017) Asset impairment charges Amortization of intangible assets Contingent consideration Total operating expenses Operating floss) income Other expense (income): interest expense Loss gain) from change in fair value of warrants Loss on debt extinguishment and modifications Other expense (income), nel Total other expense (income) (Loss) income before income taxes Income tax expense benefit Net (loss) income Deemed dividend on Series B preferred Stock Net loss) incomevaliable to common stockholders 10,841 4320 19,300 16,170) 352 1444 361 123 20.518 1283) 5. 111) 112,593) 1547,612) 1974721 237 860) 152,893) (Loss) earning per common share Basic Diluted 156201 150.27) Appendio CONSOLIDATED BALANCE SHEETS in thousands As of December 31, 2017 2016 2015 2014 (Restated) (Restated) 6,561 76,266 $- 2,292 68,660 60,336 1,018 7,127 86,724 100,548 14,359 13,644 8,445 70,532 5,265 162,095 2,703 106,250 4.840 170,761 183,947 18,960 20,127 21,491 26,029 29,835 29,835 249,040 22,809 31,745 29,835 17,657 2.751 353,837 202.469 17,954 21,192 23,414 13 1.909 266.945 5,972 4,681 247,019 264,619 51.225 29,823 67.73 ASSETS Current assets Cash and cash equivalents Accounts receivable, net of allowances of $1,820, $1,045, 5816 Income tax receivable Inventories, net Prepaid expenses and other current assets Deferred income taxes Total current assets Property, plant and equipment, net Intangible assets, net Goodwill Deferred income taxes Other noncurrent assets TOTAL ASSETS LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable Current maturities of long-term debt Contingent consideration Revolving line of credit, currea Other accrued abilities Total current abilities Revolving line of credit Deferred to come taxes Warrants Long term debt, less current matunties et Other nancurrent abilities TOTAL LIABILITIES STOCKHOLDERS' EQUITY Preferred stock 50.00F par value: Shares theted 5.000 N Common stock 50001 pat value 50 sharesized Additional paid in capitan Accumulated deficit retained earnings Treasury stack at cost: 64 bits 6677 stresat TOTAL STOCKHOLDERS' EQUITY TOTAL LABILITIES AND STOCKHOLDERS' EQUITY 53,588 750 37,055 28 362 126.654 12376 32 507 99.545 105,944 97,299 87.562 1 482 11.036 703 2400 54,39 119,392 8.751 214 3472225959 268,364 180.162 12 123818 31246 22.932 2006 24019268 69 34873 35382 oped 2013 5.287 4,030 19.100 1561 2:520 161202 87 29.05 11686 Egu 123 288 1712 125 581 CONSOLIDATED STATES O CON RWS On thousand for the Decor 2017 - powded by opening Net oss) Income 147A72 Adjustments to reconcile et poss) income to net cashed in provided by operating activities Amortization of intangible sets 5.716 Depreciation Change in valuation of warrant 4000 Stock compensation experte Amortization of financing fees 3.048 Deferred income taxes 239 18.121 Lesson textinguishment of debe 11.921 357 Asset impairment charges 1 1.614 Tax benefit from exercise of stock-based compensation Change in valuation of contingent consideration Provision for doubtful accounts 80 Provision for inventory obsolescence 5.341 toss gainon disposal of fixed assets Other source 13 Changes in operating assets and liabilities Trade accounts receivable, net 10.116 Inventory.net 13.366 Presidend others Trade accounts payable Income taves retunde 6.508 Acerved LEE 15.209 Other notes 1601 Netcash used in provided by operating activities 22 Cash flows from investing activities Capital expenditures Proces from disposat assets 22466 Acquisitions of businesses, et sacred Other use Nel cas used in investing activities Cash flows from financing acts Proceeds contemdirbt Repayments of longer det anongres Net proces and was Proceeds for Remy of sau com Sant Ta benefit from herine het cash provided by used in financing These ch 2293 the year