Opinion ID: 4105752
Heading Depth: 2
Heading Rank: 6

Heading: Growth of Source 2

Text: At the same time that he began working as the Liquidator in the dissolution of Source 1, Hodge started operating Source 2, which is essentially a carbon copy of Source 1. Source 2 does the same work as Source 1 (i.e., designing, developing, producing, and selling apparel and merchandise for promotional and marketing purposes). The office of Source 2 is the same office that was used by Source 1 and owned by Hodge. Source 2 had the same customers as Source 1 5 and employed many of the same people, including the employees tasked with completing the open orders for Source 1. On June 14, 2012, Bodybuilding.com placed an order with Source 2 identical to its earlier order with Source 1. This order was filled by Source 2. As the Liquidator for the dissolution of Source 1, Hodge was responsible for completing the company’s existing purchase orders, which were completed by September 2012. During the first three months of 2012, Source 1 had net sales of $782,854 with an operating profit of $83,135 or 10.62%. During this time, Source 1 reported General and Administrative expenses totaling $189,799.55 or 24.24%. Source 1 had net sales of $825,716 during the rest of 2012 and an operating loss of approximately $83,755 or 10.13%. This Report shows that during its dissolution, Source 1 exhausted its profits from the first three months of 2012 and all, or nearly all, of the proceeds from the asset auction. Source 1 reported paying Hodge a total of $26,124 during the first three months of 2012 and a total of $97,386 during the rest of the year. Hodge was also paid $9,999.97 by Source 2 in 2012. Source 1’s counsel filed a Report of Wind Up with the district court on January 17, 2013. The Report included a financial statement for 2012, which showed total sales for that year of $1,608,570 and an operating loss of approximately $620. In addition, the Report stated that there was a cash balance of $20,547.86, which was still subject to litigation expenses. Hodge, as the Liquidator, did not distribute any payment to any of the members of Source 1.