# Year-End Audit Call: AR Reserves, Debt Restructuring, and Action Items

**April 06, 2026 at 01:01 PM** · 52m 27s

### Bottom Line
The audit team (Shane) conducted a year-end review call with the client (JD and Lottie) to discuss financial statement details, identify required adjustments, and gather documentation for Silverco, NC&T, and Two-Family entities. The primary focus was on accounts receivable reserves, debt restructuring, and related party transactions.

### Key Takeaways
- **Accounts Receivable Reserves:** The team confirmed a $743k reserve for damage-related AR is considered adequate, but needs to investigate an unusual positive balance in the CARS Plus AR account (1254).
- **Debt Restructuring:** A significant debt restructuring with First Source resulted in a new $2M zero-interest note (Note B) for NC&T, consolidating unpaid interest and fees from multiple entities.
- **Related Party Operations:** Silverco pays for employees and other costs of affiliate Versatile Studios, which will require related party disclosure in the financial statements.
- **Action Items:** Multiple follow-ups are required, including providing loan documents, sublease agreements, and journal entries to correct misapplied customer credits.

### Action Items
- [ ] Investigate and explain the unusual positive balance in the CARS Plus AR account (1254) and provide necessary adjustments. — @Speaker B (JD) & Speaker C (Lottie) `high`
- [ ] Provide all executed documentation for the 2025 debt restructuring with First Source, including the new Note B and updated agreements for NC&T and Two-Family. — @Speaker B (JD) `high`
- [ ] Provide the total amount of payroll and other costs paid by Silverco on behalf of affiliate Versatile Studios for 2025 for related party disclosure. — @Speaker B (JD) `medium`
- [ ] Send executed sublease agreements for new subleases entered into in 2026 (subsequent events). — @Speaker B (JD) `medium`
- [ ] Provide amortization schedules/payment plans for the NC&T sales tax liability and the principal maturities for the NC&T and Two-Family debt to footnote disclosures. — @Speaker B (JD) `medium`

### Topics
Accounts Receivable & Reserves, Debt Restructuring & Notes, Payroll Accruals, Related Party Transactions (Versatile Studios), Fixed Asset Adjustments, Subsequent Events (Subleases), Sales Tax Liabilities, Audit Follow-ups

**Sentiment:** neutral

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*Generated by Call Assistant on 2026-04-09 10:08*