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ROHL NETWORKS LIMITED PARTNERSHIP
<br /> NOTES TO FINANCIAL STATEMENTS
<br /> (SEE INDEPENDENT ACCOUNTANT'S REVIEW REPORT)
<br /> OCTOBER 31,2013 AND 2012
<br /> 7. NOTES PAYABLE(CONTINUED)
<br /> The following is a schedule of approximate maturities for notes payable:
<br /> For the years ending October 31:
<br /> 2014 $ 72,500
<br /> 2015 78,400
<br /> 2016 68,400
<br /> 2017 40,500
<br /> 2018 5,700
<br /> $ 265,500
<br /> Interest expense on notes payable for the years ended October 31, 2013 and 2012 was $20,538 and $14,270,
<br /> respectively.
<br /> 8. COMMITMENTS AND CONTINGENCIES
<br /> Operating Leases
<br /> On March 4,2011,the Partnership entered into a lease agreement for its office in Jupiter, Florida.The lease term
<br /> expires in March 2015.Additionally,the Partnership entered into a lease agreement on April 28,2012 for its office in
<br /> Minnesota.The lease term expires in April 2015.
<br /> The approximate minimum future rental commitments for leases in effect at October 31,2013 are as follows:
<br /> Years ending October 31:
<br /> 2014 $ 80,000 •
<br /> 2015 27,000
<br /> Minimum lease payments net of sales taxes $ 107,000
<br /> Rent expense for the years ended October 31,2013 and 2012 was approximately$93,000 and$75,000,respectively,
<br /> and is included in'Operating expenses"in the accompanying statements of operations and partners'capital.
<br /> Profit Sharing Plan
<br /> Effective November 1, 2010, the Partnership established a 401(k)profit sharing plan.The Partnership may make
<br /> matching and/or discretionary contributions, at the option of the partners.There were no contributions to the plan
<br /> during the years ended October 31,2013 and 2012.
<br /> Litigation
<br /> In 2011,the Northeast Service Cooperative('NSC')entered into a contract with the Partnership on a project to install
<br /> broadband lines over a distance of 468 miles in the State of Minnesota.The project was completed in January 2013.
<br /> In June 2013,the Partnership filed a lawsuit against NSC to recover amounts due under the contract and to seek
<br /> other damages.A settlement agreement for the lawsuit was signed in October 2014 for$2,250,000.which includes
<br /> the outstanding balance of approximately$1,465,000 reflected within"Contracts receivable including retainage due
<br /> to the Partnership at October 31,2013,$243,000 in additional damages not reflected on these financial statements,
<br /> and 5542,000 in damages not reflected on these financial statements related to the subcontractor underpaying its
<br /> workers.The$542,000 in damages will be paid by NSC directly to the Department of Labor and not to the Partnership
<br /> (NOTE 1).Total legal fees incurred through October 31,2013 were approximately$408,000.Total legal fees incurred
<br /> subsequent to year end through the date of these financial statements were approximately$234,000.Legal fees are
<br /> recognized in the financial statements as they are incurred.
<br /> 9. SURETY BONDS
<br /> The Partnership,as a condition for entering into construction contracts,has outstanding surety bonds approximating
<br /> $4,000,000.The bonds are partially collateralized by contract receivables.
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