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BUDGET CONSTRUCTION CO., INC. AND BUDGET HOLDINGS, LLC NOTES TO THE COMBINED FINANCIAL STATEMENTS Years Ended December 31, 2007 and 2006 NOTE 6 - Credit line facility (Continued): In addition, at December 31,2007, The Company is in compliance with the covenant provisions set forth in the note payable agreement. NOTE 7 - Accounts payable and accrued expenses: Accounts payable and accrued expenses include amounts due to subcontractors and suppliers at December 31, 2007 and 2006. At December 31, 2007, accounts payable include amounts due to subcontractors, totaling $10,720, which have been retained pending completion and customer acceptance of jobs. NOTE 8 - Capital lease obligations: Leases meeting certain criteria are considered capital leases and the related asset and lease obligations are recorded at their present value in the financial statements. Interest rates in capital leases range from approximately 6.50%-11.66% and are imputed based on the leasers' implicit rate of return. These capital leases are currently payable at $13,609 per month maturing on November, 2011. Minimum future obligations on all capital leases in effect as of December 31, 2007 are as follows: Years ending December 31,: Amount 2008 2009 2010 Total minimum lease payments Less: amount representing interest Present value of net minimum lease payments Less: current portion of capital lease obligations. $ 308,379 143,770 136,249 588,398 (21,782) 566,616 (287,581 ) Capital Lease obligations, net of current portion $ 279,035 At the termination of these leases, The Company has the option to acquire these assets for $416,329. The net book value of assets acquired under capital leases at December 31, 2007 is approximately $616,302. Amortization of such assets is included in depreciation expense. 11 Benitez & Company, CPA's