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<br />NOTE 4.
<br />
<br />BERM.ELLO, AJAMIL & PARTNERS, me.
<br />
<br />NOTES TO FINANCIAL ST ATE!Y!ENiS
<br />DECE!vfBER 31, 2005 AND 2004
<br />
<br />RELA TED PARTY TRANSA CTIONS
<br />
<br />In July 1999, the Company entered into a loan agreement with its t\l.'O principal
<br />stockholders to include all balances previously owed by these stockholders. The loan
<br />agreement bears interest at 7% and is payabJ(~ by the stocy,holders through monthly payroll
<br />deductions of $5,000. The balance owed to the CompfuiY at December 31, 2005 and 2004
<br />was $366,489 and $400,444, respectively, The current portibn of this loan at December 31,
<br />2005 and 2004 was $60,000 and has been reflected as du~ from stockholders in current
<br />a~sets in the accompanying balance sheets,
<br />
<br />During 2005, celtain contract receivables from entities controlled by these stockholders
<br />were included in a promissory note receivable (NOTE 2), The outstanding balance on these
<br />contracts amounted to $1,294,647 and 2,053)04 as of December 31, 2005 and 2004,
<br />respectively, and has been included in the caption due from related parties in the balance
<br />sheets of the accompanying balance sheets. Unpaid principal balance does not have a
<br />specific maturity date, but is expected to be collected in subsequent years,
<br />
<br />Due from related parties also includes salary advances which are deducted from the
<br />corresponding profit distributions received by the stockholders, Such advances do not bear
<br />interest and have no specific maturity dates. Salary advances an10unted to approximately
<br />$243,000 and $203,000 at December 31, 2005 and 2004, respectively,
<br />
<br />In addition, due from related parties include expenses paid on behalf of a company owned
<br />by the two principal stockholders. Effective January 1, 2004, the balance outstanding from
<br />t11c affiliated entity was assumed and included in a promissory note due from the two
<br />principal stockholders. At December 31, 2005 and 2004, the balance due from these
<br />stockholders was $735,968,
<br />
<br />Accrued interest receivable on the outstanding receivable balances as of December 3],
<br />2005 and 2004 was $173,055 and $86,896, respectively, and have been induded in the
<br />caption due from related parties in the balance sheets of the accompanying financial
<br />statements,
<br />
<br />On January 2, 1992, the COinpany entered into a promissory note payable with a rclated
<br />party. During 2003, the agreement was amended changing the maturity date from
<br />December 2011 to December 2006, Consequently, monthly payments increased
<br />approximately $1,600. As of December 31,2005 and 2004, the balance owed on tbis note
<br />amounted to $2,587 and $32,642, respectively, and is reflected as long-teml debt on the
<br />balance sheets of the accompanying financial statements (NOTE 8),
<br />
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