Bermello Ajamil & Partners, Inc.#10

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I. '. . :. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . BERMELLO, AJAMIL & PARTNERS, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2006 AND 2005 NOTE 5. PROPERTY AND EQUIPMENT, NET Property and equipment, net, is summarized as follows as of December 31 : 2006 2005 Computer equipment $ 2,121 ,515 $ 1,527,822 Transportation equipment 87,376 48,769 Furniture and equipment 708,835 480,758 Leasehold improvements 563,399 491,683 Equipment held under capital leases 235.581 235.581 3,716,706 2,784,613 Less accumulated depreciation (including $183,102 and $125,464 on equipment held under capital leases as of December 31, 2006 and 2005, respectively) 1.979.427 ] .539.530 $ 1.737.279 S 1.245.083 Depreciation and amortization expense was $439,897 and $342,] 11 in 2006 and 2005, respectively. During 2006 and 2005, management reviewed and wrote off various assets, which were fully depreciated. The write off of these assets did not have a significant impact on the consolidated financial statements. NOTE 6. ACCOUNTS PA YABLE AND ACCRUED EXPENSES Accounts payable and accrued expenses consist of the following at December 31 : 2006 2005 Amounts payable to consultants $ 4,794, ] 79 $ 4,043,872 Net deferred tax liabilities 162,188 Trade accounts payable (NOTE 4) 996,041 1,6] 1,295 Accrued payroll and payroll taxes 1,201,916 880,563 Other accrued expenses 690.617 630.882 $ 7.844.941 $ 7.166.612 -15-