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BUDGET CONSTRUCTION CO., INC. AND BUDGET HOLDINGS, LLC NOTES TO THE COMBINED FINANCIAL STATEMENTS Years' Ended December 31, 2008 and 2007 NOTE 6 - Credit line facility: The credit line facility consists of the amount of money borrowed by The Company under a secured line of credit agreement of $700,000. Set line is collateralized by The Companies' assets, the stockholders' . individual guarantees and a second m0l1gage on The Company's operating facility, currently owned by The Affiliate. It is subject to revolving terms and annual reviews, and it is bearing a variable interest rate of no less than 4.75%. The line is due on demand on June 14,2009 unless renewed or extended by the financial institution. In addition, at December 31,2008, The Company is in compliance with the covenant provisions set forth in the credit line agreement. NOTE 7 - Accounts payable and accrued expenses: Accounts payable and accrued expenses include amounts due to subcontractors and suppliers at December 31, 2008 and 2007. At December 31,2008, accounts payable include amounts due to subcontractors, totaling $32,551, which have been retained pending completion and customer acceptance of jobs. During the year ended December 31, 2008, two vendors accounted for accounts payable comprising of23% of The Company's total payables. Total accounts payable due to these vendors amounted to approximately $638,447. NOTE 8-.Capitallease 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 0% - 2.21 % and are imputed based on the leasors' implicit rate of return. These capital leases are currently payable at $10,350 per month maturing on November, 20 II. Minimum future obligations on all capital leases in effect as of December 31,2008 are as follows: Years ending December 31,: 2009 2010 2011 Total minimum lease payments Less: amount representing interest Present value of net minimum lease payments Less: current portion of capital lease obligations. Capital Lease obligations, net of current portion Amount $ 138,675 I 97, 139 115,375 451,189 (676) 450,513 (138,298) $ 312,215 At the termination of these leases, The Company has the option to acquire these assets for $327,494. The net book value of assets acquired under capital leases at December 31, 2008 is approximately $441,817. Amortization of such assets is included in depreciation expense. 11 Benitez & Company, CPA's