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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 13 - Interest expense and Supplemental data to the Combined Statements of Cash Flows: The Company financed $790,098 and $541,172 of construction and transp0l1ation equipment during the years ended December 31, 2008 and 2007, respectively. The Affiliate refinanced the mortgage on the properties for $1,900,000 during the year ended December 31, 2007. Interest paid during these years is as follows: Interest expense: Credit line facility Long-term debt financing and capital lease obligations Years Ended December 31, 2008 2007 $ 34,029 $ 30,004 282,137 269,878 $ 316,166 $ 299,882 NOTE 14 - Leasing arrangements: Leases are accounted for under the provisions of Statement of Financial Accounting Standards No. 13, "Accounting for Leases", as amended, which requires that leases be evaluated and classified as operating or capital leases for financial reporting purposes. The Company is leasing a construction equipment under long-term non-cancelable operating lease. During the year ended December 31, 2008, the monthly rental under this long-term lease obligation is approximately $881, expiring on May 2009. The following is a schedule of future minimum lease payments required under this lease: Year Ending December 31, 2009 Amount $ 4,405 In addition, The Company is renting certain heavy equipment under short-term cancelable rental arrangements. Monthly rentals range between $40,000 and $50,000. NOTE 15 - Stand-by letter of credit: The Company issued a $136,109 irrevocable stand-by letter of credit for the benefit of a certain customer, in connection with a lawsuit filed by The Company, as more fully described in Note - 16. In order to procure such letter of credit, The Company pledged a $136, I 09 certificate of deposit to Colonial Bank. The issued date is September 19,2008 and the expiring date is August 29,2009. NOTE 16 - Contingent liabilities: The Company is engaged in certain legal actions arising in the ordinary course of its business, and the outcome of these actions cannot be ascertained at this time. Management believes the claims are without merit and is vigorously defending the cases. In the opinion of management, these claims will not have a material adverse effect on the financial position of The Company. 15 Benitez & Company. CPA's