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Page 9 QUALITY COMMUNICATIONS FIRE & SECURITY. INC.. QUALITY COMMUNICATIONS OF FLORIDA. INC. AND QUALITY HOLDING GROUP. L.L.C. ® NOTES TO THE COMBINED FINANCIAL STATEMENTS DECEMBER 31 . 2003 NOTE 2 - PROPERTY AND EQUIPMENT Depreciation is provided using the straight-line method at rates based on estimated useful lives of 3 to 39 years. Building S 1,566,770 Transportation equipment (See Note 4) 1.006.580 Machinery and equipment 179,761 Furniture and fixtures 41,737 Leasehold improvements 76.771 S 2.871.619 Less: Accumulated depreciation (480.217) Propeny and Equipment Net S 2.391.402 NOTE 3 - ORGANIZATION COSTS AND LOAN COSTS Through December 31 , 2003, organization and loan costs are stated at historical cost less accumulated amortization. At December 31, 2003; accumulated amortization was 5671 and 56;240, respectively. Organization costs and loan costs were amortized on a straight-line basis over 5 years. NOTE 4 - NOTES PAYABLE Quality Communications Fire & Security, Inc. has twenty-three notes payable for its transponation equipment. Nineteen of these notes bear interest ranging from 0.9% to 8.69%; the other four notes are non-interest bearing. All notes are collateralized by the transportation equipment. Quality Holding Group. L.L.C. has negotiated a new fixed rate mortgage payable commencing August 2003 with Union Planters Bank which is collateralized by the building located at 3700 S.W. 30th .Avenue, Hollywood. Florida. The rate is fixed at 6.25% for five years with the mortgage being amortized over twenty years and is due and payable in full in June 2008. A re-pricing is available at the banks sole discretion to extend an additional five years at a fixed rate of interest equal to the then-current five year United States Treasury bill rate plus 3.35% per annum. See accountant's review report.