Quality Communications Fire & Security

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Pare 10 QUALITY COMMUNICATIONS FIRE & SECURITY. INC.. QUALITY COMMUNICATIONS OF FLORIDA. INC. AND QUALITY HOLDING GROUP. L.L.C. • NOTES TO TI-IE COMBINED FINANCIAL STATEMENTS DECEMBER 31 . 2003 NOTE 4 - NOTES PAYABLE (Continued) The approximate principal payments on these notes over the next 5 years are as follows: December 31, 2004 S 158,774 December 31, 2005 162,383 December 31, 2006 156,965 December 31, 2007 153,786 December 31, 200S 104,609 Thereafter 1.140.508 Total S 1 .877.025 Less current portion (163.520) Long-term portion S 1.713.505 NOTE 3 - RELATED PARTY TRANSACTIONS The loan from stockholder consists of SI39,230 as of December 31, 2003. The loan has no stated interest rate and no maturity date. Management expects the loan to be paid in full within one year. NOTE 6 - LINE OF CREDIT Quality Communications Fire & Security, Inc. negotiated a $1,000,000 line of credit with Union Planters Bank in May 2003, which matures annually, and later negotiated an increase in the credit line of S320,000. The balance line of credit of S 1,326,940 at December 31, 2003 bears interest at 0.25% above the bank's prime rate and is guaranteed by a stockholder of the company, and includes approximately 540,000 due to VtWachoyia Bank. NOTE 7 - LEASE COMMITMENT Quality Communications Fire & Security, Inc. entered into a lease agreement with Quality Holding Group, L.L.C. for its office and warehouse space. The lease commenced July 2003 and will expire "upon the satisfaction of that certain mortgage between Union Planters Bank and the lessor", but not to exceed June 18, 2008. Minimum future rental payments including provision for 6% sales tax, over the next five years are as follows: 2004 S 148,824 2005 148,824 2006 148,824 2007 148,824 2008 74.41 1 z 669.708 See accountant's review report.