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® T.F.R. ENTERPRISES, INC.AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE I —CONTINGENT LIABILITY As of December 31. 2017, one governmental agency under two contracts have an accounts receivable balance of$5,326.616. Of this balance. management reasonably believes 51,959,260 will be collected within the year. It is the belief of the Company's management and legal representation that the remaining balance is reasonably likely to be collected in a time frame greater than one year,and has chosen to reserve twenty percent of the remaining balance. One subcontractor to the Company has an accounts payable balance of S2.261,125 under a contract with a "pay if paid" provision. The subcontractor has informally agreed to await collection efforts and has executed a tolling agreement with the Company's surety to preserve their bond rights and forbear from filing suit. It is the beliefof the Company's management and legal representation that the remaining balance is reasonably likely to be paid in a time frame greater than one year. NOTE.1—NEWW'ACCOUNTING PRONOUNCEMENTS The Financial Accounting Standards Board ("FASB") issued Accounting Standards Update No. 2015-17, Income Tares (Topic 7.10,: Balance Sheet Classification of Deferred Taves: This update would require an entity to present deferred income tax assets or liabilities as a net long-terns asset or net long-term liability. The previous presentation required a net presentation of current deferred tax assets or liabilities and non- current deferred tax assets or liabilities. The effective date for transition for entities other than public business entities is for annual periods beginning after December 15, 2017 with early adoption permitted. Management of the Company has chosen to early adopt this change in presentation. Due to this change.as of December 31. 2016 current assets decreased and non-current assets increased by S1,100.934. ® NOTE ti—SUBSEQUENT EVENTS Management has performed a subsequent events review through March 2 1. 2018. which is the date the financial statements were issued. Management concluded that there were no material subsequent events which required additional disclosure in these financial statements. 16 4i