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KAST CONSTRUCTION COMPANY LLC AND SUBSIDIARY <br />NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS <br />As of and for the years ended December 31, 2013 and 2012 <br />NOTE 10 — RELATED PARTY TRANSACTIONS <br />For the years ended December 31, 2013 and 2012, the company has earned revenues <br />from construction projects where the owners of these projects are related parties in which a <br />member has a controlling interest. Total revenues earned from these projects for the years <br />ended December 31, 2013 and 2012, amounted to $20,889,619 and $44,394,394, <br />respectively. <br />As detailed in Note 4, contracts receivable due from these related parties to the company <br />on these construction projects for the years ended December 31, 2013 and 2012, <br />amounted to $3,675,264 and $3,594,694, respectively. <br />The company has a promissory note receivable due from a member, issued on <br />January 1, 2013, and accruing interest at 5% annually. The note is payable in five equal <br />payments, plus interest, that are due on January 1, 2014 through 2018. At <br />December 31, 2013, the balance due on the note is $84,378. <br />NOTE 11 — SIGNIFICANT ESTIMATE REVISION ON CONTRACTS <br />Due to less than anticipated costs of general conditions and a quicker than anticipated work <br />schedule, the final gross profit of one of the company's contracts have increased from its <br />original estimate. <br />Due unexpected costs incurred by underperforming subcontractors, the estimated gross <br />profit of two of the company's contracts have decreased from their original estimates and <br />now reflect a projected Toss. <br />Due to revisions in the scope of work which were not considered as being part of the <br />original contract, the final gross profit of one of the company's contracts has decreased <br />from its original estimate and now reflects a Toss. <br />NOTE 12 — PENSION PLAN <br />The company has a pension plan covering all eligible employees. Contributions to the plan <br />are at the discretion of the company's members. During the year ended <br />December 31, 2013, the company contributed to the plan $80,787. <br />NOTE 13 — SUBSEQUENT EVENTS <br />The company has evaluated subsequent events through March 5, 2014, the date these <br />financial statements were available to be issued. <br />12 <br />