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Johnson -Davis, Incorporated, <br />Notes to Financial Statements <br />>c June 30, 2017 <br />Note 5 — Note receivable <br />At June 30, 2017, the Company had a note receivable from a land developing company (the <br />"Debtor"). This note has no fixed repayment plan and the balance of the note may be paid down <br />either in cash or in-kind projects performed by the Debtor. The note bears interest at a variable <br />rate such that the monthly interest payment is $ 600. <br />Note 6 - Certain Significant Estimates <br />Revenues from fixed-price contracts are recognized on the percentage -of -completion method, <br />measured by the percentage of costs incurred to date to estimated total costs for each contract. <br />This method is used because management considers incurred costs to be the best available <br />measure of progress on these contracts. Changes in job performance, job conditions, and <br />estimated profitability may result In revisions to costs and revenues in a succeeding year. <br />Note 7 - Line of Credit <br />At June 30, 2017, the Company had a $ 2,000,000 revolving line of credit payable upon demand. <br />The line of credit is secured by certain assets of the company and is personally guaranteed by <br />certain stockholders of the Company. Advances on this obligation bear interest at the Wall Street <br />Journal Prime rate plus .25%, subject to a floor of 3.50% (4.50% at June 30, 2017). There is no <br />outstanding balance of this facility at June 30, 2017. There are certain restrictive covenants relating <br />to this line of credit. At June 30, 2017, the Company was in compliance with all such covenants. <br />Note 8 - Debt <br />Debt as of June 30, 2017 consists of: <br />Eleven installment contracts with finance companies payable in <br />aggregate monthly installments totaling approximately $ 63,300 <br />including interest up to 3.74% through March 2021. These <br />obligations are personally guaranteed by certain Company <br />stockholders and are collateralized by property and equipment <br />with a net book value of approximately $ 2,248,900. <br />Nine capital leases with financial institutions payable in aggregate <br />monthly installments totaling approximately $ 7,500 including <br />interest ranging from 7.96% to 9.649/o through June 2019. These <br />obligations are personally guaranteed by certain Company, <br />stockholders and are collateralized by automotive equipment <br />with a book value cost of approximately $ 368,700 and a net book <br />value of approximately $ 80,400. <br />$ 1,675,316 <br />79,455 <br />1,754,771 <br />687,397 <br />$ 1,067,374 <br />