Page 177 - Tom Finocchiaro - RPI Apple Onboarding

APPLE SUPPLY CHAIN CO-OP, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 2017 and 2016

NOTE 4 – MEMBER NOTES RECEIVABLE

During 2015, the Co-op’s Board of Directors authorized a Co-op Member Equipment Financing Program
relative to a system wide rollout of wood assist broiler equipment. The financing program provides that a
member of the Co-op may elect to finance the purchase of the specified equipment under the terms of an
Equipment Obligation Agreement. The Co-op funds each participating member’s equipment purchases.
The Co-op is repaid for the cost of the equipment plus interest at a rate of LIBOR plus 2.85%. The cost of
the financed equipment plus interest will be repaid to the Co-op via per case surcharge on all cases of
products purchased through a distributor. If a distributor cannot accommodate the surcharge, the member
must repay the Co-op via monthly Automated Clearing House payments. Under terms of the Equipment
Obligation Agreement, the balances were due in full on December 31, 2017.

Member notes receivable consists of the following:

2017 2016

Member notes receivable $ 2,425 $ 1,680,571

Less current portion of member notes receivable (2,425) (1,654,956)
Less loan loss reserve - (25,615)

Long-term member notes receivable $ - $ -

Interest income was $31,490 and $96,585 for the years ended December 31, 2017 and 2016, respectively.

NOTE 5 – LONG-TERM DEBT

On December 11, 2015 the Co-op entered into a $4,400,000 multiple advance term loan credit agreement
with its primary bank which expires on December 11, 2018. Advances under the credit agreement were
used to fund the Co-op Member Equipment Financing Program mentioned in Note 4. Outstanding
borrowings under the credit agreement bear interest at LIBOR plus 2.85%, paid monthly. The principal of
each advance under the credit agreement shall be repaid monthly over a twenty-four month period. The
outstanding borrowings were paid in full during 2017.

Long-term debt consists of the following:

2017 2016

Outstanding borrowings $ - $ 1,937,565

Less current maturities of long-term debt - (1,662,565)

Long-term debt $ - $ 275,000

Interest expense was $41,044 and $94,032 for the years ended December 31, 2017 and 2016, respectively.

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