Page 34 - 2018 Apple Annual Report

CENTRALIZED SUPPLY CHAIN SERVICES, LLC
NOTES TO FINANCIAL STATEMENTS
December 31, 2018 and 2017

NOTE 3 - COMMITMENTS AND CONTINGENCIES (Continued)

The future minimum payments under the subscription agreement are as follows:

2019 $ 982,500
2020 951,000
2021 951,000
2022 79,250

$ 2,963,750

Effective January 1, 2017, the Company entered into a renewed two-year agreement with an unrelated
third party to provide produce management services at a fixed fee rate of $560,000 per year. The agreement
includes an automatic one-year renewal if neither party terminates. During 2018 and 2017, the total fixed
service fee recognized under this agreement was $560,000.

Rental expense for office space and certain office equipment under operating leases amounted to
approximately $221,000 and $237,000 for the years ended December 31, 2018 and 2017, respectively.
The Company has commitments related primarily to minimum lease payments through 2023.

The approximate future minimum payments under the leases for the next five years are as follows:

2019 $ 212,237
2020 212,237
2021 177,204
2022 2,044
2023 1,022

$ 604,744

NOTE 4 - 401(k) PLAN

The Company maintains a defined contribution retirement plan under Section 401(k) of the Internal
Revenue Code. Employees with one year of service and who are at least 21 years of age are eligible to
participate in the plan. Once an employee becomes eligible, the plan entry date is the first day of month
after their one year anniversary date. Eligible employees may contribute up to 100% of pretax annual
compensation, not to exceed maximum dollar limits established by law. The Company matches dollar for
dollar up to the first 3% of employee contributions and 50% of the employee elective contributions between
3% and 5%. Employees are fully vested in the Company match. A five-year vesting schedule will be applied
to any additional discretionary match that is made. Company contributions to the plan were $206,712 and
$204,532 for the years ended December 31, 2018 and 2017, respectively.

NOTE 5 - LINE OF CREDIT

At December 31, 2018 and 2017, the Company had a $1,000,000 revolving line of credit with its primary
bank. The line of credit bears interest at the Prime rate and matures on July 24, 2019. The Company had
no borrowings and incurred no related interest expense for the years ended December 31, 2018 and 2017.
The line of credit contains a restrictive financial covenant related to tangible net worth. At
December 31, 2018 the Company was in compliance with the financial covenant.

9.