Page 252 - Aida Hovsepian Onboarding

CENTRALIZED SUPPLY CHAIN SERVICES, LLC
NOTES TO FINANCIAL STATEMENTS
December 31, 2017 and 2016

NOTE 3 - COMMITMENTS AND CONTINGENCIES (Continued)

Effective January 1, 2015, the Company entered into a renewed two-year agreement with an unrelated
third party to provide produce management services. The agreement includes an automatic one-year
renewal if neither party terminates. Effective January 1, 2017, the Company renewed this agreement for an
additional two years at a fixed fee rate of $560,000 per year. The Company is required to compensate the
provider through annual fixed fees. During 2017 and 2016, the total fixed service fee recognized under this
agreement was $560,000 and $540,000, respectively.

Rental expense for office space under operating leases amounted to approximately $237,000 and $233,000
for the years ended December 31, 2017 and 2016, respectively. The Company has commitments related
primarily to minimum lease payments.

The approximate future minimum payments under the leases are as follows:

2018 $ 210,193
2019 210,193
2020 210,193
2021 175,159

$ 805,738

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 $204,532 and
$196,971 for the years ended December 31, 2017 and 2016, respectively.

NOTE 5 – LINE OF CREDIT

At December 31, 2017 and 2016, 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, 2018. The Company had
no borrowings and incurred no related interest expense for the years ended December 31, 2017 and 2016.
The line of credit contains restrictive financial covenants related to tangible net worth. At December 31,
2017 the Company was in compliance with all financial loan covenants.

The line of credit is secured by substantially all assets of the Company and guaranteed by its Members.
The Company is required to maintain a minimum compensating balance of $400,000 with its primary bank
in support of the line of credit.

9.