Page 313 - Onboarding May 2017

CENTRALIZED SUPPLY CHAIN SERVICES, LLC
NOTES TO FINANCIAL STATEMENTS
December 31, 2015 and 2014

NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

Income Taxes: The Company is a limited liability company formed under state statutes and taxed for
federal and state purposes as a partnership. Therefore, each member reports its proportionate share of
the Company’s taxable income or loss on its income tax return.

Under guidance issued by the Financial Accounting Standard Board with respect to accounting for
uncertainty in income taxes, a tax position is recognized as a benefit only if it is “more likely than not" that
the tax position would be sustained in a tax examination, with a tax examination being presumed to occur.
The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being
realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is
recorded.

The Company is subject to U.S. federal income tax as well as income tax of the states of California and
Missouri. The Company is subject to examination by taxing authorities for the tax years ending on or
after 2011 for federal and the states of California, Kansas and Missouri. The Company does not expect
the total amount of unrecognized tax benefits to significantly change in the next 12 months.

The Company recognizes interest and/or penalties related to income tax matters in income tax expense.
The Company did not have any amounts accrued for interest and/or penalties at December 31, 2015 and
2014, respectively.

Members’ Equity: After considering the Company’s need for capital and reserves, the Board of Directors
shall elect to make distributions to the Company’s members based upon each member’s pro rata share of
net earnings, which are allocated to the Concept Co-op’s based upon each Concept Co-op’s
proportionate share of activity conducted by the Company. As of December 31, 2015, the distributions
were undeclared and, accordingly, were not recorded in the balance sheets or statements of members’
equity. The Company anticipates distributing 100% of its 2015 net earnings to its members as
distributions during 2016.

The Company receives monthly freight rebates, which are distributed to the Concept Co-ops on a
quarterly basis. These distributions are allocated to the Concept Co-ops based on their pro rata share of
the rebates earned by CSCS.

Subsequent Events: Management has performed an analysis of the activities and transactions
subsequent to December 31, 2015 to determine the need for any adjustments to and disclosures within
the audited financial statements for the period ended December 31, 2015. Management has performed
their analysis through March 25, 2016, the date the financial statements were available to be issued.

7.