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TGSV ENTERPRISES, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2017 9 RELATED PARTY TRANSACTIONS (continued) The storage warehouse lease expired on December 31, 2017 and was renewed for an additional twelve months beginning January 1, 2018 through December 31, 2018. The warehouse lease has an option to renew at a rate increase not exceeding 10% per annum for two additional years. The minimum annual rental for the lease is $15,600 and is payable in monthly installments of $1,300, including sales tax. Rent to this affiliate for the year ended December 31, 2017 aggregated $15,600. Included in contract costs and revenues for the year ended December 31, 2017, is approximately $13,500 for work performed for a related party and is included in the completed contracts schedule under Miscellaneous and previously closed jobs. 10 GUARANTEES The Company is a guarantor on behalf of TGSV, LLC, an affiliate and landlord of the real estate leased by the Company as more fully described in Note 9. The guarantee is for the mortgage on the real estate owned by the affiliate with an outstanding balance at December 31, 2017 of $741,803. In addition, the affiliate has obtained a line of credit in the amount of $800,000 encumbered by the real estate and guaranteed by the Company. There have been no advances on the line at December 31, 2017. 11 CONCENTRATIONS OF CREDIT RISK Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of contracts receivable. Revenues earned during the year ended December 31, 2017, resulting from contract work performed for one customer, accounted for approximately 26% of total revenues. Contracts receivable from this customer amounted to approximately $1,510,000 as of December 31, 2017, of which approximately $637,500 has been collected subsequent to the balance sheet date. See independent accountants’ review report. -14-