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I I I I I I 'I I I II I I I I I I I I I Consul- Tech Enterprises, Inc. and Subsidiaries Notes to Consolidated Financial Statements December 31, 2006 and 2005 B. Stockholders' Equity Preferred Stock There are 300,000 authorized shares of convertible preferred stock at $.001 par value per share in Consul-Tech Enterprises, Inc. The total shares issued and outstanding at December 31, 2006 and 2005 were 127,662;68, These shares received preferred dividends sufficient to pay for the ESOP debt (Notes G, I, and J). Common Stock There are 100,000 authorized shares of common stock at $,01 par value per share in Consul-Tech Enterprises, Inc. At December 31, 2006 and 2005 there were no shares issued or outstanding, There are 300,000 authorized shares of series B common stock at $.001 par value per share in Consul-Tech Enterprises, Inc. At December 31, 2006 and 2005 there were no shares issued or outstanding, There are 400,000 authorized shares of series A common stock at $.001 par value per share in Consul-Tech Enterprises, Inc. The total shares issued and outstanding at December 31,2006 and 2005 were 268,319.6367 and 269,612.97, respectively. C. Related Party Transactions The Company has a loan receivable from CAS Group, Inc., a party related by common ownership, of $1,441,172 and $3,157,009 as of December 31,2006 and 2005, respectively, The loan is unsecured, bears interest at a rate of 5%, and has been classified as non-current on the balance sheets, Amounts due from shareholders are detailed in Note G, Rent payments to related parties are disclosed in Note L. . D. Contracts Receivable The Company derives a substantial portion of revenues from several unrelated districts of the Florida Department of Transportation. Revenues from all districts represented 39% and 79% of gross revenues and 30% and 90% of accounts receivable in 2006 and 2005, respectively. No one district accounted for more than 12% and 28% of gross revenue in 2006 and 2005, respectively. During 2005, the unusually high concentration in revenues and contracts receivable was due to the fact that the Company served as the sole contractor for repair work needed in Central Florida from damage caused by three hurricanes, The entire balance was collected during 2006, The Company expects that the business relationship with the districts will continue, Geographic ,concentrations do not represent a significant risk to the financial conditions of the company. The Company also invoices for services to other clients based on normal terms and conditions operating in the industry. The Company estimated an allowance for doubtful accounts due to exposure it faces on the jobs ongoing and believes it is not exposed to any significant credit risk on contracts receivable above the allowance provision. 10