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fl II II I I I I I I I I 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 L. Commitments and Contingencies (continued) Operating Leases (continued) Total rent payments for the years ended December 31, 2006 and 2005 amounted to $538,837 and $552,064, respectively, of which $71,465 in 2006 and $71,465 in 2005 were paid to a former shareholder of Consul-Tech Enterprises, Inc. and $62,631 in 2006 and $147,990 in 2005 were paid to companies that are partially owned by the controlling shareholders of the Company. Capital Leases The Company leases vehicles under several leases which expire in various years through 2010, The assets and liabilities are recorded at the lower of present value of minimum lease payments or fair value of the assets. The assets are depreciated over their estimated useful lives. Depreciation of the assets under capital leases amounted to $286,067 and $181,615 for the years ended December 31, 2006 and 2005, respectively, and is included in depreciation and amortization expense. Minimum future lease payments as of December 31, 2006 for all capital leases are as follows: 2007 $ 367,313 2008 350,096 2009 282,980 2010 161,056 Total minimum lease payments 1,161,445 Less amount representing interest (323,984) Present value of minimum lease payments $ 837,461 . . . , Interest rates on capitalized leases vary from 6.30% to 13.33% and are imputed based on the lower of the Company's borrowing rate at the inception of each lease or the lessor's implicit rate of return. Contingencies The Company, in the normal course of operations, is involved in alleged claims where both the Company and the clients are negotiating the settlement or resolution of disputes. In these cases, management does not believe the disposition of these matters will materially affect the fmancial position of the Company. The Company's wholly owned subsidiaries, Consul-Tech Engineering, Inc., Consul-Tech Surveying and Mapping, Inc. and Consul-Tech Development Services, Inc. are parties to lawsuits regarding zoning issues, and design problems, These lawsuits seek an undetermined amount of damages. Management is aggressively defending these claims and, although the outcome of each lawsuit is uncertain, the fmancial statements reflect accruals of insurance deductible amounts totaling $200,000 for the possible settlement of the lawsuits, 16