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Selge Construction Company, Inc.
<br />Notes to Financial Statements
<br />Note 9. Leases and Related Party Transactions (Continued)
<br />The Company has advanced funds to Selge Properties, LLC, a company related through common
<br />ownership, to purchase land near the Company's corporate office. The balance due from Selge
<br />Properties, LLC is $169,945 at February 28, 2023 and 2022, and has no stated date of repayment. The
<br />Company had also advanced $7,242 at February 28, 2022 to a stockholder that was repaid during the
<br />year ended February 28, 2023. As a result of these terms and the nature of the relationship, these
<br />amounts due are reflected as a reduction of stockholders' equity in the accompanying balance sheets at
<br />February 28, 2023 and 2022.
<br />In addition, the Company has an unsecured note payable due to a stockholder at February 28, 2023 and
<br />2022, in the amount of approximately $594,000 and $877,000, respectively, bearing interest at 5%. The
<br />payable is reflected as a long-term liability as the stockholder has waived the right to demand payment
<br />prior to March 1, 2024.
<br />Note 10. Stockholders' Equity
<br />The Company has 92,366 shares of common stock outstanding at February 28, 2023 and 2022. During
<br />the year ended February 28, 2023, the Company retired 7,634 shares of common stock valued at
<br />$420,028 that was previously classified as treasury stock on the balance sheet as of February 28, 2022.
<br />Note 11. Employee Benefit Plans
<br />The Company has adopted a profit sharing plan, more commonly known as a 401(k) plan, for the benefit
<br />of all eligible nonunion employees. The plan allows for discretionary contributions by the Company to be
<br />determined on an annual basis. For the years ended February 28, 2023 and 2022, total Company
<br />contributions associated with the plan were approximately $165,000 and $135,000, respectively.
<br />The Company has also adopted a 401(k) plan, for the benefit of all eligible union and nonunion
<br />employees. The plan does not require Company contributions but allows for salary deferrals on the part of
<br />the eligible participants. The Company did not make any contributions to the plan for the years ended
<br />February 28, 2023 and 2022.
<br />Note 12. Variable Interest Entity
<br />Selge Leasing, Inc. owns and leases machinery and equipment to the Company as described in Note 9.
<br />Selge Leasing, Inc. is related to the Company through common ownership. The Company is Selge
<br />Leasing, Inc.'s only customer. The Company and Selge Leasing, Inc. entered into a cross collateralization
<br />agreement with a local bank. The Company can be required to perform on the guarantee in the event of
<br />nonpayment of a bank debt by Selge Leasing, Inc. As of February 28, 2023 and 2022, Selge Leasing, Inc.
<br />did not have any outstanding debt that is guaranteed by the Company.
<br />Pursuant to the policy to apply the accounting alternative to certain entities under common control, Selge
<br />Construction Company, Inc. did not apply the VIE guidance to ASC 810 to consolidate this entity under
<br />common control into the Company's financial statements for the years ended February 28, 2023 and
<br />2022.
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