XML 18 R13.htm IDEA: XBRL DOCUMENT v2.3.0.15
Related Party Transactions
9 Months Ended
Sep. 30, 2011
Related Party Transactions
(8)
Related Party Transactions
 
The Company participates in transactions with the following entities affiliated through common ownership and management. The Audit Committee in accordance with its written charter reviews and approves in advance all related party transactions greater than $25,000 and follows a pre-approved process for contracts with a related party for less than $25,000.

S3 Integration, LLC (S3 Integration) is 15% owned by each of the Company’s Chief Executive Officer and Chief Operating Officer.  S3 Integration provides commercial security systems design and installation services as a subcontractor to the Company.

Chesapeake Systems, LLC (Chesapeake Systems) was 9% owned and significantly indebted to the Company’s Chief Executive Officer until the sale of his equity interest and satisfaction of his note on December 31, 2010.  Chesapeake Systems is a manufacturers’ representative and distributor of mechanical and electrical equipment.

Chesapeake Mission Critical, LLC (Chesapeake MC) is 9% owned by each of the Company’s Chief Executive Officer and its Chief Operating Officer. Additionally, it is significantly indebted to the Company’s Chief Executive Officer. Chesapeake MC is a manufacturers’ representative and distributor of electrical equipment.

CTS Services, LLC (CTS) is 9% owned by the Company’s Chief Executive Officer. CTS is a mechanical contractor that acts as a subcontractor to the Company for certain projects. In addition, CTS utilizes the Company as a subcontractor on projects as needed.

Telco P&C, LLC (Telco P&C) is 12% owned by the Company’s Chief Executive Officer. Telco P&C is a specialty electrical installation company that acts as a subcontractor to the Company. The Company has also acted as a subcontractor to Telco P&C as needed.

TPR Group Re Three, LLC (TPR Group Re Three) is 50% owned by each of the Company’s Chief Executive Officer and its Chief Operating Officer. TPR Group Re Three leases office space to the Company under the terms of a real property lease. Upon entering the lease, the Company obtained an independent appraisal of the lease, which determined the lease to be at fair value.

Chesapeake Tower Systems, LLC (Chesapeake) is owned 100% by the Company’s Chief Executive Officer.  The Company leases approximately 25,000 square feet of combined office and warehouse space from Chesapeake.  Upon entering the lease, the Company obtained an independent appraisal of the lease, which determined the lease to be at fair value.

E-Site Systems, LLC is a partnership formed during 2011 that was financed with initial debt capital of $0.1 million by the Company’s Chief Executive Officer.  The Company is a manufacturers’ representative and distributor of mechanical and electrical equipment.  The Company has not entered into any contracts with the related entity greater than $25,000 to date.
 
The following table sets forth transactions the Company has entered into with the above related parties for the three and nine months ended September 30, 2011 and 2010.  It should be noted that revenue represents amounts earned on contracts with related parties under which we provide services; and cost of revenue represents costs incurred in connection with related parties which provide services to us on contracts for our customers. As such a direct relationship to the revenue and cost of revenue information below by company should not be expected.

   
Three Months
    
Three Months
    
Nine Months
    
Nine Months
  
   
Ended
    
Ended
    
Ended
    
Ended
  
   
September 30, 2011
    
September 30, 2010
    
September 30, 2011
    
September 30, 2010
  
Revenue
                        
CTS Services, LLC
   $ -     $ 23,902     $ -     $ 23,902  
Telco P&C, LLC
     32,785       93,764       317,857       559,099  
Chesapeake Systems
     4,903       -       4,903       -  
Chesapeake Mission Critical, LLC
     21,392       9,031       303,358       20,531  
Total
   $ 59,081     $ 126,697     $ 626,118     $ 603,532  
Cost of Revenue
                                
CTS Services, LLC
   $ -     $ -     $ 17,413     $ 134,109  
Chesapeake Systems, LLC
     -       -       6,000       -  
Chesapeake Mission Critical, LLC
     2,200       47,490       73,391       135,257  
S3 Integration, LLC
     3,447       240,649       54,144       540,936  
Telco P&C, LLC
     -       -       -       37,278  
Total
   $ 5,647     $ 288,139     $ 150,947     $ 847,579  
Selling, general and administrative
                                
Office rent paid on Chesapeake Tower Sytsems
     25,332       50,664       121,253       125,682  
Office rent paid to TPR Group Re Three, LLC
     107,049       122,047       321,148       323,901  
Total
   $ 132,381     $ 172,711     $ 442,401     $ 449,583  
 
 
   
September 30, 2011
    
December 31, 2010
  
Accounts receivable/(payable):
            
CTS Services, LLC
   $ 8,555     $ 17,555  
CTS Services, LLC
     1,400       -  
Chesapeake Systems, LLC
     6,621       -  
Chesapeake Mission Critical, LLC
     14,301       -  
Chesapeake Tower Systems, Inc.
     (12,666 )     -  
Telco P&C, LLC
     112,512       364,348  
Telco P&C, LLC
     -       (600 )
S3 Integration, LLC
     (2,888 )     (25,924 )
TPR Group RE Three, LLC
     (35,683 )     -  
Total Accounts receivable
   $ 143,389     $ 381,903  
Total Accounts (payable)
   $ (51,237 )   $ (26,524 )