Barry County Services Companybarrycountyservicescompany.com/BCSC_Annual_Report_2017.pdf · 2018. 5....

Barry County Services Company Independent Auditor’s Report and Consolidated

Financial Statements

December 31, 2017 and 2016

Barry County Services Company December 31, 2017 and 2016

Contents Officers and Directors............................................................................................................ 1 Independent Auditor’s Report ............................................................................................... 2

Consolidated Financial Statements Consolidated Balance Sheets .............................................................................................................. 4

Consolidated Statements of Income ................................................................................................... 6

Consolidated Statements of Other Comprehensive Income ............................................................... 7

Consolidated Statements of Stockholders’ Equity ............................................................................. 8

Consolidated Statements of Cash Flows ............................................................................................ 9

Notes to Consolidated Financial Statements .................................................................................... 10

Barry County Services Company December 31, 2017 and 2016

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Officers and Directors

Mark Herbert President Harry Doele Secretary Aaron Shaver Treasurer Gary Gibson Mark Hewitt David Stoll General Manager & CEO Deborah Cusack CFO

Independent Auditor’s Report

Board of Directors Barry County Services Company and Subsidiaries Delton, Michigan We have audited the accompanying consolidated financial statements of Barry County Services Company and subsidiaries, which comprise the consolidated balance sheets as of December 31, 2017 and 2016, and the related consolidated statements of income, stockholders’ equity and cash flows for the years then ended, and the related notes to the consolidated financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Board of Directors Barry County Services Company and Subsidiaries Page 3

Opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Barry County Services Company and subsidiaries as of December 31, 2017 and 2016, and the results of their operations and their cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

West Des Moines, Iowa April 30, 2018

Barry County Services Company Consolidated Balance Sheets December 31, 2017 and 2016

See Notes to Consolidated Financial Statements

2017 2016Current Assets

Cash and cash equivalents 3,168,798$ 2,814,977$ Accounts receivable:

Due from customers 287,747 268,197 Other 200,500 179,968

Materials and supplies 242,120 200,388 Prepayments 84,700 104,403 Prepaid income taxes 297,942 125,838

4,281,807 3,693,771

Other Noncurrent AssetsMarketable equity securities 2,276,378 2,035,428 Other investments 177,326 177,326

2,453,704 2,212,754

Property, Plant and EquipmentTelephone plant in service 23,956,390 23,187,396 Other plant in service 3,447,607 3,430,203

27,403,997 26,617,599 Less accumulated depreciation 20,770,530 20,191,578

6,633,467 6,426,021 Plant under construction 223,590 127,909

6,857,057 6,553,930

Total assets 13,592,568$ 12,460,455$

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2017 2016Current Liabilities

Dividends payable 443,353$ 494,393$ Accounts payable 237,899 192,441 Advance billing and payments 109,835 101,885 Accrued taxes 62,283 49,413 Other 651,035 581,308

1,504,405 1,419,440

Other Noncurrent Liabilities and Deferred CreditsDeferred income taxes 322,426 266,157 Deferred compensation 363,503 336,803

685,929 602,960

Stockholders’ EquityCommon stock - no stated or par value, authorized 80,000 shares;

issued and outstanding, 49,263 and 49,464 ,shares, respectively - - Accumulated Other Comprehensive Income:

Unrealized gains (losses) on certain investments 88,021 (21,645) Retained earnings 11,314,213 10,459,700

11,402,234 10,438,055

Total liabilities and stockholders’ equity 13,592,568$ 12,460,455$

Barry County Services Company Consolidated Statements of Income

Years Ended December 31, 2017 and 2016

See Notes to Consolidated Financial Statements 6

2017 2016

Operating RevenuesLocal network services 1,796,799$ 1,663,181$ Network access services 2,073,908 2,408,497 Long distance services 843,210 823,239 Internet services 1,729,795 1,675,636 Billing services 869,889 866,372 Rental services 13,540 91,939 Miscellaneous revenue 178,077 65,433

7,505,218 7,594,297

Operating ExpensesPlant specific operations 1,167,519 1,167,895 Plant nonspecific operations 730,188 754,518 Cost of services 744,623 583,168 Depreciation 937,283 851,059 Customer operations 923,855 1,159,846 Corporate operations 1,072,002 906,900 General taxes 167,733 156,442

5,743,203 5,579,828

Operating Income 1,762,015 2,014,469

Other Income (Expense)Investment income 46,729 83,933 Gains from disposition of certain property 7,752 18,934 Other, net 37,714 (6,832)

92,195 96,035

Income (Loss) Before Income Taxes 1,854,210 2,110,504

Income Tax Expense (including impact of enactedchanges in tax laws of $140,000 and $-, respectively) 499,065 807,073

Net Income $ 1,355,145 $ 1,303,431

Barry County Services Company Consolidated Statements of Comprehensive Income



2017 2016

Net Income 1,355,145$ 1,303,431$

Other Comprehensive Income, net of tax:Unrealized gains on securities:

Unrealized holding gains arising during the period 109,666 19,751

Comprehensive Income 1,464,811$ 1,323,182$

Barry County Services Company Consolidated Statements of Stockholders’ Equity



Accumulated Other Comprehensive Retained

Total Stockholders’

Shares Amount Income Earnings Equity

Balance, December 31, 2015 51,335 -$ (41,396)$ 9,997,044$ 9,955,648$

Net income - - - 1,303,431 1,303,431 Dividends declared ($10.00 per share) - - - (494,640) (494,640) Unrealized holding gains

arising during the periodnet of tax of $9,100 - - 19,751 - 19,751

Common stock redeemed (1,933) - - (357,605) (357,605) Common stock issued 62 - - 11,470 11,470

Balance, December 31, 2016 49,464 - (21,645) 10,459,700 10,438,055

Net income - - - 1,355,145 1,355,145 Dividends declared ($9 per share) - - - (444,001) (444,001) Unrealized holding gains arising

during the period, net of taxesof $43,769 - - 109,666 (14,471) 95,195

Common stock redeemed (454) - - (95,340) (95,340) Common stock issued 253 - - 53,180 53,180

Balance, December 31, 2017 49,263 -$ 88,021$ 11,314,213$ 11,402,234$

Common Stock

Barry County Services Company Consolidated Statements of Cash Flows



2017 2016

Operating ActivitiesNet income $ 1,355,145 $ 1,303,431 Adjustments to reconcile net income

to net cash provided by operating activities:Depreciation 937,283 851,059 Deferred income taxes (1,970) 195,535 Realized (gain) loss on sale of available-for-sale securities (21,144) 18,842 Realized loss on sale of property 3,657 7,445

Changes in assets and liabilities:(Increase) Decrease in:

Accounts receivable (40,082) 39,126 Materials and supplies (30,066) 3,915 Prepayments (152,401) 115,572

Increase (Decrease) in:Accounts payable 45,114 (83,358) Accrued taxes 12,870 (23,965) Other 104,377 185,755

Net cash provided by operating activities 2,212,783 2,613,357

Investing ActivitiesCapital expenditures (1,292,889) (1,256,960) Purchases of available-for-sale securities (398,823) (878,478) Proceeds from sale of other investments - 27,187 Proceeds from sale of available-for-sale securities 332,451 841,690 Salvage 37,500 -

Net cash used in investing activities (1,321,761) (1,266,561)

Financing ActivitiesDividends paid (495,041) (385,012) Common stock redeemed, net of reissued (42,160) (346,135)

Net cash used in financing activities (537,201) (731,147)

Increase in Cash and Cash Equivalents 353,821 615,649

Cash and Cash Equivalents, Beginning of Year 2,814,977 2,199,328

Cash and Cash Equivalents, End of Year 3,168,798$ 2,814,977$

Barry County Services Company Notes to Consolidated Financial Statements


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Note 1: Nature of Operations and Summary of Significant Accounting Policies

Nature of Operations and Basis of Presentation

Barry County Services Company and subsidiaries (herein referred to as “the Company”) are providers of telecommunications exchange, local access, long distance, internet, and rental real estate in a service area located in southern Michigan.

The accounting policies of the Company conform to accounting principles generally accepted in the United States of America. Telephone operations reflect practices appropriate to the telephone industry. The accounting records of the telephone company are maintained in accordance with the Uniform System of Accounts for Class A and B Telephone Companies prescribed by the Federal Communications Commission (FCC) as modified by the state regulatory authority.

Principles of Consolidation

The consolidated financial statements include the accounts of the parent company, Barry County Services Co, and its 100%-owned subsidiaries, Barry County Telephone Company, Barry County Realty Company, Lake Michigan Telephone Company, and Southern Michigan Cellular Company. All material intercompany transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents.

Accounts Receivable

Accounts receivable are reported net of an allowance for doubtful accounts. The allowance is based on management’s estimate of the amount of receivables that will actually be collected.

Materials and Supplies

Materials and supplies is stated at the lower of cost or market with cost determined by the first-in, first-out (FIFO) method.



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Securities

Certain debt securities that management has the positive intent and ability to hold to maturity are classified as “held-to-maturity” and recorded at amortized cost. Trading securities are recorded at fair value with changes in fair value included in earnings. Securities not classified as held to maturity or trading, including equity securities with readily determinable fair values, are classified as “available-for-sale” and recorded at fair value, with unrealized gains and losses excluded from earnings and reported in other comprehensive income. Investments in private equity funds and hedge funds are recorded at net asset value (NAV), as a practical expedient, to determine fair value of the investments. Purchase premiums and discounts are recognized in interest income using the interest method over the terms of the securities. Gains and losses on the sale of securities are recorded on the trade date and are determined using the specific identification method.

Nonmarketable equity investments over which the Company has significant influence are reflected on the equity method. Other nonmarketable equity investments are stated at cost.

Property, Plant and Equipment

Property, plant and equipment is capitalized at original cost including the capitalized cost of salaries and wages, materials, certain payroll taxes, employee benefits and interest incurred during the construction period.

The Company provides for depreciation for financial reporting purposes on the straight-line method by the application of rates based on the estimated service lives of the various classes of depreciable property. These estimates are subject to change in the near term.

The estimated useful lives for each major depreciable classification of property and equipment are as follows:

Buildings 35-40 years Furniture and office equipment 5-10 years Vehicles and other equipment 7-10 years Switching equipment 12 years Outside plant 20-25 year Towers 15-20 years

Renewals and betterments of units of telephone property are charged to telephone plant in service. When telephone plant is retired, its cost is removed from the asset account and charged against accumulated depreciation less any salvage realized. No gains or losses are recognized in connection with routine retirements of depreciable telephone property. Repairs and renewals of minor items of telephone property are included in plant specific operations expense.

Repairs of other property, as well as renewals of minor items, are charged to plant specific operations expense. A gain or loss is recognized when other property is sold or retired.



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Long-lived Asset Impairment

The Company would provide for impairment losses on long-lived assets when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amount. Based on current conditions, management does not believe any of its long-lived assets are impaired.

Income Taxes

The Company files a consolidated federal tax return with its subsidiaries for income tax purposes. For financial reporting purposes, income taxes are presented by apportioning the consolidated tax provision in the ratio of the income taxes to be paid as if each were filing a separate return.

Income taxes are accounted for using a liability method and provide for the tax effects of transactions reported in the consolidated financial statements including both taxes currently due and deferred. Deferred taxes are adjusted to reflect deferred tax consequences at current enacted tax rates. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred taxes arise from differences between the basis of plant and certain liabilities. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible, when the assets and liabilities are recovered or settled.

Revenue Recognition

The Company recognizes revenues when earned regardless of the period in which they are billed. The Company is required to provide telephone service to subscribers within its defined service territory.

Local network service and internet revenues are recognized over the period a subscriber is connected to the network.

Network access and long distance service revenues are derived from charges for access to the Company’s local exchange network. The interstate portion of access revenues is based on an average schedule company formula administered by the National Exchange Carrier Association (NECA) which is regulated by the FCC. The intrastate portion of access revenues is billed based upon an individual company tariff access charge structure as approved by the state regulatory authority. The tariffs developed from this structure are used to charge the connecting carrier and recognize revenues in the period the traffic is transported based on the minutes of traffic carried. Long distance revenues are recognized at the time a call is placed based on the minutes of traffic processed at contracted rates.

The Company provides billing services to other local exchange carriers. Revenues are recognized as customer billing is completed.



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Rental income is recognized at the start of the rental period when the lessee is contractually obligated for payment.

Reclassifications

Certain reclassifications have been made to the 2016 financial statements to conform to the 2017 financial statement presentation. These reclassifications had no effect on net earnings.

Note 2: Securities

The amortized cost and approximate fair values, together with gross unrealized gains and losses, of available-for-sale securities are as follows:

Amortized Cost

Gross Unrealized

Gains

Gross Unrealized

Losses Fair Value

Available-for-Sale Equity Securities:December 31, 2017:

Mutual funds $ 2,157,831 $ 140,077 $ (21,530) $ 2,276,378

Amounts classified as:Marketable equity

securities $ 2,276,378

December 31, 2016:Mutual funds $ 2,070,316 $ 38,004 $ (72,892) $ 2,035,428

Amounts classified as:Marketable equity

securities $ 2,035,428



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The following table shows the Company’s available-for-sale investments’ gross unrealized losses, fair value and length of time that the individual securities have been in continuous unrealized loss position at December 31, 2017 and 2016:

Fair ValueUnrealized

Losses Fair ValueUnrealized

Losses

943,972$ 21,530$ 943,972$ 21,530$

Description Fair ValueUnrealized



Losses

Mutual funds 549,652$ 20,753$ 745,373$ 52,139$ 1,295,025$ 72,892$

2017Less than 12 Months Total

Less than 12 Months 12 Months or More Total

Description

Mutual funds

2016

Management evaluates the need for recording an other than temporary impairment for these investments annually. Based on the nature and financial information available for each individual investment, the length of time and extent of its fair value being below cost (generally less than twelve months at December 31, 2017) and the Company’s ability and intent to hold the investments for a sufficient time to allow for the recovery of the cost of the investment, an other than temporary impairment has not been recognized as of December 31, 2017 and 2016.

Proceeds from sales of available-for-sale securities were $332,451 and $841,690 in 2017 and 2016, respectively. The gross realized gains on sales of available-for-sale securities totaled $21,944 and $5,544 in 2017 and 2016, respectively, and the gross realized losses totaled $800 and $24,386 in 2017 and 2016, respectively. The change in net unrealized holding gains (losses) on available-for-sale securities included as a separate component of comprehensive income before tax totaled $153,435 and $28,851 in 2017 and 2016, respectively.

Investments measured at fair value are valued at Level 1 in the fair value hierarchy.



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Note 3: Investments

Investments accounted for under the cost method consist of the following:

2017 2016

Assets 5,000$ 5,000$ Liabilities 81,563 81,563 RTFC - Patronage Capital 90,763 90,763

Long-term Investments $ 177,326 $ 177,326

Because of the lack of quoted market prices and the inability to estimate fair value without incurring excessive costs, management has determined it is not practical to estimate the fair value of these investments. However, management believes that the carrying amount of these investments at December 31, 2017, included in other investments is not impaired.

Note 4: Property, Plant and Equipment

Property, plant and equipment includes the following:

2017 2016Telephone plant in service:

Land 90,839$ 90,839$ Buildings 1,002,661 1,002,661 Furniture and office equipment 1,326,278 1,261,073 Vehicles and equipment 151,820 147,212 Switching equipment 6,511,918 6,567,474 Outside plant 14,872,874 14,118,137

Subtotal 23,956,390 23,187,396

Other plant in service:Land 809,312 809,312 Buildings 161,318 161,318 Other equipment 1,366,422 1,349,018 Towers 1,110,555 1,110,555

Subtotal 3,447,607 3,430,203

Total property, plant and equipment 27,403,997$ 26,617,599$



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Depreciation on depreciable property resulted in composite rates of 3.54% and 3.39% for 2017 and 2016, respectively.

Note 5: Income Taxes

Income taxes reflected in the Consolidated Statements of Income consist of the following:

2017 2016

Federal income taxes:Current tax expense 390,024$ 511,595$ Adjustment of deferred tax liability for enacted

changes in tax laws (140,000)$ - Deferred tax expense 114,172 155,679

State income taxes:Current tax expense 111,011 99,943 Deferred tax expense 23,858 39,856

Income tax expense (benefit) $ 499,065 $ 807,073

Cash paid for income taxes and estimated income taxes for 2017 and 2016 totaled $400,000 and $470,000, respectively.



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Deferred federal and state tax liabilities and assets reflected in the Consolidated Balance Sheets are summarized as follows:

2017 2016

Deferred tax liabilitiesFederal 428,910$ 608,997$ State 130,316 114,330

Total Deferred Tax Liabilities 559,226 723,327

Deferred tax assetsFederal 179,400 384,909 State 57,400 72,261

Total Deferred Tax Assets 236,800 457,170

Total Deferred Tax Liabilities $ 322,426 $ 266,157

Current Portion $ - $ - Long-term Portion 322,426 266,157

Total Deferred Tax Liabilities $ 322,426 $ 266,157

Prepaid income taxes of $295,155 and $125,838 appearing on the Balance Sheets at December 31, 2017 and 2016, respectively, reflect overpayments of estimated taxes.

On December 22, 2017, the United States enacted tax reform legislation through the Tax Cuts and Jobs Act, which significantly changes the U.S. tax laws, including a reduction in the corporate tax rate from 35% to 21%, as well as other changes. As a result of enactment of the legislation, the company incurred a one-time income tax benefit of $140,000 during the fourth quarter of 2017, primarily related to the remeasurement of certain deferred tax assets and liabilities.

The tax provision differs from the expense that would result from applying the federal statutory rates to income before income taxes because of the deduction for state income taxes.

The Company has evaluated its income tax positions and has determined that there are no uncertain income tax positions that need to be recorded or reported in the financial statements at December 31, 2017.

The Company’s federal and state income tax returns for years 2014 to present remain subject to examination.



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Note 6: Defined Contribution Pension Plan

The Company has a defined contribution retirement program in effect for employees who meet certain eligibility requirements. This program provides for contributions to each employee’s individual retirement account. The Company’s policy is to fund plan costs accrued. Costs, expensed and capitalized, for 2017 and 2016 were $486,488 and $457,016, respectively.

Note 7: Post-retirement Benefit Plan

The Company sponsors a defined benefit post-retirement plan for its employees. The plan provides medical benefits for retired employees and their families from the date of retirement to Medicare eligible age. Eligibility is based on a factor of age and years of service. Additionally, the Company provides free local telephone service for retired employees who reside in the Company’s service territory. The plan is noncontributory and is not funded. There were no employer or participant contributions in 2017 or 2016, nor does the plan possess any assets.

The following table sets forth information about the benefit plan for the year ended December 31:

2017 2016

Benefit obligation, end of year 363,503$ 336,803$

Net post-retirement costs recognized 26,700$ 26,700$

The liability was computed assuming an 8.80% and 8.0% inflation rate for 2017 and 2016, respectively, in health care costs. The discount rate used in determining the accumulated post-retirement benefit obligation was 3.0% and 4.0% in 2017 and 2016, respectively.

Estimated Future Benefit Payments

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:

Other Benefits

2018 32,543$ 2019 8,624 2020 1,960 2021 1,960

2022-2026 9,801



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Note 8: Concentration of Credit Risk

The Company grants credit to customers, all of whom are located in the franchised service area, and telecommunications intrastate and interstate long distance carriers.

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash equivalents.

The Company maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts. The Company believes it is not exposed to any significant credit risk on cash and cash equivalents.

Eleven employees located in Delton, Michigan and employed by the Barry County Telephone Company were represented by the International Brotherhood of Electrical Workers of America, AFL-CIO Local 1106 under a three-year collective bargaining agreement expiring in 2020. The agreement will remain in effect after the above mentioned date unless terminated by either party.

Note 9: Disputed Access and Local Termination

The Company is billing access and local termination charges to Competitive Local Exchange Carriers (CLECs), wireless carriers and other telecommunications carriers who provide service using unbundled network elements (UNE). However, some of those carriers are not paying their billed amounts. Some carriers are disputing the Company’s bills and other carriers are simply refusing to pay the billed amounts. This is a problem that is present throughout the telecommunications industry. The Company is working with its legal counsel to try to resolve any issues relating to disputed charges. It is also trying to work to get carriers that are refusing to pay to make their accounts with the Company current.

The Company has reserved $25,932 in 2016, for the disputed amounts. None of the disputed billing appeared as revenue in the 2011 or earlier financial statements. Any potential recovery amounts will be recorded in the period that is received.

Note 10: Regulatory Matters

The Company received 28% and 32% of its 2017 and 2016 revenues, respectively, from access revenues and assistance provided by the Federal Universal Service Fund. The manner in which access revenues and Universal Service funds are determined has been modified in several recent Federal Communications Commission proceedings. Changes include modifications to rate-of-return support including caps on the recovery of certain expenditures, and reductions in terminating access charges billed with eventual transition to a bill-and-keep framework for the exchange of traffic between carriers.



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On March 30, 2016, the FCC released a Report and Order, Order on Reconsideration, and Further Notice of Proposed Rulemaking to reform USF. The order in this proceeding (1) provides support for standalone broadband; (2) requires broadband deployment based on the number of locations lacking service and cost of providing service; (3) requires allowances for capital investments and further limits operational expenses; and (4) phases out support for area served by qualifying competitors. In addition, the FCC created a new Universal Service Support mechanism named the Alternative Connect America Model (A-CAM). The Order allows eligible rate-of-return carriers to elect A-CAM or remain on a revised version of the legacy rate-of-return funding. Carriers not eligible for the A-CAM will fall under the revised version of the legacy rate-of-return funding. The Order provides a total budget of $2 billion for Universal Service Support to cover the A-CAM and legacy rate-of-return mechanisms.

The Company was eligible to elect A-CAM support but determined to remain a legacy rate-of-return carrier. The amount of support that will be received is not certain due to constraints on the FCC’s budget.

Whether a rate-of-return carrier chooses model-based support or remains on legacy mechanisms, it will be required to meet service obligations, adhere to reporting obligations, and retain records.

Note 11: Disclosures About Fair Value of Assets and Liabilities

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs. There is a hierarchy of three levels of inputs that may be used to measure fair value:

Level 1 Quoted prices in active markets for identical assets or liabilities

Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities

Level 3 Unobservable inputs supported by little or no market activity and are significant to the fair value of the assets or liabilities

Note 12: Subsequent Events

Subsequent events have been evaluated through April 30, 2018, which is the date the financial statements were available to be issued.

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