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Earlyin2012,DobbsCorporation engagedKiner,Inc.todesignandconstructa completemodernizationofDobbs's manufacturing

facility.Constructionwasbegunon June1,2012andwascompleted onDecember 31, 2012.DobbsmadethefollowingpaymentstoKiner,Inc.during2012:

Date                                             Payment

June1,2012                           $4,800,000

August 31, 2012                       7,200,000

December31,2012                  6,000,000


1.  $4,000,000of10-year,9%bondspayable,issuedatparonMay31,2012with interest  payableannually  onMay31.

2.   1,000,000sharesofno-parcommonstock,issuedat$10pershareonOctober1,


Inaddition tothe9%bondspayable, theonlydebtoutstandingduring 2012wasa

$1,000,000,12%notepayabledatedJanuary1,2008anddueJanuary1,2018 with interest payableannually onJanuary1.



1.  Weighted-averageaccumulatedexpenditures qualifying forcapitalizationofinterest cost.

2.  Avoidableinterest incurred during2012.

3.  Totalamount ofinterestcosttobecapitalizedduring2012.

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