|
NOTE G - LONG TERM DEBT
|
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Sep. 30, 2011
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Text Block] |
NOTE G
– LONG TERM DEBT
Senior
Convertible Debenture
A
summary of convertible debentures payable at September 30,
2011 and December 31, 2010 is as follows:
On
March 4, 2011, the Company sold its Series 5 Power Line
Carrier product line and related business assets to Dynamic
Ratings, Inc. (“Dynamic Ratings”). The
sales price was $1,000,000 in cash. In connection
with the sale, Dynamic Ratings lent the Company an additional
$700,000 in the form of a 6% promissory note dated March 4,
2011. The Company used the proceeds to retire substantially
all of its obligations under its $1.6 million senior
convertible debenture due May 29, 2011 and to cancel the
related warrants covering 11.7 million shares of the
Company’s common stock.
Business
Loan
On
September 11, 2009, the Company entered into a Loan
Agreement in the aggregate principal amount of $300,000 with
the Wisconsin Department of Commerce (the
“Department”). The outstanding
principal balance bears interest at the annual rate of 2%.
Payment of interest and principal is to be made in the
following manner: (a) payment of any and all interest
that accrues from the date of disbursement commenced on
January 1, 2010 and continued on the first day of each
consecutive month thereafter through and including December
31, 2010; (b) commencing on January 1, 2011 and continuing on
the first day of each consecutive month thereafter through
and including November 1, 2016, the Company shall pay equal
monthly installments of $4,426 each; followed by a final
installment on December 1, 2016 which shall include all
remaining principal, accrued interest and other amounts owed
by the Company to the Department under the Loan
Agreement. The Company may prepay amounts
outstanding under the credit facility in whole or in part at
any time without penalty. The Loan Agreement is secured by
substantially all of the Company’s assets and the
proceeds from this loan were used for the working capital
requirements of the Company. The outstanding
borrowing under the agreement at September 30, 2011 was
$264,430.
Promissory
Note #1
On
March 4, 2011, the Company sold all its Series 5 PLC product
line assets to Wisconsin-based Dynamic Ratings, Inc.
(“Purchaser”) under an Asset Purchase Agreement
(“APA”). Per the APA, the Company
signed an unsecured Promissory
Note (“Note #1”) due to Purchaser in the
aggregate principal amount of $700,000. The outstanding principal balance
bears interest at the annual rate of 6% and is due on March
31, 2014. Note #1 may be
prepaid in whole or in part, without penalty at any time,
however scheduled payments are due on June 30, 2012 and June
30, 2013. Payments shall be applied first to
accrued but unpaid interest and then to
principal. Note #1
contains certain earn-out provisions that encompass both the
Company’s and Purchaser’s revenue
volumes. Provided these provisions are met, the
Company could potentially retire Note #1 prior to its
expiration date. Payments
not made when due, by maturity acceleration or otherwise,
shall bear interest at the rate of 12% per annum
from the
date due
until fully paid.
Promissory
Note #2
From
the sale of its Series 5 PLC product line assets, the Company
used the proceeds received to retire substantially all of its
obligations under its $1.6 million senior convertible
debenture due May 29, 2011 and to cancel the related warrants
covering 11.7 million shares of the Company’s common
stock. In exchange for the early retirement of
debt and cancellation of warrants, the Company provided the
lender with an unsecured one-year promissory note
(“Note #2”) for $50,000. The outstanding principal balance
bears interest at the annual rate of 5.25% and is due on
March 4, 2012. The monthly payment of principal and interest
is $4,385. However Note #2 is due immediately if
the Company (a) receives three million ($3,000,000) dollars
in aggregate in new debt or equity financing, (b) attains one
million ($1,000,000) dollars in EBITDA, as defined for any
reporting quarter or (c) becomes
insolvent. The Note may be
prepaid in whole or in part, without penalty at any
time. Payments shall be applied first to accrued
but unpaid interest and then to
principal. The outstanding principal balance as
of September 30, 2011 is $25,327.
Aggregate
maturities of long-term debt as of September 30, 2011 are as
follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||