Quarterly report pursuant to Section 13 or 15(d)

LONG-TERM DEBT AND NOTES PAYABLE

v2.4.0.8
LONG-TERM DEBT AND NOTES PAYABLE
 3 Months Ended
Mar. 31, 2014
Debt Disclosure [Abstract]  
Debt Disclosure [Text Block]
7.
LONG-TERM DEBT AND NOTES PAYABLE
 
Long-term debt and notes payable are summarized as follows.
 
 
March 31,
 
December 31,
 
 
 
2014
 
2013
 
 
 
 
 
 
 
 
 
Note payable to a bank due in monthly installments of $4,406 including interest at Wall Street Journal Prime + 1% (minimum of 5.5%); remaining balance due October 10, 2018; collateralized by substantially all of the Company's assets and guaranteed by an officer of the Company
 
$
207,813
 
$
218,119
 
 
 
 
 
 
 
 
 
Line of credit to a bank, expires April 10, 2014, interest rate of Wall Street Journal Prime (3.25% as of March 31, 2014) plus 1%, floor rate of 5%
 
 
465,000
 
 
472,000
 
 
 
 
 
 
 
 
 
Note payable to a bank due interest only at a 5% rate; balloon principal payment due August 10, 2014; collateralized by substantially all of the Company's assets and guaranteed by an officer of the Company
 
 
500,088
 
 
-
 
 
 
 
 
 
 
 
 
Note payable to a bank, matures August 5, 2014, interest rate of Wall St. Journal Prime (3.25% as of March 31, 2014) plus 1%
 
 
24,531
 
 
38,614
 
 
 
 
 
 
 
 
 
Loan agreement with an outside company on December 23, 2013, interest at 1% per month, accrued interest and principal due February 23, 2014, unsecured
 
 
125,000
 
 
150,000
 
 
 
 
 
 
 
 
 
Bank overdraft facility; unsecured; maximum facility $260,000; interest rate 11% at March 31, 2014
 
 
88,532
 
 
79,372
 
 
 
 
 
 
 
 
 
Term facility with monthly payments of $5,000, including interest at 10.3% at March 31, 2014; due June 14, 2016
 
 
123,007
 
 
133,448
 
 
 
 
 
 
 
 
 
Term facility dated December 1, 2013; monthly payments of $3,172 including interest at 12.5%; Due December 1, 2018; secured by a bond on all moveable assets at our Pretoria, South Africa location and partially guaranteed by our CEO
 
 
137,632
 
 
142,807
 
 
 
 
 
 
 
 
 
 
 
 
1,671,603
 
 
1,234,360
 
Current portion of long-term debt
 
 
1,474,735
 
 
835,454
 
Long-term debt, less current portion
 
$
196,868
 
$
398,906
 
 
On April 11, 2013, the Company and Paragon Commercial Bank (“Paragon”) entered into a credit agreement (the “Credit Agreement”). The Credit Agreement provides for an additional $500,000 revolving credit facility with a one-year term from the closing date. The Credit Agreement is available to be drawn at the Company’s discretion to finance investments in new business ventures and for the Company’s general corporate working capital requirements in the ordinary course of business. The note payable originally matured on August 10, 2013 and on November 4, 2013 the note was extended to October 10, 2018 with monthly principal and interest payments of $4,406, whereas the new credit facility expired on April 10, 2014.
 
The Company is currently negotiating with the lender to extend the debt with an expiration date of April 10, 2014. The lender has not issued a formal notice of default to the Company. 
 
Borrowings under the Credit Agreement bear monthly interest at the greater of: (i) floor rate of 5.00% or (ii) the Wall Street Journal’s prime plus rate (3.25% as of March 31, 2014) plus 1.00%. All unpaid principal and interest are due one (1) year after the closing date. Any borrowings are secured by a lien on all of the Company’s assets. The obligations under the Credit Agreement are guaranteed by Mike Pruitt, the Company’s Chief Executive Officer.
 
In addition, in February 2014 the Company secured a note with Paragon for $500,000 due on August 10, 2014. The note bears interest at a 5% annual rate, payments of interest only are due monthly until the due date.
 
This increases the Company’s aggregate obligation to Paragon to approximately $1.2 million at March 31, 2014.
 
ARB entered into a term note with TD Bank in 2008 for $300,000, which has a balance of $24,531 at March 31, 2014 and has a maturity date of August 4, 2014. The interest rate is 1.75% above the Wall Street Journal prime rate (3.25%), and the monthly principal and interest payment is $4,836, subject to adjustment by TD Bank, except for the last payment which shall be the unpaid balance at maturity. The term note is personally guaranteed by two former shareholders of ARB, and TD Bank has a first lien on all ARB’s assets.
 
On December 23, 2013, the Company entered into a loan agreement with an outside company for $150,000, due on February 23, 2014. Interest is compounded monthly at a rate of 1%. As of February 23, 2014, the Company was not in compliance with the terms of this note due to non-payment of principal and interest. On March 21, 2014, the Company paid the note holder $25,000 of principal and $4,751 of accrued interest. However, the note holder has not issued a formal notice of default to the Company.