(7)

Bank Loan

The Company has an outstanding bank loan with U.S. Bank National Association. Immediately prior to October 26, 2012, the loan had an outstanding principal balance of $1.9 million. On October 26, 2012, in connection with the purchase of the assets related to the management of the FBR Funds, the Company funded part of the purchase price by entering into an amended and restated loan agreement, bringing the total loan balance to $18.4 million. The amended and restated loan agreement required 59 monthly payments in the amount of $153,333 plus interest at U.S. Bank National Association’s prime rate (currently 3.25%, in effect since December 17, 2008) plus 0.75% (for an effective interest rate of 4.00%) and was secured by the Company’s assets. The final installment of the then-outstanding principal and interest would have been due October 26, 2017.

On November 1, 2013, in connection with the second and final payment for the purchase of the assets related to the management of the FBR Funds, the Company amended the loan agreement to bring the total loan balance to $30.0 million. The amended loan agreement requires 47 monthly payments in the amount of $312,500 plus interest at the U.S. Bank National Association’s prime rate, as set from time to time (currently 3.25%, in effect since December 17, 2008) plus 0.75% (effective interest rate of 4.00%) and is secured by our assets. The final installment of the then-outstanding principal and interest is due October 26, 2017. The note maturity schedule is as follows:


Years ended September 30:

2015	$	3,750,000
2016		3,750,000
2017		3,750,000
2018		15,471,667


Total	$	26,721,667

The amended and restated loan as of October 26, 2012 was considered “substantially different” from the original loan per the conditions set forth in Emerging Issues Task Force (EITF) 96-19 “Debtor’s Accounting for a Modification or Exchange of Debt Instruments.” The Company did an evaluation of the debt modification under EITF 96-19 and determined that the financial impact of the modification on the prior principal was not material to the overall financial statements and accordingly no adjustment was made. The amended loan as of November 1, 2013 was not considered “substantially different” from the original loan and therefore an evaluation under EITF 96-19 was not necessary.

The amended loan agreement includes certain reporting requirements and loan covenants requiring the maintenance of certain financial ratios. The Company was in compliance for the periods ended September 30, 2014 and 2013.

In connection with securing the financings discussed above, the Company incurred loan costs in the amount of $0.38 million. These costs are included in other assets and the balance is being amortized on a straight-line basis over 60 months. Amortization expense during the fiscal year ended September 30, 2014 was $83,327 compared to $44,956 for the prior comparable period. Future amortization expense is as follows:


Years ended September 30:

2015	$	86,495
2016		86,495
2017		86,495
2018		7,208


Total	$	266,693