NOTES PAYABLE

3 Months Ended

Mar. 31, 2012

Notes Payable Disclosure [Abstract]

Notes Payable Disclosure [Text Block]

10. NOTES PAYABLE

Notes payable consists of the following as of March 31, 2012:

Promissory note payable secured by a first mortgage on the real property of  the Company having a carrying value of $1,086,704 at March 31, 2012, bearing interest at 7.5% per annum, due in monthly interest only payments beginning on February 22, 2011, maturing on May 22, 2012, with balloon payment of principal and any accrued and unpaid interest.	$	1,053,993
Promissory note payable, secured by third mortgage on real property, having a carrying value of $1,100,420 at September 30,2011, bearing 6.99% interest per annum, due in monthly principal and interest payments of $1,980, maturing on February 22, 2012.		—
Promissory note payable, unsecured, bearing interest at 5% per annum, due in monthly principal and interest payments of $2000, maturing on August 31, 2012.		33,314
		1,087,307
Less amounts due within one year		1,087,307
Long-term portion of notes payable	$	—

As of December 31, 2011, principal payments on the notes payable are as follows:

2012	$	1,087,307
2013		—
2014		—
2015		—
2016		—
Thereafter		—
	$	1,087,307

On March 18, 2011, the Chief Executive Officer transferred all financial interest in GKR. Accordingly, all transactions of the Company with GKR subsequent to March 18, 2011, are not classified with those of related parties, and the note payable due them was converted to a convertible debenture as of September 8, 2011. Accordingly the balance due under that obligation is classified with the convertible debenture balance as of March 31, 2012 and December 31, 2011. See Note 11. CONVERTIBLE DEBENTURES for further discussion.

On February 18, 2011, the Company’s wholly owned subsidiary, Trebor Industries, Inc., entered into a Forbearance Agreement with Branch Banking and Trust Company (“BBT”) for the promissory note in the principal amount of $1,000,000 in favor of BBT (the “Term Loan”) and the promissory note in the principal amount of $199,991 in favor of BBT (the “Second Note”). The Term Loan and Second Note are collectively referred to as the “Secured Notes”.  The Secured Notes are secured by the Company's Fort Lauderdale facilities and personally guaranteed by the Company’s chief executive officer. As previously disclosed, the Company failed to bring the Secured Notes current and in January 2011 BBT accelerated the full principal and accrued interest due under the Secured Notes, as well as initiated collection and legal action.  The Forbearance Agreement effectively extends the maturity date of the Secured Notes to May 22, 2012.  The Secured Notes were consolidated under a Consolidated and Restated Promissory Note in the principal amount of $1,053,993, effective November 22, 2010, (the “Consolidated Note”).  The maturity date of the Consolidated Note is May 22, 2012, and may be prepaid at any time.  The interest rate on the Consolidated Note is 7.5% per annum. Pursuant to the Forbearance Agreement the Company paid $33,000 to BBT at closing.  In addition to the monthly interest only payments required under the Consolidated Note, Trebor was required to pay BBT $6,028 by February 28, 2011, and monthly payments of approximately $3,555 on March 10, 2011, April 10, 2011, and May 10, 2011, to satisfy disbursements, costs and expenses associated with the Forbearance Agreement. See Note 21. SUBSEQUENT EVENTS for discussion of Default Notice on the Forbearance Agreement and Foreclosure on the real estate and assets securing the mortgage

 

In February 2011, the Company converted a vendor payable into an unsecured promissory note as reflected above in table summarizing notes payable as of March 31, 2012 and in table below summarizing notes payable as of December 31, 2011. Principal and interest payments of $2,000 per month were to begin on February 28, 2011, and continue through August 31, 2012, maturity. As of March 31, 2012, the Company was in arrears on making payments by approximately seven months. No default notice has been received and the Company plans to make payments as soon as it is able.

Notes payable consists of the following as of December 31, 2011:

Promissory note payable secured by a first mortgage on the real property of  the Company having a carrying value of $1,093,562 at December 31, 2011, bearing interest at 7.5% per annum, due in monthly interest only payments beginning on February 22, 2011, maturing on May 22, 2012, with balloon payment of principal and any accrued and unpaid interest.	$	1,053,993
Promissory note payable, secured by third mortgage on real property, having a carrying value of $1,100,420 at September 30,2011, bearing 6.99% interest per annum, due in monthly principal and interest payments of $1,980, maturing on February 22, 2012.		—
Promissory note payable, unsecured, bearing interest at 5% per annum, due in monthly principal and interest payments of $2000, maturing on August 31, 2012.		33,314
		1,087,307
Less amounts due within one year		1,087,307
Long-term portion of notes payable	$	—