XML 26 R13.htm IDEA: XBRL DOCUMENT v2.3.0.15
LONG-TERM NOTES PAYABLE
9 Months Ended
Sep. 30, 2011
LONG-TERM NOTES PAYABLE [Abstract] 
LONG-TERM NOTES PAYABLE
NOTE 7 - LONG-TERM NOTES PAYABLE

On June 4, 2008, the Company issued a note payable in the amount of $296,103 due to Star Financial Corporation, which is owned by Fay Passley, the mother of our Chief Executive Officer, Shaun Passley, which has since been amended (the "June 2008 Note", as amended from time to time).  The loan is unsecured and bears interest at 10%, with annual payments of principal and interest in the amount of $106,951, originally due and payable beginning on December 1, 2009 and a maturity date of June 4, 2013.  In April 2010, Star Financial, agreed to modify the repayment terms of the June 2008 Note (as defined above), to provide for $100,000 to be due on August 1, 2011, $100,000 to be due on August 1, 2012, and the remaining balance of the June 2008 Note to be due on August 1, 2013 in return for junior lien on the Company's assets.

In connection with the loan, the Company paid $14,100 (5%) in financing costs that are being amortized over the life of the loan using the effective interest method.  The majority of the funds borrowed pursuant to the June 2008 Note were used to pay the seller the $210,000 payment in connection with the purchase of DFI and PRMI, as described below.  

As part of the acquisition of Desk Flex, Inc., an Illinois corporation ("DFI"), and Professional Resource Management, Inc., an Illinois corporation ("PRMI") on June 18, 2008, Epazz provided a 7% promissory note in the amount of $225,000.  The promissory note bears interest at the rate of 7% per annum, and all past-due principal and interest bear interest at the rate of twelve percent (12%) per annum until paid in full.  The principal amount of the note was due on June 18, 2011.  The note was payable in monthly installments of $6,947 until such time as this Note was paid in full.  Additionally, Epazz agreed to secure the payment of the note with a security interest over all of the tangible and intangible assets of DFI and PRMI, and the outstanding stock of both companies until the note is repaid. As of September 30, 2011 this note has been paid in full

As part of the purchase of the AutoHire software product, Epazz provided a non-interest bearing promissory note in the amount of $50,000.   The note was payable in monthly installments of $416 beginning May 5, 2010.  As of  September 30, 2011 this note has been paid in full.