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Note 4 - Letters of Credit
12 Months Ended
Dec. 31, 2012
Notes  
Note 4 - Letters of Credit

NOTE 4 - LETTERS OF CREDIT

 

On November 30, 2011, we entered into separate Credit Facility Agreements with two individuals pursuant to which such individuals agreed to act as sureties in connection with a combined $500,000 line of credit from a financial institution and certain extensions of credit by critical vendors which are necessary for our business.  Pursuant to such agreements, in consideration of the assisting parties’ extension of credit thereunder, we agreed to pay a total of $200,000 to the assisting parties or, at the assisting parties’ election, the assisting parties may each elect to receive 757,576 shares of common stock.  The assisting parties agreed to make assistance available to us within 10 business days of our written request and provide a guaranty to a financial institution.  We recorded a $200,000 deferred financing cost that is being amortized over the three (3) year life of the agreements.  On November 15, 2012, the two individuals irrevocably elected the option to receive payment in equity pursuant to the terms of the Credit Facility Agreements and on December 3, 2012 each such individual received 757,576 shares of common stock.

 

Pursuant to such Credit Facility Agreements, on January 27, 2012, we secured an irrevocable stand-by letter of credit in the amount of $50,000 with a financial institution for the benefit of a wholesale energy provider.  On August 18, 2012, the irrevocable stand-by letter of credit for the benefit of a wholesale energy provider was increased by $120,000 to $170,000.  This letter of credit expired on January 31, 2013.  In addition, on May 10, 2012, we secured an irrevocable stand-by letter of credit in the amount of $50,000 with a financial institution for the benefit of ERCOT.  The letter of credit, which expires on May 10, 2013, is subject to automatic extension and renewal provisions.