6. Notes Payable

12 Months Ended

Oct. 31, 2013

Notes

6. Notes Payable

6. Notes Payable

On May 9, 2011, a new note payable was issued to G.S. Beckwith Gilbert, the Company’s significant shareholder and Chairman, in the amount of $4,815,000. The note payable bears a maturity date of November 1, 2014 and has an annual interest rate of 6% payable in cash. Interest payments will be made annually on October 31 of each year.  

During fiscal year 2012, the Company paid fiscal year 2012 interest to G.S. Beckwith Gilbert of $292,958, representing the entire fiscal year 2012 interest due, thereby meeting the payment requirements of the loan agreement. In August 2012, the Company made a $50,000 principal payment, bringing the principal amount of the note payable due to G.S. Beckwith Gilbert to $4,765,000 on October 31, 2012.

During fiscal year 2013, the Company paid fiscal year 2013 interest to G.S. Beckwith Gilbert of $287,564, representing the entire fiscal year 2013 interest due, thereby meeting the payment requirements of the loan agreement. In the fourth quarter of 2013, the Company made $400,000 in principal payments, bringing the principal amount of the note payable due to G.S. Beckwith Gilbert to $4,365,000 on October 31, 2013.

During the first quarter of fiscal year 2014, the Company made $300,000 in principal payments, bringing the principal amount of the note payable due to G.S. Beckwith Gilbert to $4,065,000.

The Company has received a commitment from G.S. Beckwith Gilbert, dated January 16, 2014, that if the Company, at any time, is unable to meet its obligations through January 16, 2015, G.S. Beckwith Gilbert will provide the necessary continuing financial support to the Company in order for the Company to meet such obligations. Such commitment for financial support may be in the form of additional advances or loans to the Company, in addition to the deferral of principal and/or interest payments due on the existing loans, if deemed necessary. The note payable is secured by the Company’s assets.