NOTE 6 - LONG-TERM DEBT

3 Months Ended

Mar. 31, 2012

Long-term Debt [Text Block]

NOTE 6 – LONG-TERM DEBT

Long-term debt consisted of the following:

	March 31, 2012			December 31, 2011
Note payable due December 31, 2014, as extended,  plus interest at 5% per annum (a) (b)	$	1,332,018		$	1,582,017
Note payable due December 31, 2014, as extended,  plus interest at 5% per annum (a)		500,000			500,000
Seller note payable due December 31, 2014, as extended,  plus interest at 5% per annum (a)		5,850,807			5,925,807
Convertible Debenture payable to a finance company due July 1, 2013, plus interest at 16% per annum (c)		800,000			800,000
Less discount		(291,663	)		(333,329	)
Total long-term debt	$	8,191,162		$	8,474,495

(a) In December 2011, the Company issued 2,489,956 shares of common stock in exchange for extending due date of certain notes payable. The shares were valued at $871,485 ($0.35 per share, the stock price on the date of the agreement), and will be charged to expense over terms of the extensions.

(b) The purchase agreement also provided for the Company to charge all uncollectable receivables and payments of pre-acquisition liabilities against the note payable to Stonegate Holdings (seller of the VSG and RMI assets). As of December 31, 2011, the Company charged an aggregate of $2,134,236 to Stonegate Holdings and reduced the value of customer lists, as this was a result of the acquisition agreement. 

(c) On December 27, 2011, the Company sold an aggregate of $800,000 of debentures (Debentures) and warrants to purchase 1,333,333 shares of common stock of the Company. The Debentures are payable on July 18, 2013 and interest is payable quarterly, commencing April 1, 2012, at 16% per annum.

The warrants are exercisable at any time through December 31, 2017 at $0.60 per share, subject to adjustment as defined in the warrant agreement.

The Debentures are convertible into shares of common stock of the Company at $0.50 per share, at any time, subject to limitations, as defined in the agreement. The conversion price and amount may be subject to adjustment.

In addition, under certain conditions, the Company has the right to redeem the Debentures at 120% of the principal amount and accrued interest thereon.

The debt discount was calculated at issuance and is being amortized to interest expense over the term of the note.