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Subsequent Event
3 Months Ended
Mar. 31, 2013
Subsequent Event

18. Subsequent Event

 

On May 6, 2013, the Company entered into a Loan and Security Agreement effective April 30, 2013 (the “Loan Agreement”) with Ardinger Family Partnership, Ltd. (“Ardinger”) whereby Ardinger agreed to make a term loan to the Company in the amount of $550,000.  The interest rate on the unpaid principal amount under the Loan Agreement is seven and a half percent (7.5%) per annum.  Interest on the unpaid principal amount under the Loan Agreement is due in full at maturity.  Within fifteen (15) days after each month end, beginning with the month ending May 31, 2013, the Company shall pay a portion of the indebtedness under the Loan Agreement in an amount equal to five percent (5.0%) of the Company’s total revenue or income earned during such prior month before any deductions or allowances.  Within three (3) business days of the Company receiving the net proceeds of any asset sale that is not in the ordinary course of business, the Company shall pay a portion of the indebtedness under the Loan Agreement in an amount equal to one hundred percent (100%) of the net proceeds of such sale.  The maturity date is April 30, 2015, subject to certain exceptions. 

 

Absent approval from Ardinger, the Loan Agreement prohibits the Company from taking certain actions, including, but not limited to (i) incurring any lien on any of its assets, subject to certain exceptions; (ii) incurring indebtedness in excess of $250,000 in any fiscal year, subject to certain exceptions; (iii) granting any dividends on any equity interest of the Company; (iv) liquidating, merging, or consolidating with or into any entity; or (v) making capital expenditures in excess of $100,000 in any fiscal year; or (vi) creating, incurring, assuming, or suffering, to exist, any obligations as lessee under any lease, except leases in an aggregate amount less than $500,000 in any fiscal year and with lease terms of thirty-six (36) months or less. The Company ratified and confirmed existing liens previously granted by the Company to Ardinger and granted to Ardinger a first priority lien and security interest in and to all of the collateral granted under the prior loan agreement between the same parties, which loan agreement is still in existence.