10. Long-Term Debt

Since October 1998, the Company has maintained a credit facility with an entity controlled by the Ardinger Family Partnership, LTD., the estate of one of its principal stockholders, Mr. H.T. Ardinger. Most recently, ViewCast.com, Inc., Osprey Technologies, Inc. and VideoWare, Inc. (jointly and severally, the “Borrower”) amended the terms and conditions of the loan and security agreement with the Ardinger Family Partnership, Ltd. (“Ardinger”) on December 30, 2011, to be effective as of October 1, 2011. Under the amended terms any amounts outstanding of the primary principal amount and secondary principal amount mature December 31, 2014, subject to certain earlier payment conditions. The interest on the primary principal amount will accrue based on an interest rate per annum that is the greater of 5.0% or the effective prime rate plus 0.75% (5.00% as of December 31, 2012 and June 30, 2013, respectively). Interest on the secondary principal shall accrue based on the effective Applicable Federal Rate, as defined in the agreement, (0.21% and 0.18% as of December 31, 2012 and June 30, 2013, respectively). The amendment defers the payment of the accrued interest on the unpaid primary and secondary principal amounts from October 1, 2011 through March 31, 2012. Beginning April 30, 2012, payment of such accrued interest was paid in three approximately equal monthly payments. The amended terms call for interest accruing after March 31, 2012 to be paid monthly; and beginning July 31, 2012, minimum monthly principal payments of $21,422, in addition to the monthly interest payments. Accrued interest was $10,769 and $38,314 at December 31, 2012 and June 30, 2013, respectively. The amended note agreement is secured by all the assets of the Borrower.

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. Under the terms of the Loan Agreement, payments of $18,447, $46,583, and approximately $20,000 were due June 15th, July 15th, and August 15th 2013, respectively. The Company has not made any of these payments, and accordingly, the debt is in default. This default has been waived by Ardinger as of August 19, 2013.

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.

The Company’s long-term debt consisted of:

	December 31, 2012			June 30, 2013
				(Unaudited)
Outstanding Primary Principal Amount	$	1,078,621		$	1,078,621
Outstanding Secondary Principal Amount		4,591,361			5,141,361
Other debt		32,156			20,193
Total long-term debt		5,702,138			6,240,175
Less current maturities		(150,870	)		(275,056	)
Total long-term debt less current maturities	$	5,551,268		$	5,965,119

Other debt consists of capital leases for equipment.