Note 3 - Notes Payable

12 Months Ended

Dec. 31, 2011

Notes To Financial Statements

Debt Disclosure [Text Block]

3. Notes Payable

The Company has two $1,000,000 notes payable under an unsecured loan agreement with HBL dated July 22, 1999.  The annual interest rate on unpaid principal from the date of each respective note is 4.5 percent, with accrued interest being payable at maturity.  $1,000,000 was payable on or before June 3, 2008.  The other $1,000,000 was payable on or before August 28, 2008.  Although we are currently in default of the notes, HBL has not demanded payment through the date of this filing.

The Company has a line of credit with Wells Fargo for $20,000, with interest at the prime rate plus 6.75 percent. There was an outstanding balance at December 31, 2011 and 2010 of $19,978 and $1,822, respectively, which is included in accounts payable and accrued expenses. This line is used from time to time for purchases.  The Company paid $2,005 and $1,577 of interest under the line of credit in 2011 and 2010, respectively.

In 2010, the Company entered into a verbal agreement with Paul Tibbits, a Director, to purchase 12,000,000 warrants held by him for $200,000. The agreement included interest at 0.43% per annum, with no stated maturity date, and no collateral. A promissory note in the amount of $200,000 to Paul Tibbits was executed on January 10, 2011. This note was in default at year end and now accrues interest at the default rate of 10% per annum.

On March 9, 2011, a promissory note (Note #2) in the amount of $20,000 to Paul Tibbits was executed.  The term of the note is 183 days and is due on September 8, 2011.  The annual interest rate is .0054 (.54 %)(or 10% if in default). This note was in default at year end, but was settled on February 8, 2012.

On April 6, 2011, a promissory note (Note #3) in the amount of $40,000 to Paul Tibbits was executed.  The note is a demand note or if no demand is made, the note matures on October 8, 2011.  The annual interest rate is .0054 (.51%)(or 10% if in default).  This note was in default at year end, but was settled on February 8, 2012.

On April 15, 2011, the Company entered into a convertible debt agreement with Asher Enterprises, Inc. and Hope Capital, Inc.  The note was in the amount of $63,000 at an annual interest rate of 14% on a 365-day basis with a maturity date of April 14, 2012.  All or any part of the outstanding and unpaid principle of the note along with any accrued and unpaid interest (at the option of the Borrower) can be converted into the Company’s common stock at any time during the term of the note. On October 27, 2011, Hope Capital, Inc. exercised its right to convert debt into equity by sending a Notice of Conversion to ABI to convert $10,000 principal amount of the note dated April 15, 2001, into 250,000 shares of ABI Common Stock at $0.04 per share.  The shares were issued in a timely manner in accordance with the covenants of the Note.  The Conversion Price used was the Fixed Conversion Price.  On December 22, 2011, ABI paid the remaining balance ($53,000) of the note dated April 15, 2011 along with accrued interest of $3,216.33.  This amount was wired to the lender and received on December 22, 2011.  Asher Enterprises, Inc. subsequently acknowledged the receipt of the funds and returned the original Note marked “Paid”.

On May 24, 2011, the Company entered into a second convertible debt agreement with Asher Enterprises, Inc. and Hope Capital Inc.  The note was in the amount of $40,000 at an annual interest rate of 14% on a 365-day basis with a maturity date of May 31, 2012. All or any part of the outstanding and unpaid principle of the note along with any accrued and unpaid interest (at the option of the Borrower) can be converted into the Company’s common stock at any time during the term of the note. The reserve requirement for the second note was 3,500,000 common shares.

On September 7, 2011, a promissory note (Note #4) in the amount of $10,000 to Paul Tibbits was executed.  The note is a demand note and if no demand is made, the note is due on October 7, 2011.  The annual interest rate is .0026 (.26%)(or 10% if in default). This note was in default at year end, but was settled on February 8, 2012.

On October 12, 2011, a promissory note (Note #5) in the amount of $10,000 to Paul Tibbits was executed.  The note is a demand note and if no demand is made, the note is due on January 13, 2012.  The annual interest rate is .0016 (.16%)(or 10% if in default). This note was in default prior to being settled on February 8, 2012.

On December 13, 2011, a promissory note (Note #6) in the amount of $5,000 to Paul Tibbits was executed.  The note is a demand note and if no demand is made, the note is due on March 13, 2012.  The annual interest rate is .0019 (.19%)(or 10% if in default). This note was settled on February 8, 2012.

On December 16, 2011, Shen An Chou, wired $70,000 ($69,982 net of an $18 international wire fee) to the Company as a short-term non-interest-bearing loan for operations.  The agreement was verbal only and no note was executed.  Due to the short-term nature of the loan, no interest rate was assigned to the loan.  The loan was repaid in full on February 28, 2012.