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Other Liabilities
9 Months Ended
Sep. 30, 2015
Other Liabilities Disclosure [Abstract]  
Other Liabilities

NOTE 6 – OTHER LIABILITIES

 

In connection with the BCS acquisition on November 12, 2014, the Company assumed a related party note payable to the former Chief Technology Officer of the RFID division of BCS. The note is payable in equal monthly installments of $4,758 beginning October 31, 2014 and ending October 2018. The loan bears interest at 1.89% and is unsecured and subordinated to the Company’s bank debt.

 

The Company has purchased key man life insurance policies for certain executives to insure the Company against risk of loss of executive. Should loss of an executive occur, those funds would be used to settle pay off their respective promissory notes, repurchase their shares of Common Stock and settle any amounts owed to them or to their respective estates.

 

As of September 30, 2015, the Company balances are net per the right of offset noted in FASB No. 39 and 41. To have right of offset, the Company would need to show (1) amounts of debt are determinable, (2) reporting entity has the “right” to setoff, (3) the right is enforceable by law, and (4) reporting entity has the ‘intention’ to setoff. Given that the Company has satisfied these requirements, the Company has elected to use the right of setoff as the cash value of the policies are being used as the collateral for the loans. Should the Company default on payments to the policy or determine to not continue with the policies, the cash value of the policy is intended to pay off of the loan. The Company also intends on settling out the loans in the future with the cash value of the policy.

 

As of September 30, 2015, the balance of amount of premium financed notes are $1,194,074 and the cash value of the policy as of this date is $1,114,774, along with $59,540 of prepaid insurance expense costs, with a net negative cash value of the policies of $19,760.