Certain Relationships and Related Transactions

12 Months Ended

Dec. 31, 2011

Notes to Financial Statements

Certain Relationships and Related Transactions

Note 11: Certain Relationships and Related Transactions

The following is a summary of transactions to which the Company and certain officers and directors of the Company are a party or have a financial interest. The Board of Directors of the Company has adopted a policy that all transactions between the Company and its officers, directors, principal shareholders and other affiliates must be approved by a majority of the Company's disinterested directors, and be conducted on terms no less favorable to the Company than could be obtained from unaffiliated third parties.

Jeffrey R. Gaither, a Director, is Managing Partner of Bose McKinney & Evans, LLP, a law firm that performs legal services for the Company. The Company paid Bose McKinney for services rendered in the approximate amount of $357,895, $320,186 and $428,028 in 2009, 2010 and 2011, respectively.

At various times, Paul W. Mobley, the Company’s Chairman of the Board and Chief Executive Officer, loaned the Company $855,821 in 2010 and $400,000 in 2011 for a total of $1,255,821 to help fund $1,125,000 in principal payments in 2010 and $925,000 in 2011 due under its bank loan and to help fund $933,809 in payments related to discontinued operations in 2010 and $709,816 in payments related to discontinued operations in 2011. The payments related to the discontinued operations were largely for legal fees related to the Heyser lawsuit, which is described in Note 10 of the notes to the accompanying consolidated financial statements. The advances are evidenced by promissory note in the amount of $1,255,821, which provides for interest to be paid monthly on the unpaid principal balance of the note which began December 1, 2010, and has continued on the first day of each calendar month thereafter and will continue until the note is paid in full, at the rate of 8% per annum and the Company is current on the required interest payments. In addition, the note requires principal payments commencing on November 1, 2012 and on the first day of each calendar month thereafter in the amount of $100,000 per month through September 1, 2013 and $125,500 on October 1, 2013. The Third Amendment to the Loan Agreement with Wells Fargo states that no principal payment on the officer note can commence until the Wells Fargo loan is paid in full.