Borrowings from Officer

12 Months Ended

Dec. 31, 2013

Borrowings from Officer

Borrowings from Officer

7. Borrowings from Officer

On February 7, 2013, the Company entered into an unsecured revolving promissory note to borrow up to $2,200,000 from G. Ward Paxton, the Company’s Chief Executive Officer.  Under the terms of the note, the Company may borrow, repay and reborrow on the loan as needed up to an outstanding principal balance due of $2,200,000 at any given time through March 2014.

On February 6, 2014, the Company entered into an unsecured revolving promissory note, to replace the note listed above, to borrow up to $2,200,000 from G. Ward Paxton, the Company’s Chief Executive Officer.  Under the terms of the note, the Company may borrow, repay and reborrow on the loan as needed up to an outstanding principal balance due of $2,200,000 at any given time through March 2015.

Amounts borrowed from this officer accrue interest at a floating rate per annum equal to SVB’s prime rate plus 1% (5% at December 31, 2013).  All outstanding borrowings and accrued but unpaid interest is due on March 31, 2015.  As of December 31, 2013, the borrowings outstanding totaled $1,530,000 and accrued interest totaled $76,000.