Note 15 – Other long term liabilities

In January 2010, K&K acquired land and a building for $1,525,000. The purchase was financed through mortgage notes payable as follow:

Mortgage payable with TFCU in the amount of $800,000. The loan bears interest at a rate per annum of 6.625% with minimum monthly payments due of principal and interest of $5,490 commencing March 1, 2010 through February 2020. The agreement includes a financial covenant which requires K&K to maintain a minimum debt service coverage ratio. The note is guaranteed by Cables Unlimited and collateralized by K&K’s real property.

Second mortgage payable to a bank in the amount of $640,000 due in monthly installments of interest only of $3,485 from February 2010 through April 2010, at a rate per annum of 6.625%, and then due in monthly installments of $8,197 of principal and interest at 9.25% from May 2010 through September 2010. The mortgage was collateralized by K&K’s building. This mortgage was paid in full in September 2010 with the proceeds received through the financing noted below.

In September 2010, K&K entered into a mortgage payable with the Small Business Administration (“SBA”) in the amount of $643,000. The loan bears interest at a rate per annum of 4.605% with minimum monthly payments due of principal and interest of $4,236 commencing October 1, 2010 through September 2030. The note is guaranteed by Cables Unlimited and the former owner of Cables Unlimited and is collateralized by K&K’s real property.

The following summarizes the information relative to the outstanding VIE debt at July 31, 2011:

Note payable - TFCU	$	780,608
Note payable - SBA		622,948
		1,403,556
Less current portion		(38,090	)
	$	1,365,466

Future payments on the outstanding debt are as follows:

2011	$	16,022
2012		39,363
2013		41,350
2014		43,298
2015		45,350
Thereafter		1,218,173
	$	1,403,556