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Loan Payable
3 Months Ended
Sep. 30, 2011
Loan Payable [Abstract] 
Loan Payable

6.   LOAN PAYABLE:

 

As of September 30, 2011, PA-1, the Company's wholly-owned subsidiary, owes $7,296,000 under the terms of the Pennvest Loan related to the construction of the Phase 1 System at Kreider Farms. The Pennvest Loan is structured in phases (pre and post-completion of permitting/commencement of construction) and Pennvest's disbursements take the form of reimbursements of qualified sums expended by PA-1. In connection with the Pennvest Loan, the Company has provided a 'technology guaranty' regarding nutrient reduction performance of the Kreider System which will expire when the Kreider System's nutrient reduction performance has been demonstrated. The closing/settlement of the Pennvest Loan took place on November 3, 2010, and as of September 30, 2011, PA-1 has submitted six requests for drawdowns/reimbursements from Pennvest totaling $7,657,225 of which Pennvest has held $361,225 as retainage pending completion of the project and has loaned PA-1 $7,296,000. PA-1 has been using the proceeds from the Pennvest Loan to reduce its current obligations related to the Kreider project. The terms of the Pennvest Loan provide for funding of up to $7,754,000 which is to be repaid by interest-only payments for three years, followed by an additional ten-year amortization of principal. The Pennvest Loan accrues interest at 2.547% for years 1 through 5 and 3.184% for years 6 through maturity. The Pennvest Loan is collateralized by a pledge of all revenues generated from the Project including, but not limited to, revenues generated from nutrient reduction credit sales and by-product sales. In addition, in consideration for the excess credit risk associated with the project, Pennvest is entitled to participate in the profits from the project calculated on a net cash flow basis, as defined. For the three months ended September 30, 2011, the Company has incurred interest expense related to the Pennvest Loan of $45,644, of which $43,650 has been capitalized as a cost of the Phase 1 System.