Notes to Related Parties

9 Months Ended

Sep. 30, 2011

Notes To Related Parties [Abstract]

Notes To Related Parties Disclosure [Text Block]

6.           Notes to Related Parties

Subordinated Convertible Notes Payable

Notes payable to related parties includes unsecured convertible notes to UBA for a total value of $3,292,800 as of September 30, 2011, including interest at the prime rate plus 1.5%, but not to exceed 10% per year.  The UBA notes are convertible into common stock at $1.50 per share except for one note dated March 2, 2005 which is convertible into common stock at $1.44 per share. The issuance of 183,871 shares of common stock to the independent, non-employee members of the Board of Directors on September 14, 2011 triggered an adjustment to the conversion rate of such March 2, 2005 note. As such, $580,800 in principal and accrued interest is convertible into common stock at $1.44 per share while the remaining $2,712,000 is convertible at $1.50 per share. (For additional information, see Item 2. "Management's Discussion and Analysis of Financial Condition and Results of Operations – Description of Our Indebtedness – Master Line of Credit."). The UBA notes have been extended through June 2012 with automatic renewals after such maturity date for successive one year terms, provided that either MBC or UBA may elect not to extend a term upon written notice given to the other party no more than 60 days and no fewer than 30 days prior to the expiration of such term. UBA may demand payment within 60 days of the end of the extension period but is precluded from doing so because the notes are subordinated to long-term debt agreements with Cole Taylor maturing in June 2016. Therefore, we will not require the use of working capital to repay any of the UBA notes until the Cole Taylor facilities are repaid.  The UBA notes include $1,377,400 and $1,309,400 of accrued interest at September 30, 2011 and December 31, 2010, respectively.

5% Notes Payable

Also included in notes payable to related parties is an unsecured loan from Shepherd Neame to KBEL payable in annual installments of $93,700 with interest at 5% per year maturing in June 2012.  The amounts outstanding under this loan as of September 30, 2011 and December 31, 2010 were $93,700 and $184,800 respectively, including current maturities of $93,700 and $92,400 on those dates.