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Notes To Related Parties
6 Months Ended
Jun. 30, 2012
Notes To Related Parties  
Notes to Related Parties

 

6.    Notes to Related Parties

 

Subordinated Convertible Notes Payable

 

Notes payable to related parties includes unsecured convertible notes to UBA for a total value, including interest at the prime rate plus 1.5%, but not to exceed 10% per year, of $3,361,100 as of June 30, 2012. Thirteen of the UBA notes are convertible into shares of the Company’s Common Stock at $1.50 per share and one UBA Note is convertible into shares of the Company’s Common Stock at a rate of $1.44 per share. The issuance of shares of the Company’s Common Stock to non-employee directors on September 14, 2011 triggered an adjustment to the conversion rate with respect to the note that now converts at a rate of $1.44 per share. As of June 30, 2012, the outstanding principal and interest on the notes issued to UBA were convertible into 2,257,260 shares of the Company’s Common Stock.

 

The UBA notes were extended until June 2012 with automatic renewals after such maturity date for successive one year terms, provided that either the Company or UBA may elect not to extend the 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. The Company and UBA did not issue any such notice prior to June 2012 and hence the maturity date of the notes has been automatically extended until June 30, 2013. 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, the Company 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 $1,445,700 and $1,400,300 of accrued interest at June 30, 2012 and December 31, 2011, respectively. 

  

5% Notes Payable

 

Included in current maturities of notes payable to related parties as of December 31, 2011 was $93,200 related to a note bearing annual interest at 5% issued by Shepherd Neame to KBEL, which was paid in full as of June 30, 2012.