NOTE 11: - LONG TERM DEBT
|12 Months Ended|
Dec. 31, 2012
|Debt Disclosure [Text Block]||
NOTE 11:– LONG TERM DEBT
a. Subordinated convertible notes due August 15, 2011:
In August 2008, the Company issued $5,000,000 in 10% subordinated convertible notes due August 15, 2011 (the “Notes”). The Notes were convertible at the option of the holders at a fixed conversion price of $2.24. The principal amount of the Notes was payable over a period of three years, with the principal amount being amortized in eleven payments payable at the Company’s option in cash and/or stock, by requiring the holders to convert a portion of their Notes into shares of the Company’s common stock, provided certain conditions were met. The failure to meet such conditions could have made the Company unable to pay its Notes, causing it to default.
As of December 31, 2011, the Notes were paid in full and all associated warrants had expired.
b. Mortgage Note, Ann Arbor, Michigan:
In July 2011, the Simulation and Training Division purchased a building for $1,500,000 containing both office and lab space. The building was financed with a $1,100,000 mortgage loan that was obtained through the Company’s primary bank. The note requires a payment (principal and interest) of approximately $8,000 per month at an interest rate of LIBOR plus 375 basis points per annum with a balloon payment due in May 2017. In December 2012, FAAC leased surplus space of the purchased building to a non-profit organization for $6,300 per month as office space for a term of 10 years with an option to terminate the lease with a one year prior notice in May 2018. (See Note 8 for the relevant covenants relating to the mortgage.)
c. Mortgage Note, Auburn, Alabama:
In March 2007, the Company purchased space for the now-discontinued Armor Division in Auburn, Alabama for approximately $1,100,000 pursuant to a seller-financed secured purchase money mortgage. Half the mortgage is payable over ten years in equal monthly installments based on a 20-year amortization of the full principal amount, and the remaining half is payable at the end of ten years in a balloon payment. The note requires a payment (principal and interest) of approximately $9,300 per month at an interest rate of 8.0% per annum. The Company is currently leasing this building to the buyer of the Armor Division for approximately $9,300 per month under a three year lease.
d. Term loans, Israel:
In February 2012, the Company negotiated a short term loan with a local bank in Israel. The funds were released to the Company in three tranches of $250,000 each in February, March and April 2012. The interest rate for this loan is prime plus 1.2% and will be repaid in three tranches in February, March and April 2013. The balance of this loan as of December, 2012 was $811,834. The Company has additional long term debt outstanding of approximately $2,000 for a vehicle loan. This amount is payable in 2013.
e. Minimum loan payments:
The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.
Reference 1: http://www.xbrl.org/2003/role/presentationRef