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NOTE 11: - LONG TERM DEBT
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Dec. 31, 2012
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| 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:
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