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Note 4: Notes Payable and Accrued Interest - Related Parties
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Dec. 31, 2011
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| Related Party Transactions Disclosure [Text Block] |
Note
4: Notes Payable and Accrued Interest - Related
Parties
As
of December 31, 2011 and 2010, the Company had the following
notes payable and accrued interest balances
outstanding:
On
February 1, 2008, Isabel Moeller, sister of our Chief
Executive Officer, Klaus Moeller, loaned $310,000 to the
Company at an interest rate equal to 8% per annum as a short
term note payable. The funds were borrowed from Ms.
Moeller in order to reduce outstanding obligations due to
Genius Products at that time. Subsequent
agreements extended the maturity date to December 31, 2010
and reduced the stated interest rate to six (6%) percent per
annum. On September 30, 2010, Ms. Moeller agreed
to accept a new note with a maturity date of December 31,
2012, resulting in the reclassification of the total amount
outstanding, including principal and accrued interest, as
long term debt. On March 7, 2012, Ms. Moeller
executed and extension agreement to change the maturity date
of the note to January 15, 2015, with no change in the terms.
Payments were made on the outstanding principal in the amount
of $14,000 and $10,000 on February 9, 2011 and April 27,
2011, respectively. On April 1, 2011, Ms. Moeller
converted $200,000 of the outstanding principle to 1,000,000
shares of the Company’s common stock. The
amount due to Ms. Moeller as of December 31, 2011 and
December 31, 2010 includes $33,982 and $22,142 in accrued but
unpaid interest, respectively.
Notes
were issued in favor of four of the Company’s officers
(the “Officers”) for loans to the Company at
various times during the years 2007 through
2009. On December 31, 2009, the Officers agreed to
issue new note agreements for the outstanding balances,
including accrued but unpaid interest, with a maturity date
of December 31, 2010 and a stated interest rate of 6% per
annum. Repayments in the aggregate amount of
$60,654 were made on August 11, 2010. On September
30, 2010, the Officers agreed to extend the maturity date of
the loans to December 31, 2012 resulting in the outstanding
balances, including principal and accrued interest, to be
reclassified as long term debt. On March 7, 2012,
the four Officers agreed to execute extension agreements to
change the maturity date on their respective notes to January
15, 2015, with no change in the terms. On October
12, 2010 repayments were made in the aggregate amount of
$40,707. Additional repayments were made on February 2, 2011
and April 27, 2011 in the aggregate amounts of $66,000 and
$30,000, respectively. The amount due to the
Officers on these notes includes accrued but unpaid interest
in the amounts of $34,956 and $21,824 as of December 31, 2011
and December 31, 2010, respectively.
On
September 30, 2010, four of the Officers agreed to convert
accrued but unpaid salaries through September 30, 2010 to
subordinated long term notes payable. In February
2011, as a result of an agreement by each of the four
Officers to retroactively decrease the amount of the annual
salary for 2010 from $125,000 per annum per Officer to
$80,000, the amount of the notes were reduced to
an aggregate of $1,620,137. The notes have a
maturity date of December 31, 2012 and a stated interest rate
of six percent (6%) per annum, said interest accruing from
October 1, 2010 on the unpaid balance of principal and
interest. On March 7, 2012, the four Officers
agreed to execute extension agreements to change the maturity
date on their respective notes to January 15, 2015, with no
change in the terms. There is no prepayment
penalty. As of December 31, 2011 and December 31,
2010, the accrued but unpaid interest totals $123,099 and
$24,090, respectively.
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