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Schmidt Construction <br />Notes to Divisional Balance Sheet <br />December 31, 2007 <br />Note 3 -Related Party Transactions (Continued) <br />The assets of the Division are subject to creditors of the Parent company as a whole. In <br />the event of default by the Parent, the assets of the Division could be used to satisfy the <br />obligations. <br />Note 4 -Notes Payable -Former Stockholders <br />Notes payable consist of the Division's allocated portion of the following at December <br />3 I , 2007: <br />Note payable to a former stockholder for the purchase of common <br />stock, with annual payments ranging from $ 124,022 to $492,478, plus <br />interest at 1.5 percent over an average 12-month LIBOR (an effective <br />rate of 6.64 percent at December 31, 2007), with final payment due <br />June 30, 2010. The note is guaranteed by affiliated companies and is <br />subordinated to all bank debt $ 1,024,554 <br />Note payable to a former stockholder for the purchase of common <br />stock, with annual payments ranging from $274,381 to $510,212, plus <br />interest at 1.5 percent over an average 12-month LIBOR (an effective <br />rate of 6.64 percent at December 3 I , 2007), with final payment due <br />June 30, 2012. The note is guaranteed by affiliated companies and is <br />subordinated to all bank debt 1,986,190 <br />Total 3,010,744 <br />Less current portion 682,434 <br />Long-term portion $ 2,328,310 <br />Outstanding principal and accrued interest become immediately due and payable upon <br />the death of the majority stockholder, sale of substantially all assets, or loss of majority <br />control by the current majority stockholder. <br />The allocated principal payments due on notes payable are as follows: <br />2008 $ 682,434 <br />2009 823,627 <br />20 I 0 52 I ,40 I <br />20 I I 473,070 <br />2012 510,212 <br /> Total $ 3,010,744 <br />5 <br />