(7)

Bank Loan

The Company has an outstanding bank loan with U.S. Bank National Association. On October 26, 2012, the loan, which then had an outstanding principal balance of $1.9 million, was amended to provide an additional $16.3 million to purchase the assets related to the management of the FBR Funds. The balance of the loan immediately following the amendment was $18.4 million. The amended loan agreement requires fifty-nine (59) monthly payments in the amount of $153,333 plus interest at the bank’s prime rate (currently 3.25%, in effect since December 17, 2008) plus 0.75% (for an effective interest rate of 4.00%) and is secured by the Company’s assets. The final installment of the then-outstanding principal and interest is due October 26, 2017.

In connection with securing the financing discussed above, the Company incurred loan costs in the amount of $0.25 million. These costs are included in other assets and the balance is being amortized on a straight-line basis over 60 months. The unamortized balance of loan fees was $0.20 million at September 30, 2013. The loan balance is $16.9 million as of September 30, 2013 compared to $1.9 million at the end of the prior comparable period. The note maturity schedule is as follows:


Years ended September 30:

2014	$	1,840,000
2015		1,840,000
2016		1,840,000
2017		1,840,000
2018		9,506,667


Total	$	16,866,667

The amended loan is considered “substantially different” from the original loan per the conditions set forth in Emerging Issues Task Force (EITF) 96-19 “Debtor’s Accounting for a Modification or Exchange of Debt Instruments.” The Company did an evaluation of the debt modification under EITF 96-19 and determined that the financial impact of the modification on the prior principal was not material to the overall financial statements and accordingly no adjustment was made.

The loan agreement includes certain reporting requirements and loan covenants requiring the maintenance of certain financial ratios. The Company was in compliance for the periods ended September 30, 2013 and 2012.

In connection with securing the financing discussed above, the Company incurred loan costs in the amount of $0.25 million. These costs are included in other assets and the balance is being amortized on a straight-line basis over 60 months. Amortization expense during the fiscal year ended September 30, 2013 was $44,956 compared to $6,295 for the prior comparable period. Future amortization expense is as follows:


Years ended September 30:

2014	$	48,475
2015	$	48,475
2016	$	48,475
2017	$	48,475
2018		3,518


Total	$	197,418

In connection with the purchase of the assets related to the FBR Funds, the Company funded part of the second and final payment of the purchase price by entering into an amendment to the existing loan agreement, bringing the total loan balance to $30.0 million. See Footnote 13 for more detail on the amendment to the loan agreement.