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6. Term and Credit Note Payable | 9 Months Ended
--- | ---
Sep. 30, 2012
Term And Credit Note Payable |
6. Term and Credit Note Payable | The following table summarizes our notes payable balance as of:
Lender |  | Due Date |  | Interest Rate |  | September 30, 2012 |  | December 31, 2011
|  |  |  |  |  | (Unaudited) |  |
Bridge Bank - term note; paid in full on March 1, 2012 |  | February 2013(paid in full) |  | Prime + 2 percentage points |  | $ | — |  |  | $ | 475,000 |
Bridge Bank - term note |  | February 2016 |  | Prime + 1 percentage points |  | 4,555,555 |  |  |
Bridge Bank - credit facility; paid in full on March 1, 2012 |  | February 2013(paid in full) |  | Prime + 2 percentage points |  | — |  |  | 2,431,303 |
Bridge Bank - credit facility |  | February 2014 |  | Prime + 0.5 percentage points |  | 3,300,000 |  |  |  |  |
Totals |  |  |  |  |  | 7,855,555 |  |  | 2,906,303 |
Less: term and credit notes payable - current portion |  |  |  |  |  | (1,333,333 | ) |  | (452,000 | )
Term and credit notes payable - long-term |  |  |  |  |  | $ | 6,522,222 |  |  | $ | 2,454,303 |
Principal Payments Due Principal payments due are as follows as of September 30, 2012:
2012 |  | $ | 333,333 |
2013 |  |  | 1,333,333 |
2014 |  |  | 1,333,333 |
2015 |  |  | 1,333,333 |
2016 |  |  | 222,223 |
Total |  | $ | 4,555,555 |
On March 1, 2012, we entered into a new Business Financing Agreement with Bridge Bank. N.A. (“Bridge Bank”), for up to a $10 million revolving credit facility (the “Revolving Credit Line”) and a $5 million term loan (the “Term Loan”). The Revolving Credit Line replaced our then existing $8 million revolving credit facility. The new credit facility is used primarily to satisfy our working capital needs following the closing of the merger with Vertro described herein. As of September 30, 2012, there was approximately $1.1 million credit available on the revolving credit facility and $0 on the term loan. Subject to the terms of the new agreement, we are entitled to obtain advances against the Revolving Credit Line up to 80% of eligible accounts receivable balances, which are generally those balances owed by U.S. based customers that are less than 90 days from the date of invoice, plus $1 million up to the credit limit of $10 million. In addition, subject to the terms of the agreement, we are entitled to borrow up to $5 million under the Term Loan, which is repayable in 45 equal monthly installments beginning June 2012. The Revolving Credit Line portion of the credit facility expires on February 28, 2014, at which time all loan advances under the Revolving Credit Line become due and payable. The Term Loan expires in February 2016. Under the terms of the new agreement, we must maintain certain depository, operating and investment accounts at Bridge Bank; provide Bridge Bank a first priority perfected security interest in all of our accounts and personal property; provide various monthly, quarterly and annual reports; and limit additional indebtedness to $500,000 of purchase money including capital leases and an additional $500,000 of all other indebtedness. In addition, the new agreement required that we maintain through May 2012 an “operating profit” of net income plus interest and taxes plus non-cash expenses for amortization, depreciation, stock based compensation, discontinued operations, non-recurring non-cash items and certain closing costs associated with the Merger Transaction with Vertro of not less than $200,000 for the immediate proceeding three month period; after May 2012 a Debt Service Coverage Ratio of at least 1.50 to 1.0 tested on the immediate proceeding three month period; and an Asset Coverage Ratio of not less than 1.10 to 1.0 at all times until September 30, 2012 and 1.25 to 1.0 thereafter. Interest on the Revolving Credit Line is payable monthly at prime plus 0.5% (3.75% at September 30, 2012) plus a monthly maintenance fee of 0.125 percentage points on the average daily account balance. Interest on the Term Loan bears interest at prime plus 1% (4.25% at September 30, 2012). In connection with establishing the credit facility, the Company incurred fees payable to Bridge Bank of approximately $100,000. The agreement calls for a termination fee until the first anniversary and prepayment fee on the Term Loan until the first anniversary. On October 11, 2012, we entered into the Second Amendment to the Business Financing Modification Agreement with Bridge Bank (“Second Amendment”). Second Amendment modified the minimum asset coverage ratio to 0.9 to 1.00 for September 2012 and October 2012, 1.0 to 1.00 for November and December 2012 and 1.15 to 1.0 for each measuring period thereafter beginning January 2013. It also changed the minimum operating profit measured monthly on a trailing 3 month basis to not less than $600,000 for the September 2012 measuring period and $1,000,000 for the October 2012 measuring period. Also changed was the minimum debt service ratio, measured monthly on a trailing 3 month basis, to not less than 1.1 to 1.0 for November 2012 measuring period, 1.25 to 1.0 for December 2012 and 1.50 to 1.0 for each measuring period thereafter beginning January 2013. Further, the Second Amendment waived the event of default caused by the non-compliance of the operating profit in July and August 2012. Additionally, pursuant to the Second Amendment, the Company issued Bridge Bank a warrant to purchase 51,724 shares of our own common stock exercisable at $0.87 per share exercisable until October 2017. As of September 30, 2012, we were not in compliance with all terms of the amended Bridge Bank credit facility, however we regained compliance upon execution of the Second Amendment.

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