Quarterly report pursuant to Section 13 or 15(d)

Debt

Debt

9 Months Ended

Jan. 31, 2012

NOTE 8 – DEBT

As of January 31, 2012 and April 30, 2011, respectively, the following debts associated with the Freedom-2 Holdings, Inc. subsidiary are as follows:


	January 31, 2012			April 30, 2011
	Principal	Accrued interest & penalty	Total	Principal	Accrued interest & penalty	Total
Note payable to a Bank for a mortgage secured by the building, interest at 7.75 % payable in monthly installments of $19,202, with a balloon payment due 2/1/2013.	$ 1,592,315	$ 326,317	$ 1,918,632	$ 1,592,315	$ 233,762	$ 1,826,077
Increase for fair value at acquisition	112,681	-	112,681	112,681	-	112,681
Amortization of premium	(83,909)	-	(83,909)	(62,334)	-	(62,334)
Note payable for a mortgage	1,621,087	326,317	1,947,404	1,642,662	233,732	1,876,424
Note Payable to Fish & Richardson, secured by a second mortgage on the building with interest at 2.5% payable in monthly installments of $5,787.	178,951	27,137	206,088	178,951	23,782	202,733
Note Payable to MFE, LLC secured by a third mortgage on the property due 12/31/2009 with interest at 10% payable on the first day of April, July and October until the maturity date with the balance payable on the maturity date.	-	-	-	150,000	15,000	165,000
License fee agreement with Brown University, amended February 12, 2009, for intellectual property rights. Equal payments of $100,000 are due on June 1, 2009, 2010, 2011 and 2012. The license fee payments do not include interest.	400,000	-	400,000	400,000	-	400,000
Decrease for fair value at acquisition	(58,408)	-	(58,408)	(58,408)	-	(58,408)
Amortization of premium	52,417	-	52,417	38,939	-	38,939
Note fee payable	394,009	-	394,009	380,531	-	380,531
Bridge loan payable initiated 12/01/2008 accruing interest at 8% and payable upon maturity on 6/30/2010.	20,000	2,800	22,800	20,000	1,600	21,600
Total	2,214,047,	356,254	2,570,301	2,372,144	274,144	2,646,288
Less: current portion	2,214,047	356,254	2,570,301	2,372,144	274,144	2,646,288
Long-term portion	$ -	$ -	$ -	$ -	$ -	$ -

On July 30, 2009, the mortgage agreement with Cornerstone Bank was modified whereby the principle of $43,572 paid to date on the note was re-advanced to the borrower returning the principle balance to $1,600,000. Payments under the modified agreement commenced on September 1, 2009.

There have been pending sales of the Company’s building in 2008 and again in 2009 and 2010, which would have accelerated the payment of the Cornerstone Bank mortgage. In addition, there was a temporary leasing of a small separated portion of the building in 2009, which unfortunately ended due to bankruptcy of the lessee, Eldon of NJ. Although the Company’s efforts continue in this area to sell or lease part or all of the building, to date, the large number of vacant properties in the Cherry Hill, NJ region have made it difficult to accomplish either, through and including the current year. Accordingly, although the maturity date of the mortgage extends to February 1, 2013, the Company recognizes the entire outstanding mortgage value as a current liability. At the date of acquisition the mortgage and license fee payable were recorded at fair value on the Company’s balance sheet. The above schedule adjusts the book value of those liabilities to their fair value, net of applicable amortization of the discount and premium as of January 31, 2012 and April 30, 2011.

During the quarter a settlement agreement was reached with MFE, LLC, whereby the Company paid them $100,000 and MFE relinquished all future claims to any and all remaining principle and interest. As a result of the settlement the Company recorded $50,000 of principle and $22,500 of accrued interest to gain on settlement of debt.

As of January 31, 2012 the Company was indebted to its CEO for a $100,000 note payable, $12,005 for advances to cover certain operating expenses and $241 of accrued interest. The note bears interest at 8% and is due within one year. The $12,005 was repaid in February 2012.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References + Details