I will expect the company to provide an update this week...
On June 10, 2010, SmartPros Ltd. entered into an agreement with an unrelated company under which it agreed to provide up to $900,000 of credit, subject to various conditions, to that company. The credit facility is secured by a first lien on substantially all of the assets of the borrower and the borrower’s obligations under the financing agreement are guaranteed by the principles of the borrower. Interest on the amounts outstanding under the credit facility accrues at the rate of prime plus 8% and all amounts outstanding under the credit facility are due and payable on October 11, 2010. In consideration for extending credit, SmartPros obtained a ten-year right of first refusal to purchase the assets of the borrower. At closing, the borrower immediately drew down the entire credit line of $900,000, of which $541,000 was used to pay-off a pre-existing secured loan and the balance will be used for working capital. As part of the transaction, the previous secured lender assigned its security interest in the borrower’s assets to SmartPros.
I sent IR a note about this (haven't heard anything). I agree with you both--horrible form by management. We should get an 8-k whether they paid or not. I wonder if this is a way to back into an acquisition of the borrower.
Why is there no information about the loan being paid off? For a company with an 11 million dollar market cap, a one million dollar loan is significant. It is comparable to Apple making a 20 billion dollar loan. I hope we get a good answer soon.