Note 11 - Long-term Debt

9 Months Ended

Sep. 30, 2014

Debt consisted of the following:


	September 30, 2014		December 31, 2013
Note payable to a bank, due in monthly installments, including interest at 7.25% with a principal balance due on February 22, 2019, secured by real property. (a) (b)	$ 321,724		$ 1,341,243
Revolving line of credit to a bank, which allows NPI to borrow up to $2,500,000 through May 2016, secured by assets of NPI, including, but not limited to, accounts receivable, inventory, and equipment. (d)	1,957,027		-
Revolving line of credit to a bank, which allows NPI to borrow up to $2,000,000, interest due monthly at the greater of prime (3.25%) plus one or 5%, principal balance due April 30, 2014, secured by assets of NPI. (a) (d)	-		1,318,034
Note payable to a bank, due in quarterly payments of interest only, with interest at 5%, with a principal balance due May 31, 2014, secured by the Company’s real property. (e)	-		1,150,000

Note payable, due in monthly payments of $1,000, with interest at 4%. This note is paid in full.		-	3,000
Note payable to a bank, due in monthly installments, with interest at 12.5%, with a principal balance due in February 2017, secured by the Company’s real property. (a) (c)		232,218	-
Note payable, non-interest bearing, which was issued in exchange for shares to be purchased by the Company, secured by 63,540 shares of the Company not delivered as of September 30, 2014, the Company has entered into an escrow agreement to resolve payment of this amount		200,000	200,000
Note payable to a bank, due in monthly installments, with interest at 12.5%, with a principal balance due in June 30, 2017, secured by the Company’s real property. (a) (c)		149,681	-

Subtotal	2,860,650	4,012,277
Less current portion	(2,019,468)	(3,697,808)
Total	$ 841,182	$ 314,469

(a) Daniel Dror, Chairman and CEO of American, is a personal guarantor of these notes payable.

(b) On February 22, 2014, the Company entered into a modification and extension agreement with the bank. In connection with this agreement, the Company paid down $1,000,000 of the note payable owed to the bank. In addition, the term of the note payable was extended from February 22, 2014 to February 22, 2019. The note as amended bears interest at 7.25% and payments of $3,941 are owed monthly for 59 months beginning March 22, 2014, and a balloon payment owed for the remainder of the note payable and interest (approximately $196,000) due February 22, 2019.

(c) On February 24, 2014, the Company entered into a promissory note agreement. The note bears interest at 12.5% and payments of $3,444 are owed monthly for 35 months, beginning in March 2014, and a payment for the remainder of the note payable is due during the 36^th month.

(d) On May 21, 2014, the Company entered into a new revolving line of credit agreement, which allows NPI to borrow up to $2,500,000. The previous line of credit balance owed was concurrently paid off.

(e) AITP sold its 174 acres in Waller County, Texas, which closed on July 25, 2014. The proceeds were used to pay the note in full.

Interest expense for the three and nine months ended September 30, 2014 and 2013 was $7,917, $123,211, $62,160, and $185,959, respectively.

Each of American's subsidiaries that have outstanding notes payable has secured such notes by that subsidiary’s inventory, accounts receivable, property and equipment and is guaranteed by American.

AMERICAN INTERNATIONAL INDUSTRIES INC 10-Q/A