SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
of Report (Date of Earliest Event Reported): June 2, 2011
(Exact name of Registrant as Specified in its Charter)
|(State or other Jurisdiction of Incorporation or Organization)
||(Commission File Number)
||(IRS Employer Identification No.)
|1945 The Exchange
|(Address of principal executive offices)
Registrants telephone number, including area code: (770) 953-0304
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions (see General
Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
||ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
Mortgage Note. A subsidiary of Servidyne, Inc. (the Company) is the obligor under a
mortgage note payable on the Companys corporate headquarters building, which is pledged as
collateral on the note. The principal amount of this note was approximately $4,100,000 at January
31, 2011. Exculpatory provisions of the mortgage loan limit the obligors liability for repayment
to its interest in the mortgaged property. The note bears interest at 7.75% and matures August 1,
2012. As discussed in the Companys prior reports filed with the Securities & Exchange Commission
(the SEC), due to the Companys dispositions of real estate assets, this mortgage note is
the last remaining mortgage obligation of the Company. In addition, as a result of the
dispositions, the Company concluded in the third quarter of fiscal year 2011 to discontinue
separate financial statement reporting of its former Real Estate Segment.
Secured Term Note. Another of the Companys subsidiaries is the obligor on a secured note
payable to a third party in the principal amount of $1,000,000 as of January 31, 2011. The note
was originally assumed, as amended, in connection with an acquisition in 2003. Within the terms of
the note, the Company will not have to repay $150,000 of the above principal amount provided that
it complies with the terms of the note.
In the third quarter of fiscal 2011, the Companys subsidiary and the lender entered into an
agreement to amend the note as follows:
||The maturity date of the note, originally December 18, 2011, and principal payment
structure was amended such that principal payments commenced on February 19, 2011,
based on a 60-month amortization. In addition, a $150,000 principal payment is due on
October 19, 2011, with a balloon payment of the remaining principal balance of
approximately $408,000 due on January 19, 2016; and
||The interest rate was changed from the prime rate plus 1.5% to a fixed rate of 6%
The note continues to be secured by the general assets of a subsidiary.
The documents related to the mortgage note and term note are filed herewith as Exhibits 10.1
through 10.4 and Exhibits 10.5 though 10.10, respectively. The summaries of these documents
contained herein are qualified in their entirety by the full text of such documents.
||CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN OFF-BALANCE
SHEET ARRANGEMENT OF A REGISTRANT.
The disclosure set forth above under Item 1.01 is incorporated by reference herein in response
to this Item 2.03.
In coordination with the Companys filing of Amendment No.1 to the Companys Annual Report on
Form 10-K/A for the year ended April 30, 2010, the Company hereby amends and restates its risk
factors previously filed with the SEC. The following risk factors supersede in their entirety the
Companys previously filed risk factors. In the following discussion of risks, we, our, us,
the Company or Servidyne refer to Servidyne, Inc. and its subsidiaries, unless the context
clearly requires otherwise.
The following risk factors should be considered in evaluating the Company. These risk factors
outline current risks the Company faces. Any of these potential risk factors, if actually
realized, could result in a materially negative impact on the Companys business and financial
results. In such an event, the trading price of the Companys stock could be materially adversely
We have experienced consolidated net losses in each of the last two fiscal years, and expect to
experience a net loss for the fiscal year ending April 30, 2011. There is no guarantee that we
will be able to generate net earnings in the near future, or at all.
We experienced consolidated net losses of approximately $1.9 million and $5.0 million for our
fiscal years ended April 30, 2010, and April 30, 2009, respectively, and approximately $2.0 million
for the nine months ended January 31, 2011, and we expect to incur a consolidated net loss for our
fiscal year ending April 30, 2011. Despite increases in sales and our efforts at expense
reduction, we cannot assure you that we will attain sustained profitability in the near future, or
We have used a significant amount of cash for operations in recent years. We may deplete our
capital resources before we achieve sufficient positive cash flow to fully fund our operations, and
may not be able to secure additional capital on favorable terms and on a timely basis, or at all,
which could materially adversely affect our ability to grow or continue to operate our business.
We believe that we have, or can obtain, sufficient capital resources to operate our business
in the ordinary course until we begin to generate sufficient cash flow from operations; however,
this will depend substantially upon future operating performance (which may be affected by
prevailing economic conditions) and financial, business and other factors, some of which are beyond
our control. Failure to secure adequate resources for working capital and capital expenditures
could materially impair our ability to continue to operate.
The Company has historically generated substantial liquidity from the sale of real estate
assets. For instance, in June 2010, we successfully closed on the sale of our owned shopping
center in Jacksonville, Florida, generating net cash proceeds of approximately $2 million, and in
December 2010, we successfully closed on the sale of our owned shopping center in Smyrna,
Tennessee, generating net cash proceeds of approximately $250,000. As a result, our real estate
assets now consist of only our corporate headquarters building in metropolitan Atlanta, Georgia; a
commercially zoned land parcel in North Ft. Myers, Florida; and commercially-zoned land parcels in
Oakwood, Georgia. In addition, given the recent decline in commercial real estate values in the
United States, the Company may be unable to sell any of its few remaining real estate assets at
acceptable prices, or at all, in the near future.
In the event that currently available cash and cash generated from operations were not
sufficient to meet future cash requirements, we might need to:
||refinance existing debt, or obtain new funds through bank loans or equity or debt
||sell real estate or other assets;
||limit growth or curtail operations to levels consistent with the constraints imposed
by the available cash and cash flow; or
||pursue any combination of these options.
Our ability to secure new debt or equity financing could be limited by economic conditions.
We cannot provide assurance that any reductions in planned expenditures or curtailment of
operations would be sufficient to cover shortfalls in available cash, or that debt or equity
financing or real estate or other asset sales would be available on terms acceptable to us, if at
all, in which event we could deplete our capital resources before achieving sufficient cash flows
to fund operations, and might be obliged to explore strategic alternatives for our business, or
The future of our business depends on the success of our building performance efficiency offerings.
If we fail to continue to grow revenues and profitability from these offerings, our prospects will
be adversely affected.
Our strategic focus is on developing our building performance efficiency, or BPE, offerings.
The Companys few remaining real estate assets are not an element of our growth strategy, as we
intend to dedicate our future capital resources and management attention to growing the BPE
Our ability to achieve earnings in recent years has been significantly dependent on achieving
capital gains from the sales of real estate properties. Most of the proceeds from these sales have
been invested in establishing and growing the BPE business. As a result, we have limited remaining
real estate holdings, and consequently, real estate capital gains cannot be depended upon as a
primary source for future earnings.
In addition, as a result of these real estate dispositions, rental income, another source of
our historical earnings, has been negatively impacted. Accordingly, in order for us to improve
profitability in the future, the BPE business will need to be expanded sufficiently to produce
consolidated net earnings. There can be no guarantee, however, that the BPE business will be able
to produce sufficient earnings, if any, to replace the earnings contribution that was generated by
our former real estate segment in recent years, particularly in light of the BPE business lack of
a long-term track record of sustained profitability.
Our ability to implement our growth strategy for the BPE business will depend upon a variety of
factors that are not entirely within our control, including, but not limited to:
||our ability to add new product and service offerings on a timely basis,
and to keep our current products and services competitive;
||the successful hiring, training and retention of qualified personnel;
||the establishment of new relationships and the expansion of existing
relationships with customers and suppliers;
||the availability of adequate capital; and
||our ability to make profitable business acquisitions and to integrate such
acquired businesses into existing operations.
To date, our BPE business has yet to achieve sustained profitability. In light of the absence
of a proven long-term track record of sustained profitability for the BPE business, we cannot
guarantee that our growth strategy will be successful. If our growth strategy ultimately were to
be unsuccessful, our revenues, earnings and stock price would be adversely affected.
Our earnings could be adversely affected by non-cash adjustments to goodwill and other assets.
As prescribed by generally accepted accounting principles in the United States, we undertake
an annual review of goodwill and other intangible assets balances. This test is performed during
the third quarter of our fiscal year, unless there has been a triggering event that warrants an
earlier interim testing for possible impairment. Our most recently completed annual test indicated
that no impairment existed as of January 31, 2011. Future impairment tests could yield different
results, however, depending upon such factors as our actual operating performance being
significantly different than our assumptions utilized in the testing, or as a result of changes in
our industry. Consequently, future tests may result in an impairment of goodwill or other
intangible assets, in which event we would be required to record a non-cash charge to earnings in
our financial statements during the period in which such impairment were determined to exist. Our
goodwill and other intangible assets at January 31, 2011, were approximately $8.6 million, or
approximately 34% of our total assets. At April 30, 2010, they were approximately $8.7 million, or
approximately 21% of total assets.
Non-cash adjustments to other assets can also negatively affect our earnings. For instance,
as reflected in our recent filings, we had to record a one-time non-cash income tax valuation
allowance of $857,000 on our state deferred income tax assets, as a result of our periodic review
of the recoverability of our deferred tax assets.
Any such charges could have a material adverse effect on our results of operations.
The markets for our products, services and technology are very competitive and are becoming more
so; if we cannot successfully compete in those markets, our business could be materially and
The markets for our energy savings products, services and technology are highly competitive
and fragmented, and are subject to rapidly changing technologies, emerging competing products and
services, frequent performance improvements, and evolving industry standards. We compete against
not only smaller companies of similar size to us, but also against much larger traditional and
competitive energy efficiency services providers and energy services companies. We expect
competition in our markets to increase in the future because of the substantial near-term and
long-term growth potential of our markets. Competition could arise from both newly organized
businesses, as well as from business expansions by established enterprises into our markets.
Increased competition could cause us to reduce the price of our energy savings products and
services, and we could experience lower gross profit margins and slower growth, or even a loss of
Many of our existing competitors, as well as many potential new competitors, have longer
operating histories, greater name recognition, larger customer bases and significantly greater
financial, technical, marketing, sales, manufacturing and other resources than we do. This may
enable these competitors to develop and implement new and better product, service and/or technology
offerings more quickly than we can, and to adapt more rapidly to changes in customer requirements
or preferences. Greater resources may also enable competitors to promote their products more
effectively, or price them more attractively, than we can. Established larger enterprises may have
existing customer, vendor and partner relationships that may give them a competitive advantage
vis-à-vis our BPE offerings, and other competitors with greater resources may be more attractive to
potential new customers, vendors, partners and employees than we may be to them.
Consequently, we cannot assure you that we will have the financial resources, technologies,
portfolio of products and services, or marketing, sales and operating support capabilities to
compete successfully in the future, which could materially and adversely affect our revenues and
Failure to adequately expand our sales force may impede our growth.
We are dependent on our direct sales force to obtain new customers for our BPE business,
particularly large enterprise customers, and to help manage our customer base. We operate in a
very competitive marketplace for sales personnel with the advanced sales skills, technical
knowledge, industry experience, and existing customer relationships that we need. Our ability to
achieve significant growth in revenues in the future will depend, in large part, on our success in
recruiting, training, motivating and retaining a sufficient number of such qualified sales
personnel. New personnel require significant training. Our recent hires and planned new hires
might not prove to be as productive as we would like or expect, and we might be unable to hire a
sufficient number of qualified individuals in the future in the markets where we conduct or desire
to conduct business. If we cannot hire, develop, and retain a sufficient number of qualified and
productive sales personnel, our revenues and profitability could be adversely impacted, and as a
result, our growth could be impeded, which could have a material adverse effect on our business and
As more of our sales efforts are targeted at larger enterprise customers, sales cycles may become
longer and more expensive, and we may encounter pricing pressures and implementation challenges,
all of which could harm our business.
We are seeking to continue our recent years success in obtaining additional larger enterprise
customers for our BPE offerings. As we target more of these customers, we anticipate potentially
facing greater sales and marketing costs, longer sales cycles and less predictability in closing
sales. In this market segment, a customers decision to use our BPE products and services may be
an enterprise-wide decision, and if so, this type of sale could require us to provide greater
levels of education to prospective customers regarding the use and benefits of our building
performance-enhancing products and services.
In addition, larger customers may demand more customization, enhanced integration services and
additional product features and services. As a result of these factors, new sales opportunities
may require us to devote greater sales support and professional services resources to individual
customers, driving up the costs and the amount of time required to close sales and diverting
selling and professional services resources to a smaller number of larger transactions. Because of
these factors, the risk of not closing a sale with a larger enterprise customer may be greater than
with smaller customers, and the results of such potential failure, due to higher costs and fewer
overall ongoing sales initiatives, also could be greater. Moreover, the purchasing power of larger
enterprise customers may result in lower profit margins.
A limited number of customers comprise a significant portion of our revenues and backlog. The loss
of, or any significant decrease in, business from these customers could have an adverse effect on
significant portion of our revenues and backlog for the fiscal year
ended and as of
April 30, 2010, and the nine months ended January 31, 2011, were derived from a relatively limited
number of customers. In fiscal year 2010, we generated approximately 27% of revenues from our
largest customer, and our top five customers accounted for approximately 53% of revenues. At April
30, 2010, approximately 55% of our backlog was due to one customer, and the top five customers
accounted for approximately 83% of our backlog. For the nine months ended January 31, 2011, we
generated approximately 28% of revenues from our largest customer, and our top five customers
accounted for approximately 64% of revenues. At January 31, 2011, approximately 32% of our backlog
was due to one customer, and the top five customers accounted for approximately 81% of our backlog.
This customer concentration increases the risk of fluctuations in our revenues and operating
results. If we lose a significant customer, or if revenues or orders from significant customers
decline, our business, results of operations and financial condition could be materially adversely
affected. Additionally, if one of these customers is lost, or if revenues or orders from one or
more of these customers decline, we cannot assure you that we will be able to replace or supplement
the lost customers with others that generate comparable revenues or profits.
A portion of our revenues is derived from fixed price contracts, which could result in losses on
A portion of our revenues and current backlog is based on fixed price or fixed unit price
contracts that involve risks relating to our potential responsibility for the increased costs of
performance under such a contract. Generally, under fixed price or fixed unit price contracts, we
have to absorb any increase in our costs not caused by a customer modification or other compensable
change to the original contract, whether due to inflation, inefficiency, faulty estimates or other
factors. There are a number of other factors that could create differences in contract
performance, as compared to the original contract price, including, among other things, differing
facility conditions, insufficient availability of skilled labor in a particular geographic location
and insufficient availability of materials.
We often utilize subcontractors in performing services or completing projects, whose potential
unavailability or unsatisfactory performance could have a material adverse effect on our business
and financial position.
We often utilize unaffiliated third-party subcontractors in order to perform some of our
energy engineering and consulting services, proprietary software and other IT development projects,
much of our energy savings maintenance, installation and retrofit projects, and most of our other
construction-related projects and services. As a consequence, we depend on the continuing
availability of, and satisfactory performance by, such subcontractors. Such subcontractors may not
be available at the times or in the quantities needed, or in the markets where we operate, or the
quality of work by such subcontractors may prove to be below acceptable standards.
In addition, the subcontractors may be unable to qualify for payment and performance bonds to
ensure their performance or may be otherwise inadequately capitalized. Insurance protection
available to subcontractors for construction defects, if any, is increasingly expensive and may
become unavailable, and the scope of such protection may become greatly limited.
If as a result of subcontractor problems or failures, we were unable to meet our contractual
obligations to our customers, or were unable to successfully recover sufficient indemnity from our
subcontractors or their bond or insurance carriers, then we could suffer losses which could
decrease our profitability, damage our customer relations,
significantly harm our reputation, or
otherwise have a material adverse effect on our business and financial position.
If our security measures for our proprietary technology solutions were breached, and as a result
unauthorized access to a customers data were obtained, our BPE offerings could be perceived as not
being sufficiently secure, customers might curtail or stop using our products and services, and we
could incur significant losses and liabilities.
Our proprietary technology solutions involve the storage of customers data and information,
whether locally on the customers own computers, or on our computers. Some of these
proprietary technology solutions also involve the transmission of such data and information.
Security breaches could expose us to partial or total loss of this data and information, potential
litigation, and possible liability.
If security measures were breached as a result of third-party action, employee error,
malfeasance or otherwise, during transfer of data and information to data centers or at any time,
and, as a result, someone were to obtain unauthorized access to any of our customers data and
information, our reputation might be damaged, our business might suffer, and we might incur
significant losses and liability.
Because techniques used to obtain unauthorized access or to sabotage computer systems change
frequently, and generally are not recognized until after being launched against a target, we might
be unable to anticipate such techniques or to implement adequate preventative measures on a timely
If an actual or perceived breach of security were to occur, the market perception of the
effectiveness of our security measures could be harmed, we could lose sales and customers, and our
business and financial potential could be harmed.
We depend on the assistance of our customers to complete energy savings projects on a timely basis.
If a customer were unable or unwilling to offer us assistance on a timely basis, or at all, it
could affect project timelines and reduce or slow the recognition of energy savings project
Much of the work we perform requires significant interaction with our customers. Therefore,
we must have our customers full cooperation to complete projects on a timely basis. In the early
stages of a project, we are at risk of our customers not providing accurate or timely data for
project implementation. Also, we must frequently access our customers facilities, and any
restriction of such access could delay or prevent the completion of projects.
Our recently introduced Fifth Fuel Management® offering is largely untested. If we fail
to fully develop this offering, its prospects could be adversely affected. Moreover, developing
Fifth Fuel Management® will require additional capital, which we may not be able to
Our Fifth Fuel Management® offering is relatively new, and its business viability
is largely untested. Our ability to develop Fifth Fuel Management® into a profitable
product line depends upon a variety of factors, some of which are not entirely within our control,
||our ability to develop, acquire and/or license any additional technologies
and processes necessary to fully develop and implement the Fifth Fuel
||our ability to market and sell this new offering to significant customers,
such as public and investor-owned utilities and building owners and operators; and
||the availability of adequate capital to fund the full development,
marketing and working capital requirements of Fifth Fuel Management®.
In light of the relative newness of Fifth Fuel Management®, and the absence of a
proven track record of profitability, we cannot guarantee that this offering will be successful.
In addition, we anticipate that developing the Fifth Fuel Management® offering to
meet expected demand will require additional capital, which we may seek to raise through outside
sources or the sale of assets. We cannot assure you that we will be successful in raising adequate
additional capital on acceptable terms, or at all.
If the new Fifth Fuel Management® system ultimately were to be unsuccessful, our
revenues, earnings, financial position, stock price and the business as a whole could be adversely
The value to customers of our energy savings products and services is substantially impacted by the
prevailing conditions of energy markets; if energy prices and utility costs were to decline, our
sales might not grow, or could even decline.
The financial value to customers who utilize our energy efficiency products and services is
usually measured by the energy and utility cost savings to be realized over time. Accordingly, the
return on our customers investment for installing energy efficient products and services and the
time period necessary for our customers to recoup their initial investment in utilizing these
products and services are directly correlated with the prevailing retail market prices for energy.
If the price of energy and utility rates drop, customers energy savings and returns on investment
from energy efficiency products and services would be less, and the time period over which their
investment could be recovered through energy and utility costs savings would be extended.
Consequently, if energy prices were to decline, demand for our energy efficiency products and
services could decline as a result, as potential customers would be dissuaded from an upfront
investment that may not produce an attractive return on investment for some time.
A decline in energy prices could not only negatively affect the level of sales of energy
savings products and services, but could also decrease the profitability of such products and
services, as we might be obliged to lower prices in response to a resulting decrease in customer
We depend upon key personnel, and the loss of any such key personnel could adversely impair our
ability to conduct business. In addition, implementing our growth strategy will require the
addition of more suitable personnel.
One of our objectives is to develop and maintain a strong management team at all levels. At
any given time, we could lose the services of key executives or other key employees, and the loss
of any such key personnel could adversely affect our results of operations, financial condition and
ability to execute our business strategy. If we were to lose a member
of our senior management team,
we might be required to incur significant costs in identifying, hiring and retaining a replacement
for such departed executive.
In addition, the growth of our BPE business will require the addition and retention of
qualified personnel. Some of our offerings, such as energy
engineering, energy savings project
design and implementation, and various IT-oriented products and services, may require personnel with
special skills who are in high demand in the employment marketplace. We compete for such personnel
with some companies with much greater resources. Accordingly, we may not be able to attract and
hire such personnel or retain them in the face of better offers from competitors.
Prevailing capital market and economic conditions could impact demand for our services and
U.S. and international capital markets have experienced severe volatility, disruptions and
failures in recent years, and the U.S. economy has only recently emerged from recession. Customers
and potential customers who are capital-constrained, whether due to a weak economy or deteriorated
market conditions, may delay or even cancel certain operating expenses and/or capital expenditures,
including expenditures for our services and products.
If we cannot find suitable candidates for business acquisition or cannot integrate completed
business acquisitions successfully, our prospects could be adversely affected.
In addition to organic growth, our strategy includes growth through business acquisitions.
Our BPE business was established through several business acquisitions over the years. We compete
for acquisition opportunities with other companies that have significantly greater financial
resources. Therefore, there is a risk that we may be unable to complete an important acquisition
because another company may be able to pay more for a potential acquisition candidate or may be
able to use its financial resources to acquire a potential acquisition candidate before we could
obtain the requisite financing.
Even if we complete a desirable business acquisition on favorable terms, we may not be able to
successfully integrate any newly acquired company into existing operations on a timely basis.
Integration of a substantial business is a challenging, time-consuming and costly process. It is
possible that the acquisition itself or the integration process could result in the loss of the
acquired companys management or other key employees, the disruption of the acquired companys
business, or inconsistencies in standards, controls, procedures and policies that could adversely
affect the acquired companys ability to maintain good relationships with its suppliers, customers
In addition, successful integration of an acquired company requires the dedication of
significant management resources that may temporarily detract attention from Servidyne and the
acquired companys day-to-day businesses. If we cannot integrate
the organization, operations and
systems of an acquired company in a timely and efficient manner, the anticipated benefits of a
completed acquisition may not be fully realized.
We could be exposed to environmental liability related to the disposal of hazardous materials.
One of our key offerings is replacing existing lighting systems with newer, more energy
efficient lighting systems in various types of facilities. Replacing lighting systems can often
involve removing, handling and disposing of hazardous materials. Various federal, state and local
laws govern the handling of hazardous materials. Complying with environmental laws and regulations
can be costly. If we fail to comply, we could face liability from government authorities or other
third parties. Even in cases where we subcontract the disposal of such materials, we could face
potential liability. Judgments, fines or similar penalties for environmental non-compliance could
negatively affect our financial position and reputation.
We are subject to changing regulations regarding corporate governance and required public
disclosure that have increased both the costs of compliance and the risks of noncompliance. As a
small public company, these costs of compliance may affect us disproportionately as compared with
As a public company, we are subject to the laws, rules and regulations, and standards of
various governing bodies, including the Securities and Exchange Commission, Nasdaq and the Public
Company Accounting Oversight Board, which are charged with the protection of investors and the
oversight of companies whose securities are publicly traded. The Companys efforts to comply with
have resulted in, and are expected to continue to result in, increased general and administrative
expenses and a diversion of management time and attention away from earnings-generating activities
to compliance activities.
In addition, because these laws, rules and regulations, and standards are subject to varying
interpretations, their application in practice may evolve over time as new guidance becomes
available. This evolution may result in continuing uncertainty regarding compliance matters and
additional costs necessitated by ongoing revisions to our disclosure and governance practices. If
we fail to satisfactorily address and remain in compliance with all of these laws, rules and
regulations, and standards, and any subsequent revisions or additions, our business may be
Moreover, many compliance costs are not in direct proportion to the size of a particular
company. As a small public company, these costs might affect us disproportionately, particularly
in comparison to our larger public competitors. We may also be at a disadvantage vis-à-vis public
company compliance costs compared with privately held competitors that are not subject to the same
laws, rules and regulations, and standards.
We might not be able to refinance the mortgage debt on our corporate headquarters building on a
timely basis or on acceptable terms.
At January 31, 2011, we had a mortgage note payable of approximately $4.1 million on our
corporate headquarters building, which is pledged as collateral on the note. The note matures on
August 21, 2012. Exculpatory provisions of the mortgage loan limit our liability for repayment to
our interest in the mortgaged property. The propertys current leasing status, physical condition
and net operating income; global, national, regional or local economic conditions; financial and
credit market conditions; the level of liquidity available in real estate markets; the Companys
financial position; the terms and conditions or status of the Companys other corporate loans; or
other prior financial commitments could impair the Companys ability to refinance the mortgage debt
on the corporate headquarters building at a time when such refinancing might be necessary.
Moreover, such refinancing might not be available at acceptable terms, including in respect of
loan principal amounts, interest rates, amortization schedules, guaranties or maturity terms.
||FINANCIAL STATEMENTS AND EXHIBITS.
||Real Estate Note dated
July 17, 2002, made by 1945 The Exchange LLC
(an affiliate of the Company) in favor The Ohio National Life
Insurance Company (related to the Companys corporate headquarters
||Deed to Secure Debt and Security Agreement made and entered into
as of July 17, 2002, by and between 1945 The Exchange LLC and The
Ohio National Life Insurance Company (related to the Companys
corporate headquarters building).
||Assignment of Leases and Rents made and entered into as of July
17, 2002, by and between 1945 The Exchange LLC and The Ohio
National Life Insurance Company (related to the Companys
corporate headquarters building).
||Unconditional Guaranty of Payment
and Performance made as of July 17,
2002, by Abrams Properties, Inc. (an affiliate of the Company) in
favor of The Ohio National Life Insurance Company (related to the
Companys corporate headquarters building).
||Consolidated Amended and Restated Renewal Note and Security
Agreement dated as of December 18, 2003, by and among National Loan
Investors, L.P., DMD2, Inc. (f/k/a the Wheatstone Energy Group,
Inc.) and Servidyne Systems, LLC (f/k/a The Wheatstone Energy
Group, LLC, f/k/a WEGI Acquisition, LLC) (an affiliate of the
||Assumption Agreement dated as of
December 18, 2003, by and among
National Loan Investors, L.P., DMD2, Inc., Servidyne Systems, LLC,
M. Todd Jarvis and Paul M. Williams.
||Loan Modification, Extension, Reaffirmation and Assumption
Agreement dated as of March 9, 2011, by and among National Loan
Investors, L.P. and Servidyne Systems, LLC.
||Modification and Extension Promissory Note and Security Agreement
No. 1 dated March 9, 2011, and effective January 19,
and among National Loan Investors, L.P. and Servidyne Systems,
||Modification and Extension Promissory Note and Security Agreement
No. 2 dated March 9, 2011, and effective January 19,
and among National Loan Investors, L.P. and Servidyne Systems,
||Unconditional Guaranty of Payment and Performance made and entered
into March 9, 2011, by Abrams Power, Inc. (an affiliate of the
Company) to and in favor of National Loan Investors, L.P.
Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|Dated: June 2, 2011
||/s/ Rick A. Paternostro
||Rick A. Paternostro
||Chief Financial Officer