Note Payable

6 Months Ended

Sep. 30, 2014

NOTE 6 – NOTE PAYABLE

Note payable consists of:
	September 30, 2014			March 31, 2014
	(Unaudited)
Note payable, principal balance of $21,500,000, to a third party, payable in 10 equal quarterly payments of $2,150,000, starting April 30, 2014 (P/Note 2)	$	19,625,000		$	21,500,000
Less: debt discount		(2,103,175	)		(2,639,788	)
Note payable, net of discount		17,521,825			18,860,212
Less: current portion		(8,875,000	)		(9,165,128	)
Note payable, long term	$	8,646,825		$	9,695,084

On March 10, 2014, Algo Markets entered into an asset purchase agreement with a third party, pursuant to which the seller sold 12 algorithms related to online financial markets trading for $24,000,000. Algo Markets agreed to pay $2,500,000 to the seller at closing and the remaining balance of $21,500,000 is payable in ten (10) equal quarterly installments of $2,150,000 each, starting April 30, 2014 (P/Note 2). For the six months ended September 30, 2014, the Company paid $4,375,000 to the third party, of which $2,500,000 was due to the third party at the closing in March 2014 and was recorded as other current liability as of March 31, 2014, and $1,875,000 was paid towards the note payable.

In connection with the issuance of the P/Note 2, the Company has recorded an imputed interest on the note payable at the annual interest rate of 10% over the term of the Note 2. As a result, the Company recorded a debt discount in the amount of $2,683,063 on Note 2 which is being amortized to interest expense over the life of the P/Note 2. The Company has recorded interest expense of $268,306 and $536,613 related to the amortization of debt discount related to the Note 2 for the three months and six months ended September 30, 2014. The Company did not have Note 2 for the comparable periods in 2013.

Commitments as of March 31,:	Amount
2015	$	4,300,000
2016 to 2017		15,325,000
Total	$	19,625,000

- 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

Clone Algo Inc. 10-Q