Note 5. Long-Term Debt and Lease Obligations

The Company had the following long-term debt at December 31, 2011 and 2010:

Crestpark LP, Inc.

On June 30, 2011, the Company entered into a debt conversion agreement with Crestpark, pursuant to which Crestpark converted $7,891,086 of the Fixed Tranche and the outstanding balance of $5,000,000 of the Floating Tranche, along with $540,978 of related accrued interest into 1,221,097 shares of the Company’s Series D 8% Cumulative, Compounding Exchangeable Preferred Stock (the “Series D Preferred Stock”).

As of December 31, 2011 and December 31, 2010, the Company has outstanding a Note Payable (“Note”) with Crestpark for $2,000,000 and $14,891,086, respectively, under a Credit and Security Agreement originally dated December 18, 2007 and subsequently amended. Outstanding borrowings are due and payable on the earlier of (i) January 1, 2015 or (ii) the first date on which the Company either issues equity securities or arranges for additional indebtedness (other than trade indebtedness incurred in the ordinary course of business) in a transaction or series of transactions which generates aggregate net proceeds to the Company of not less than the then current principal amount outstanding under this Note, plus all accrued but unpaid interest. The Company may prepay the Note at any time without premium or penalty.

As of December 31, 2010, the Company had outstanding a Note Payable (“Note”) with Crestpark LP, Inc (“Crestpark”), for $14,891,086 under a Credit and Security Agreement originally dated December 18, 2007 and subsequently amended. Outstanding borrowings are due and payable on the earlier of (i) January 1, 2015 or (ii) the first date on which the Company either issues equity securities or arranges for additional indebtedness (other than trade indebtedness incurred in the ordinary course of its business) in a transaction or series of transactions which generates aggregate net proceeds to the Company of not less than the then current principal amount outstanding under this Note, plus all accrued but unpaid interest. The Note provides, among other things, that $9,891,086 (the “Fixed Tranche”) of the borrowings thereunder shall bear interest at 9.5% per annum and that such interest will be due and payable at maturity of the Note. The remaining $5,000,000 of borrowings (the “Floating Tranche”) under the Note will bear interest at a floating rate equal to 2% over the prime rate (the “Base Rate”), payable quarterly beginning March 31, 2011. In addition, quarterly principal payments of $125,000 are due beginning March 31, 2012.

The borrowings under the Note are secured by a first priority security interest in all of the assets of the Company except that Crestpark’s security interest in certain monitoring equipment is subordinate to the interest of AHK Leasing LLC under its sale leaseback arrangements and to the interest of Access Bank under the December 29, 2011 Line of Credit.

Capital Leases - AHK Leasing, LLC  

AHK Leasing, LLC (“AHK”) is a company controlled by three stockholders, one of which is a current director, which lent the Company money to acquire revenue producing equipment. These loans were in the form of capital leases with 36 month terms and bearing interest at a rate of 8.50% to 11.25% per annum and mature between February 2012 and August 2014. There was no accrued interest payable to AHK at December 31, 2011.

Total interest expense, including unused commitment fees, for the years ended December 31, 2011 and 2010 is as follows:

Interest expense paid during 2011 and 2010 was $136,176 and $401,200, respectively.

The following is a schedule of aggregate debt maturities, including lease related obligations, due in future years as of December 31, 2011:

The cost and accumulated depreciation of assets acquired under capital leases is as follows:

The Company has a noncancelable operating lease for its facility in Omaha, Nebraska and an operating lease for office equipment, as outlined above. The total rent expense under the operating leases was $81,360 and $90,694 for the years ended December 31, 2011 and 2010, respectively.