Spicy Pickle Franchising defaults on $5.27 million of promissory notes

Lenders demand $4.76 million to cure default caused by bad debt charge

By Devika Patel

Knoxville, Tenn., Feb. 2 - Spicy Pickle Franchising, Inc. is in default under $5.27 million of promissory notes, according to an 8-K filed Thursday with the Securities and Exchange Commission.

On Feb. 2, the company was notified by Presley and Patricia Stacey Reed and Raymond and Joan BonAnno, the investors, that it had defaulted on several notes.

Affected are the company's $509,595 convertible promissory note, its $307,657 convertible promissory note, its $2 million convertible promissory note, two $500,000 convertible promissory notes, a $1.16 million senior secured promissory note and a $290,000 senior secured promissory note.

The default stemmed from a $335,000 bad debt charge taken against operations when one of the company's debtors told Spicy Pickle that it would not be able to pay the receivable it owed the company. This resulted in a loss for the quarter ended Dec. 31, which led to the default, the company said in the filing.

The Reeds have demanded immediate payment of $3.79 million, which includes principal and accrued interest as of Feb. 1.

The BonAnnos have demanded immediate payment of $969,844, which also includes principal and accrued interest as of Feb. 1.

Spicy Pickle Franchising is a Denver-based restaurant operator.

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