Zunicom Inc fka ZNCM

[MikeDDKing]

They wrote down the value of the notes earlier in the year along with the value of their "INVESTMENT IN UNCONSOLIDATED INVESTEE." See the $1.4M impairment on the value of UPG notes in the cashflow statement for the Q3'09 10-Q. Note that there is also an impairment of their investement in UPG which was based upon the drop in UPG share price. The notes and investments in UPG are separate line items on the balance sheet.

Also note the following from the Q3'09 10-Q: "The Company evaluated its investment in UPG at March 31, 2009 to determine if an other than temporary decline in fair value below the cost basis had occurred. The primary input in estimating the fair value of the investment was the quoted market value of UPG publicly traded shares as at March 31, 2009, which declined significantly from the date of the initial investment in December 2006. As a result of the severe decline in the quoted market value, the Company recognized an impairment in other income (loss) of $4,367,891 to adjust the cost basis in the investment to its estimated fair value. As a result the carrying value of the Company's investment in UPG as of September 30, 2009, is $3,195,313. The Company has determined that there are no further impairments in the three months ended September 30, 2009."

Furthermore, there is this from the Q3'09 10-Q: "In conjunction with its evaluation of its investment in UPG described in Note E above, the Company also evaluated its two unsecured promissory notes from UPG in the amount of $4,753,125 to determine if an other than temporary decline in the fair value of the notes had occurred. The principle inputs in estimating the fair value of the UPG notes was the possible impairment of UPG's ability to service the notes in the future given the revenue decline in the first quarter of 2009, especially from its largest customer, and the profitability decline from 2007 to the first quarter of 2009. As a result, the Company recognized an impairment in other income (loss) of $1,425,788 to adjust the cost basis of the notes to their estimated fair value. As a result, the carrying value of the UPG notes as of September 30, 2009, is $2,596,088. The Company has determined that there are no further impairments in the three months ended September 30, 2009. The Company is dependent upon the interest and principal payments on the UPG notes for its cash flow (see Note K below). The Company does not believe, however, that an impairment of the value of the notes will negatively impact its ability to continue as a going concern over the next twelve months. The Company has sufficient cash on hand to meet its obligations over the next twelve months."