Long Term Debt

3 Months Ended

Mar. 31, 2016

Revolving Line of Credit and Long Term Debt [Abstract]

LONG TERM DEBT

6. LONG TERM DEBT

On July 6, 2011, REFCO provided to the Company a $2,430,000 term loan with a fixed interest rate of 3.54%, subject to an increase to 4.55% in the event the Company's debt service coverage ratio (net profit plus taxes, interest, depreciation, amortization and rent expense divided by debt service plus interest and lease/rent expense, calculated on a trailing four-quarter basis) falls to or below 2.0 to 1. Principal and interest on the term loan are payable in equal monthly installments through July 6, 2017, the date on which the term loan matures. The proceeds of the term loan were used to pay the Company’s remaining obligations under a lease agreement relating to industrial revenue bonds used to fund the expansion of Kinpak’s facilities and acquisition of related equipment. At March 31, 2016, approximately $585,000 was outstanding under the term loan. The term loan and the revolving line of credit under the Bank Loan Agreement are cross-defaulted (i.e., a default under one instrument is a default under the other). See Note 5 for information regarding REFCO’s waiver of an event of default that may be deemed to have occurred under the cross-default provisions of the term loan as a result of an event of default under the Business Loan Agreement; REFCO has waived the default through May 9, 2017.

At March 31, 2016 and December 31, 2015, the Company was obligated under capital lease agreements covering equipment utilized in the Company’s operations.  The capital leases, aggregating approximately $82,000 and $88,000 at March 31, 2016 and December 31, 2015, respectively, mature on July 1, 2020 and carry an interest rate of 2%.

The following table provides information regarding the Company’s long term debt at March 31, 2016 and December 31, 2015:

	Current Portion				Long Term Portion
	March 31,  2016		December 31, 2015		March 31,  2016		December 31, 2015
Term loan	$	436,441	$	432,601	$	148,942	$	259,503
Capitalized equipment leases		17,092		18,547		64,625		69,315
Total long term debt	$	453,533	$	451,148	$	213,567	$	328,818

Required principal payments under the Company’s long term obligations are set forth below:

12 month period ending March 31,
2017	$	453,533
2018		167,918
2019		19,326
2020		19,682
2021		6,641
Total	$	667,100