Notes Payable

6 Months Ended

Jun. 30, 2013

Notes

Notes Payable

(4)  Notes payable.  In March 2011, the Company obtained a $14,000 loan from JPMorgan Chase Bank, N.A. (Chase), to help finance the purchase of Femcare Group Ltd (Femcare) of the United Kingdom, and its subsidiaries. The terms and conditions of the loan require UTMD to a) repay the loan principal in equal monthly payments over 5 years, b) pay interest based on the 30-day LIBOR rate plus a margin starting at 2.80% and ranging from 2.00% to 3.75%, depending on the ratio of UTMD’s funded debt to EBITDA (Leverage Ratio), c) pledge 65% of all foreign subsidiaries’ stock, d) provide first priority liens on all domestic business assets, e) maintain UTMD’s Interest Coverage Ratio at 1.15 to 1.00 or better, f) maintain UTMD’s Tangible Net Worth (TNW) above a minimum threshold 20% below TNW at closing on March 18, and g) maintain UTMD’s Leverage Ratio at 2.75 to 1.00 or less.  UTMD is in compliance with all of the loan covenants at June 30, 2013.  Based on UTMD’s financial position, the bank’s margin was 2.00% at June 30, 2013.  The principal balance on this note at June 30, 2013 was $3,850.

In March 2011, the Company also obtained a $12,934 loan from JP Morgan Chase, London Branch, to help finance UTMD’s purchase of Femcare. Terms and conditions of the UK loan are the same as those listed above for the $14,000 U.S. loan.  The principal balance on this note at June 30, 2013 was $6,693.