NOTE E – DEBT AND LINE OF CREDIT

The Company’s Line of Credit and Debt consisted of the following as of December 31, 2014 and December 31, 2013:

	December 31, 2014		December 31, 2013
First Niagara:
Mortgage payable in equal monthly installments of $13,199 including interest at 8.25% until May 1, 2017 (“Maturity”), collateralized by the building, land and personal property⁽¹⁾	$	348,000	$	452,000

Debenture financing
$523,000 in principal amount of Series A Debentures; interest at 15% per annum from August 1, 2013 through January 31, 2015, payable quarterly; maturity date of February 1, 2015⁽²⁾.		523,000		634,000

Bridge Loan with Cantone Asset Management, LLC⁽³⁾:
Interest rate of 15% payable upon loan maturity; maturity date of February 1, 2015.		200,000		200,000

Imperium Line of Credit: Interest payable in arrears for the preceding calendar month on the first day of each calendar month at a rate of 8% per annum plus “PIK” interest at a 2% per annum. Unused line fee equal to 2% of the maximum amount available under the line, less the aggregate amounts outstanding to Imperium, payable on the first day of each calendar month. Collateral Monitoring Fee of $2,500 due on the first day of each month. Success fee of $175,000 if Imperium terminates due to an event of default, or if we terminate and pre-pay all amounts due to Imperium prior to the stated expiration date of January 16, 2016.		1,076,000		1,180,000
		2,147,000		2,466,000
Less debt discount (Debenture and line of credit financings)		(97,000)		(253,000)
Total debt	$	2,050,000	$	2,213,000

Current portion	$	1,837,000	$	2,213,000
Long-term portion	$	213,000	$	0

(1)

The mortgage through First Niagara was refinanced and extended on April 28, 2014.

(2)

See Note J – Subsequent Events for information related to the maturity and refinancing of the Series A Debenture.

At December 31, 2014, the following are the debt maturities for each of the next five years:

2015	$	1,837,000	⁽³⁾
2016		159,000
2017		54,000
2018		0
2019		0
	$	2,050,000

(3) Although the Imperium Line of Credit does not mature until January 16, 2016, the balance on the line of credit is included in the debt maturity for 2015 given the “demand” nature of the line of credit.

FIRST NIAGARA: MORTGAGE CONSOLIDATION LOAN

On March 8, 2013, The Company entered into a Second Amendment to Loan Agreement (the “Second Mortgage Consolidation Loan Amendment”) with First Niagara Bank (“First Niagara”). The Mortgage Consolidation Loan is secured by the Company’s facility in Kinderhook, New York as well as various pieces of machinery and equipment. Under the Second Mortgage Consolidation Loan Amendment, the Mortgage Consolidation Loan was recast into a 4-year fully amortizing note with a one-year term through March 1, 2014. The interest rate was increased from 8.25% to 9.25% and the monthly payment was reduced to $14,115 from $14,437. The Company was also required to make a principal reduction payment of $25,000 at the time of closing. All other terms of the Mortgage Consolidation Loan remained unchanged, including compliance with a covenant (measured monthly) to maintain a certain level of liquidity (defined as any combination of cash, marketable securities or borrowing availability under one or more credit facilities other than the Mortgage Consolidation Loan).

On April 28, 2014, the Company entered into a Third Amendment to Loan Agreement (the “Third Mortgage Consolidation Loan Amendment”) with First Niagara Bank. The Mortgage Consolidation Loan continues to be secured by the Company’s facility in Kinderhook, New York as well as various pieces of machinery and equipment. Under the Third Mortgage Consolidation Loan Amendment, the Mortgage Consolidation Loan was recast into a 3-year fully amortizing note through May 1, 2017. The interest rate of the amended facility was decreased from 9.25% to 8.25%, and the monthly payment was reduced from $14,115 to $13,199. The Company was required to pay First Niagara a renewal fee of 1% of the principal balance as of April 1, 2014, or $4,200. No principal reduction payment was required. All other terms of the Mortgage Consolidation Loan remained unchanged, including compliance with the covenant previously referenced.

The balance on the Mortgage Consolidation Loan was $348,000 at December 31, 2014 and $452,000 at December 31, 2013. Interest expense recognized was $32,000 and $48,000 in Fiscal 2014 and Fiscal 2013, respectively.

DEBENTURE FINANCING

Debenture Financing

In August 2008, the Company completed an offering of Series A Debentures (“Series A Debentures”) and received gross proceeds of $750,000. The net proceeds of the offering of Series A Debentures were $631,000 after $54,000 of placement agent fees and expenses, legal and accounting fees of $63,000 and $2,000 of state filing fees.

2013 Series A Debenture Extension

On October 7, 2013, the Company entered into a new Placement Agent Agreement (“2013 Agent Agreement”) with Cantone Research, Inc. (“Cantone”) related to the further extension of the Series A Debentures, as amended, due August 1, 2013. Under the terms of the 2013 Agent Agreement, Cantone acted as the Company’s exclusive placement agent in connection with another amendment of the Series A Debentures. Under the amendment, the term of Series A Debentures was extended to reflect a due date of either February 1, 2014 or August 1, 2014, at the election of the Series A Debenture Holder. The interest rate during the extension period remained 15% per annum, due quarterly in arrears. All other terms of the Series A Debentures remained the same.

The Company incurred $87,000 in costs related to the 2013 Extension. The Company amortized $65,000 in Fiscal 2014 and $22,000 in Fiscal 2013. As of December 31, 2014, there was $0 in unrecognized expense with 0 months remaining.

On October 7, 2013, the Company entered into a new Bridge Loan Agreement and Note (the “2013 Bridge Loan”) with Cantone Asset Management, Inc. (“CAM”). The 2013 Bridge Loan was in the amount of $200,000 and was used to pay off the existing Bridge Loan with CAM ($150,000) and the remaining $50,000 was used to pay placement agent fees and expenses as previously indicated. Net proceeds of $6,250 were remitted to the Company. The 15% interest on the existing Bridge Loan of $150,000 was paid with 225,000 restricted shares of ABMC common stock.

The maturity date of the 2013 Bridge Loan was August 1, 2014, with simple interest of 15% paid in advance, in the form of 300,000 restricted common shares of ABMC stock. In addition to the interest, as inducement to enter into the 2013 Bridge Loan, the Company issued 153,486 restricted common shares of ABMC stock, and the Company issued CAM a 3-year warrant to purchase 250,000 common shares of ABMC stock at an exercise price of $0.14 (the average closing sale price of the Company’s common shares for the 5 days business days ending October 7, 2013). The warrants were 100% exercisable on the date of the grant.

On October 7, 2013, the Company entered into an Agreement to the Series A Debenture (the “2013 Series A Debenture Amendment”) with 30 of the 32 holders of Series A Debentures (the “Debenture Holders”) (representing $634,500 of Series A Debentures). One of the Debenture Holders (representing $10,500 in Series A Debentures) did not wish to extend and the Company used net proceeds and cash on hand to pay the principal amount due to this Holder. One of the Debenture Holders transferred their investment to another existing Debenture Holder. As previously indicated, the extension period of either 6 or 12 months was at the election of the Debenture Holder. 27 of the 30 Debenture Holders (representing $543,500 of Series A Debentures) elected to extend for a period of 12 months. The other 3 (representing $91,000 in Series A Debentures) elected to extend for a period of 6 months. The 27 holders that elected to extend for a 12-month period were each issued a warrant to purchase 1 share of common stock for each $1.00 that was extended. The Company issued 2-year warrants to purchase 543,500 common shares of ABMC stock at an exercise price of $0.14. The fair value of the Debenture Holder warrants was $76,000 and the Company amortized this cost over the term of the Series A Debenture extension, or 12 months. The Company recognized $44,000 of this expense in Fiscal 2014 and $32,000 of this expense in Fiscal 2013. As of December 31, 2014, there was $0 in unrecognized expense with 0 months remaining.

On February 7, 2014, the Company paid $91,000 to the 6-month extension Debenture Holders; bringing the balance due to Debenture Holders to $543,000.

2014 Forbearance

The Company’s Series A Debentures and Bridge Loan with CAM matured on August 1, 2014 and the Company was unable to pay back the principal amount of $543,000 related to the Series A Debentures and $200,000 related to the CAM Bridge Loan (the “Debenture Debt”). The Company was however able to continue to make interest payments on the Debenture Debt. On July 30, 2014, the Company entered into a term sheet to engage CRI to solicit existing holders of the Debenture Debt (the “Holders”) to forbear from exercising remedies of default related to the non-payment of principal until February 1, 2015. All but one of the 27 Debenture Holders agreed to forbear. The Company repaid the principal of $20,000 to this one Debenture Holder bringing the balance on the Debentures to $523,000. See Note J – Subsequent Events for information related to the status of the Series A Debentures that matured on February 1, 2015.

The Company paid Cantone a fee for assisting the Company in obtaining forbearance agreements from the Holders. The fee was 2% of the forbearing principal amount, and was paid $7,000 in cash and 1% in 58,575 restricted commons shares of ABMC stock. A stock price of $0.12 per share (which was the average closing price of the Company’s common shares for the ten (10) preceding trading days) was used to determine the number of restricted shares to be issued to CRI. The Company also reimbursed Cantone’s legal fees of $1,000.

The Company is amortizing these costs (totaling $15,000) over the course of the forbearance period, or over 6 months. The Company recognized $13,000 in expense in Fiscal 2014 and $0 in Fiscal 2013. As of December 31, 2014, there is $2,000 in unrecognized expense with 1 month remaining. The Company recorded a debt discount in the amount of $42,000 in Fiscal 2014 and $60,000 in Fiscal 2013, and the Company recognized $107,000 in interest expense in Fiscal 2014 and $122,000 in Fiscal 2013.

Line of Credit with Imperium Commercial Finance, LLC (“Imperium”)

On January 16, 2013 (the “Imperium Closing Date”), the Company entered into a 3-year Loan and Security Agreement (“LSA”) with Imperium, a new Senior Lender, to refinance a Line of Credit with Medallion Financial Corp.

Under the LSA, the Company is provided with a revolving loan facility (the “Imperium Line of Credit”), which is secured by a first security interest in all of our receivables, inventory, and intellectual property rights along with a second security interest in our machinery and equipment (together the “Collateral”). On March 6, 2014, Imperium amended the Borrowing Base of the Imperium Line of Credit. More specifically, the amount available under the Imperium Line of Credit was capped to the lower of (i) $1,000,000, or (ii) 100% of the eligible outstanding accounts receivable. As of the date of this report, the Borrowing Base of the Imperium Line of Credit is based solely on Eligible Receivables. The Imperium facility also originally included a supplemental advance that was a discretionary facility secured by the same Collateral as the Imperium Line of Credit.

Under the LSA, so long as any obligations are due to Imperium, the Company must maintain certain minimum EBITDA (Earnings Before Interest, Taxes Depreciation and Amortization) requirements. The Company has not been in compliance with the EBITDA requirements since the First Quarter of 2013. The EBITDA requirement for the three months ended December 31, 2014 was $300,000, and the Company did not comply with this requirement. The Company did receive a waiver from Imperium for the three months ended March 31, 2013 (for which the Company paid a fee of $10,000), but no further formal waivers have been issued. This non-compliance constitutes an event of default, and the interest rate on the Imperium Line of Credit can be increased by 4% for as long as the event of default occurs. Imperium’s other remedies include, but are not limited to, termination or suspension of Imperium’s obligation to make further advances to the Company, and declaration of all amounts owed to Imperium due and payable. The increase in interest rate, given the Company’s current advances under the Imperium Line of Credit would not be material, however, if Imperium were to suspend or terminate further advances, or declare all amounts due and payable, this would have a material adverse effect on the Company’s business and negatively impact the Company’s ability to continue operations. As of the date of this report, Imperium has not enforced any of its default remedies related to this non-compliance.

The Company incurred $435,000 in costs related to the Imperium Line of Credit. With the exception of an early termination fee of $25,000 paid to Medallion (which was fully recognized in the three months ended March 31, 2013), these costs are being amortized over the term of the facility (3 years). The Company recognized $138,000 of these costs in Fiscal 2014 and $257,000 in costs in Fiscal 2013. The Company incurred $103,000 and $122,000 in interest expense in Fiscal 2014 and Fiscal 2013, respectively.

As of December 31, 2014, the balance on the Imperium Line of Credit was $876,000 and the balance on the supplemental advance was $200,000, for a total loan balance of $1,076,000. As of December 31, 2014, additional loan availability on the line of credit was $87,000 and since Imperium suspended further advances under the Supplemental Advance, there was $0 in availability under the Supplemental Advance, for a total Loan Availability of $1,163,000 at December 31, 2014. The balance on the Imperium Line of Credit was $1,180,000 at December 31, 2013. There was a debt discount recorded in the amount of $97,000 and $193,000 for Fiscal 2014 and Fiscal 2013, respectively.

The Imperium Line of Credit is used for working capital and general corporate purposes, and the Imperium

Loan and Security Agreement with Medallion Business Credit

The Loan and Security Agreement with Medallion Business Credit (“Medallion”) was only in place for the first 15 days of Fiscal 2013. Given this, apart from the$25,000 early termination fee indicated previously, there was $0 in costs incurred in Fiscal 2013. We did incur $8,000 in interest expense in Fiscal 2013. The amount outstanding on the Medallion Line of Credit at December 31, 2014 was $0, and all indebtedness due to Medallion was paid in full and Medallion’s security interest in our assets were terminated.