Note E – Line of Credit and Debt

	March 31, 2015		December 31, 2014
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⁾	$	0	$	348,000
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⁾.		0		523,000
Bridge Loan with Cantone Asset Management, LLC⁽³⁾:
Interest rate of 15% payable upon loan maturity; maturity date of February 1, 2015⁽³⁾.		0		200,000
Loan and Security Agreement with Cherokee Financial, LLC: 5 year note at an annual interest rate of 8% plus a 1% annual oversight fee, interest only and oversight fee paid quarterly with first payment being due on May 15, 2015, annual principal reduction payment of $75,000 due each year on the anniversary of the closing date with a final balloon payment being due on March 26, 2020. Loan is collateralized by a first security interest in building, land and property.		1,200,000		0
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.		1,018,000		1,076,000
		2,218,000		2,147,000
Less debt discount (Line of credit & Cherokee Financial, LLC Loan)		(285,000)		(97,000)
Total debt	$	1,933,000	$	2,050,000

Current portion	$	977,000	$	1,837,000
Long-term portion	$	956,000	$	213,000

(1)

The mortgage through First Niagara Bank was satisfied in full on March 27, 2015 via a refinancing with Cherokee Financial, LLC.

(2)

The Series A Debentures were satisfied in full on March 27, 2015 via a refinancing with Cherokee Financial, LLC.

(3)

The Bridge Loan with Cantone Asset Management, LLC was satisfied in full on March 27, 2015 via a refinancing with Cherokee Financial, LLC.

(4)

On March 26, 2015, the Company entered into a Loan and Security Agreement with Cherokee Financial, LLC (the “Cherokee LSA”). The purpose of the Cherokee LSA was to refinance the Series A Debentures and Cantone Asset Management LLC Bridge Loan (both of which matured on February 1, 2015) and the Mortgage Consolidation Loan with First Niagara Bank at a better interest rate.

FIRST NIAGARA: 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 continued 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 a covenant.

The balance on the Mortgage Consolidation Loan was $0 at March 31, 2015 and $348,000 at December 31, 2014, respectively. Interest expense recognized was $5,000 in the First Quarter 2015 and $7,000 in the First Quarter 2014.

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. The Series A Debentures’ original maturity date was August 1, 2012, but this original maturity date was extended in 2012 (with $645,000 in Series A Debentures extending) and extended again in October 2013 (the “2013 Debenture Extension”). One of the Series A Debenture Holders (representing $10,500 in Series A Debentures) did not wish to extend so the balance on the Series A Debentures was again decreased to $634,500.

Cantone Research, Inc. (“CRI”) again acted as the Company’s Placement Agent in the 2013 Debenture Extension. CRI received 1) a cash fee of $39,750, 2) a 3-year warrant to purchase 75,000 shares of the Company’s common stock at an exercise price of $0.14, and 3) a non-accountable expense allowance paid with 115,000 restricted shares of ABMC common stock (in lieu of cash). The Company also paid $4,000 in legal fees incurred by CRI. The fair value of the CRI warrant was $10,000 and the Company recognized 100% of this expense on the date of the grant in the year ended December 31, 2013.

Under the 2013 Debenture Extension, the term of $634,500 in Series A Debentures was extended to reflect a maturity 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 and all other terms of the Series A Debentures remained the same. As previously indicated, the extension period of either 6 or 12 months was at the election of the Series A Debenture Holder. 27 of the 30 Series Debenture Holders (representing $543,500 of Series A Debentures) elected to extend for a period of 12 months so they were granted 2-year warrants to purchase 543,500 shares of the Company’s common stock at an exercise price of $0.14. The other 3 (representing $91,000 in Series A Debentures) elected to extend for a period of 6 months and did not receive warrant grants. The fair value of the Debenture Holder warrants was $76,000.

The First Quarter 2015 includes $0 in expense related to the 2013 Debenture Extension and the First Quarter 2014 includes $19,000 in expense. As of March 31, 2015, there was $0 in unrecognized expense with 0 months remaining related to the 2013 Debenture Extension.

BRIDGE LOAN WITH CANTONE ASSET MANAGEMENT, LLC.

When the Series A Debentures originally matured in 2012, there were certain holders (representing $100,000 in Debentures) that did not wish to extend the term of their Series A Debentures. Given this, the Company entered into a Bridge Loan with Cantone Asset Management, LLC (“CAM”) in the amount of $150,000 ($100,000 was used to pay those Holders of Series A Debentures that did not wish to extend the Series A Debentures and $50,000 was used to pay placement agent fees and expenses associated with the extension). The CAM Bridge Loan originally matured on August 1, 2013 with simple interest in advance of 15%.

On October 7, 2013, the Company entered into a new Bridge Loan with CAM (the “2013 Bridge Loan”). 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 associated with the 2013 Bridge Loan. Net proceeds of $6,250 were remitted to the Company.

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 shares of the Company’s common stock, and the Company issued CAM a 3-year warrant to purchase 250,000 shares of the Company’s common stock at an exercise price of $0.14. The CAM warrant was valued at $35,000 and the Company recognized 100% of this expense in the year ended December 31, 2013.

2014 Forbearance

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.The Series A Debentures and the 2013 Bridge Loan 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 2013 Bridge Loan (together 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 once again engage CRI to solicit existing holders of the Debenture Debt to forbear from exercising remedies of default related to the non-payment of principal until February 1, 2015. All but one of the 27 Series A Debenture holders agreed to forbear. The Company repaid the principal of $20,000 to this one Series A Debenture holder bringing the balance on the Debentures to $523,000. The maturity of the 2013 Bridge Loan was also extended to February 1, 2015.

The Company paid CRI 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 shares of the Company’s common stock. A stock price of $0.12 per share was used to determine the number of restricted shares to be issued to CRI. The Company also reimbursed CRI’s legal fees of $1,000. The Company amortized these costs (totaling $15,000) over the course of the forbearance period, or over 6 months. The Company recognized $2,000 in expense in the First Quarter 2015 and $0 in expense in the First Quarter 2014. As of March 31, 2015, there is $0 in unrecognized expense with 0 month remaining.

The Company recognized $22,000 in interest expense in the First Quarter of 2015 related to the Series A Debentures and the CAM Bridge Loan, and we had $10,000 in accrued interest expense at March 31, 2015 related to the Series A Debentures and CAM Bridge Loan.

As of March 31, 2015, the balance on the Series A Debenture and the CAM Bridge Loan is $0.

LOAN AND SECURITY AGREEMENT WITH CHEROKEE FINANCIAL, LLC.

On March 26, 2015, the Company entered into a Loan and Security Agreement with Cherokee Financial, LLC (the “Cherokee LSA”). The purpose of the Cherokee LSA was to refinance the Company’s Series A Debentures and CAM Bridge Loan (both of which matured on February 1, 2015) and the Company’s Mortgage Consolidation Loan with First Niagara Bank at a better interest rate. The loan is collateralized by a first security interest in the same assets as the First Niagara Bank loan (i.e. real estate and machinery and equipment). Under the Cherokee LSA, the Company was provided the sum of $1,200,000 in the form of a 5-year Note at an annual interest rate of 8%. The Company will make interest only payments quarterly on the Cherokee Note, with the first interest payment being due on May 15, 2015. The Company will also make an annual principal reduction payment of $75,000 on each anniversary of the date of the closing with the first principal reduction payment being due on March 26, 2016. A final balloon payment is due on March 26, 2020. In addition to the 8% interest, the Company will pay Cherokee Financial, LLC a 1% annual fee (in cash and paid contemporaneously with payment of quarterly interest) for oversight and administration of the loan. The Company can call the Cherokee Note at anytime with no penalty; except that a 1% administration fee would be required to be paid to Cherokee Financial, LLC to close out all participations.

The Company issued 1.8 million restricted shares of the Company’s common stock to Cherokee Financial LLC. The Company will also issue an additional 0.5 restricted shares of the Company’s common stock, or 600,000 restricted shares, to Cherokee Financial LLC on March 26, 2016, however, if the Company has repaid the Cherokee Note in full prior to this date, the Company is not obligated to issue these additional shares.

As placement agent for the transaction, CRI received a 5% cash fee on the $1.2 million, or $60,000, and 200,000 restricted shares of the Company’s common stock. The Company will also issue an additional 196,000 restricted shares of the Company’s common stock to CRI on March 26, 2016 as an additional placement agent fee and expense allowance, however, if the Company has repaid the Cherokee Note in full prior to this date, the Company is not obligated to issue these additional shares.

The Company received net proceeds of $80,000 after $1,015,000 of debt payments, $60,000 in placement agent fees, $19,000 in legal fees, $19,000 in expenses, $3,000 in state filing fees and $4,000 in interest expense (for 8% interest on $511,000 in new participations received from February 24, 2015 through March 25, 2015). With the exception of the interest expense, the Company will be amortizing these expenses over the term of the Cherokee LSA, or 5 years as deferred finance and debt issuance costs. From these net proceeds, in April 2015, the Company also paid $15,000 in interest expense related to 15% interest on $689,000 in Series A Debentures and CAM Bridge Loan for the period of February 1, 2015 through March 25, 2015.

The First Quarter 2015 includes $10,000 in expense related to the Cherokee LSA and the First Quarter 2014 includes $0 in expense. As of March 31, 2015, there was $345,000 in unrecognized expense with 59 months remaining related to the Cherokee LSA.

The Company recognized $1,000 in interest expense in the First Quarter of 2015 related to the Cherokee LSA, and we had $10,000 in accrued interest expense at March 31, 2015 related to the Cherokee LSA.

As of March 31, 2015, the balance on the Cherokee LSA is $1,200,000.

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 Senior Lender, to refinance another Line of Credit.

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 receivables, inventory, and intellectual property rights along with a second security interest in 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 First Quarter 2015 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 the prior Lender (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 $34,000 of these costs in the First Quarter 2015 and in the First Quarter 2014. The Company incurred $27,000 and $26,000 in interest expense in the First Quarter 2015 and the First Quarter 2014, respectively. The Company had accrued interest of $7,000 as of March 31, 2015.

As of March 31, 2015, the balance on the Imperium Line of Credit was $818,000 and the balance on the supplemental advance was $200,000, for a total loan balance of $1,018,000. As of March 31, 2015, additional loan availability on the line of credit was $116,000 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 $1,134,000 at March 31, 2015. There was a debt discount recorded in the amount of $72,000 and $170,000 for the First Quarter 2015 and First Quarter 2014, respectively.

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