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Secured Lines of Credit
12 Months Ended
Dec. 31, 2015
Line of Credit Facility [Abstract]  
Secured Lines of Credit

5. Secured Lines of Credit

 

In June 2011, MB Financial provided a line of credit drawable up to 85% of eligible receivables and 60% of eligible inventory for a period up to June 2016. Effective August 20, 2014, pursuant to Third Default Notice,MB Financial notified that it would reduce the advance rate for eligible inventory by 2% each month.The borrowings are collateralized, with recourse, by MBC’s and Releta’s trade receivables and inventory located in the US. This facility carries interest (including default interest) at a rate of prime plus 3% and is secured by substantially all of the assets of Releta and MBC.The amount outstanding on this line of credit as of December 31, 2015 was approximately $453,100. Included in the Company’s balance sheet as accounts receivable at December 31, 2015, are account balances totaling $1,121,300 of accounts receivables and $1,490,100 of inventory collateralized to MB Financial under this facility.

 

On April 26, 2005, Royal Bank of Scotland Commercial Services Limited (“RBS”) provided an invoice discounting facility to KBEL for a maximum amount of £1,750,000 based on 80% prepayment against qualified accounts receivable related to KBEL’s UK customers. The initial term of the facility was for a one year period after which time the facility could be terminated by either party by providing the other party with six months’ notice. The facility carries an interest rate of 1.38% above the RBS base rate and a service charge of 0.10% of each invoice discounted. The amount outstanding on this line of credit as of December 31, 2015 was approximately $1,210,300.

 

On November 24, 2015, KBEL received a notice from RBS regarding its intention to terminate the credit line and all other banking services it currently provides to KBEL on February 26, 2016. RBS subsequently extended the termination date to May 31, 2016. We have engaged in discussions with a bank which provided an indicative offer to provide a replacement for the RBS line of credit. It would have a material adverse effect on KBEL and the Company if KBEL is unable to find a substitute replacement before termination of the RBS facilities.