11. Long-Term Debt

Long-term debt consists of the following:

In thousands	2016		2015
8¼% Limited convertible senior subordinated notes due 2012	$	387	$	626
9½% Subordinated debentures due 2012		220		334
Revolving credit line		1,805		-
Term loans		872		-
Term loan – related party		500		-
Real estate mortgage – secured		-		333
Total debt		3,784		1,293
Less deferred financing costs		243		-
Net debt		3,541		1,293
Less portion due within one year		2,984		1,031
Net long-term debt	$	557	$	262

Payments of long-term debt due for the next five years are:

In thousands	2017		2018		2019		2020		2021
	$	2,984	$	80	$	720	$	-	$	-
		.

On July 12, 2016, the Company entered into the Credit Agreement. Under the Credit Agreement, the Company is able to borrow up to an aggregate of $4.0 million, which includes (i) up to $3.0 million of a revolving loan, at an interest rate of prime plus 4.0% (7.75% at December 31, 2016) , for an equipment purchase, repayment of certain outstanding obligations, including payments to the Company’s pension plan, the purchase of inventory/product and general working capital purposes, and (ii) a $1.0 million term loan, at an interest rate of prime plus 6.0% (9.75% at December 31, 2016), for the purchase of equipment. The availability under the revolving loan is calculated based on certain percentages of eligible receivables and inventory. Due to limited availability at the inception of the Credit Agreement, the Company capped the revolving loan at $2.0 million, while reserving the option to remove the cap when needed. During 2016, the Company had drawn $1.8 million on the revolving loan and $400,000 on the term loan, of which $1.8 million and $380,000, respectively, are outstanding as of December 31, 2016. Interest under the Credit Agreement is payable monthly in arrears. The Credit Agreement also requires the payment of certain fees, including, but not limited to a facility fee, an unused line fee and a collateral management fee.

The Credit Agreement contains financial and other covenant requirements, including, but not limited to, financial covenants that require the Borrowers to maintain a fixed charge coverage ratio of at least 1.1 to 1.0 starting with their August 31, 2016 financial statements. As of December 31, 2016, the Company was in compliance with all covenants. The Credit Agreement allows the Company to continue to pay dividends on all its Preferred Stock or any other new preferred stock, if any, which dividends will be excluded as fixed charges for 18 months.

The Credit Agreement is secured by substantially all of the Borrowers’ assets and expires July 12, 2019, unless earlier terminated by the parties in accordance with the termination provisions of the Credit Agreement. The foregoing description of the Credit Agreement is included to provide information regarding its terms. It does not purport to be a complete description and is qualified in its entirety by reference to the full text of the Credit Agreement.

In connection with the BFI Agreement, defined hereafter, the Borrowers entered into a First Amendment to Credit and Security Agreement dated as of September 8, 2016 with SCM, to provide for certain amendments to the Credit and Security Agreement with SCM dated July 12, 2016 to allow for the Company’s entry into the BFI Agreement and the security interest granted to BFI thereunder. The Company, BFI and SCM also entered into a Mutual Lien Intercreditor Agreement, dated as of September 8, 2016, setting forth SCM’s senior lien position to all collateral of the Company, except for the purchase order securing the BFI Agreement, and the rights of each of SCM and BFI with respect to the collateral of the Company.

On September 8, 2016, the Company entered into an agreement with BFI (the “BFI Agreement”), pursuant to which the Company can borrow up to $750,000 at a fixed rate of interest of 10.00%, with a maturity date of March 1, 2017. As of December 31, 2016, the Company had borrowed $750,000 under the BFI Agreement and had repaid $258,000, leaving an outstanding balance of $492,000. Subsequent to December 31, 2016, the Company repaid the BFI Agreement in full. Under the BFI Agreement, the Company granted BFI a security interest in accounts receivable, materials and intangibles relating to a certain purchase order for equipment issued in July 2016.

The Company has outstanding $387,000 of Notes which are no longer convertible into common shares. The Notes matured as of March 1, 2012 and are currently in default. As of December 31, 2016 and 2015, the Company had accrued $234,000 and $327,000, respectively, of interest related to the Notes, which is included in Accrued liabilities in the Consolidated Balance Sheets. The trustee, by notice to the Company, or the holders of 25% of the principal amount of the Notes outstanding, by notice to the Company and the trustee, may declare the outstanding principal plus interest due and payable immediately. On July 15, 2016, holders of $239,000 of the Notes accepted the Company’s offer to exchange each $1,000 of principal, forgiving any related interest, for $200 in cash, for an aggregate payment by the Company of $48,000. As a result of the transaction, the Company recorded a gain on the extinguishment of debt, net of expenses, of $308,000.

The Company has outstanding $220,000 of Debentures. The Debentures matured as of December 1, 2012 and are currently in default. As of December 31, 2016 and 2015, the Company had accrued $148,000 and $193,000, respectively, of interest related to the Debentures, which is included in Accrued liabilities in the Consolidated Balance Sheets. The trustee, by notice to the Company, or the holders of 25% of the principal amount of the Debentures outstanding, by notice to the Company and the trustee, may declare the outstanding principal plus interest due and payable immediately. On July 15, 2016, holders of $114,000 of the Debentures accepted the Company’s offer to exchange each $1,000 of principal, forgiving any related interest, for $200 in cash, for an aggregate payment by the Company of $23,000. As a result of the transaction, the Company recorded a gain on the extinguishment of debt, net of expenses, of $154,000.

On April 27, 2016, the Company received a $500,000 loan from Carlisle at a fixed interest rate of 12.00%, which is due to mature on April 27, 2019 with a bullet payment of all principal due at such time. Interest is payable monthly. Mr. Elser, a director of the Company, exercises voting and dispositive power as investment manager of Carlisle.

As of December 31, 2015, the Company, through a subsidiary, had a $333,000 mortgage on its facility in Des Moines, Iowa, which was due to mature on March 1, 2020, had a fixed rate of interest of 5.95% and required an average minimum monthly compensating balance of $100,000. On February 1, 2016, the Des Moines facility was sold in a sale/leaseback transaction and the mortgage was satisfied.