Annual report pursuant to Section 13 and 15(d)

Short Term Debt

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Short Term Debt
12 Months Ended
Dec. 31, 2014
Debt Disclosure [Abstract]  
Short Term Debt

NOTE 10 – SHORT TERM DEBT

 

On February 25, 2013, the Company entered into a working capital revolving line of credit with a bank, with a credit limit of $500,000 which was increased to $2 million when the line was renewed on June 26, 2014. The line is used in financing overseas sales of the Company’s products. The Company’s draws under the line are transaction specific and are guaranteed by the Export Import Bank, a U.S. government entity. The line is secured by a perfected first security interest on all of the Company assets. Drawdowns on the line are used to meet the working capital needs of the Company to purchase materials and fund the labor and overhead to manufacture specific products for export to specific customers. The current line, which accrues interest at a fixed rate of 6.0%, expires on June 26, 2015, and has a total credit limit of 2,000,000. The loan is guaranteed by the Company’s President.

 

For the year ended December 31, 2014, there were total draws on the line of credit of $2,445,000 and repayments of $953,394. For the year ended December 31, 2013, there were total draws on the line of credit of $785,712 and repayments of $285,712.

 

The outstanding balance as of December 31, 2014 and 2013 were $1,991,605 and $500,000, respectively, which has been included in the short-term debt – third parties on the balance sheet.

 

During the year ended December 31, 2013, one of the Company’s board members resigned, therefore $100,000 of short term debt - related parties in the prior year that was owed to him was reclassified to short term debt – third parties in the year ended December 31, 2014.

 

During 2013 and 2012, the Company has entered into other various notes to individuals at interest rates ranging from 5% to 18% and are due on demand. During the years ended December 31, 2014 and 2013, the Company repaid $115,000 and $199,750 respectively, on these various notes.

 

At December 31, 2013, these notes aggregated $400,000, which includes the $100,000 reclassified from short term debt – related parties as described above, and are included in the short term debt – third parties on the balance sheet along with the $500,000 line of credit above for a total of $900,000.

 

On April 15, 2014, the Company entered into a note payable for $200,000 with a term of one year and interest accruing at a rate of 8%, which is accruing and due in full at the end of the note.

 

At December 31, 2014, the outstanding balance on this note was $200,000 and is included in the short term debt – third parties in the accompanying consolidated balance sheet along with the $1,991,605 line of credit and $485,000 in various notes payable to individuals above for a total of $2,476,605.

 

Interest expense for the short-term debt was approximately $158,000 and $62,000 for the years ended December 31, 2014 and 2013, respectively.