Annual report pursuant to Section 13 and 15(d)

Notes and Other Obligations

Notes and Other Obligations
12 Months Ended
Dec. 31, 2013
Notes and Other Obligations [Abstract]  
Notes and Other Obligations
Note 4.  Notes and other obligations:

Notes payable and installment obligations consisted of the following as of December 31:
Mortgage notes
Termination obligation
Other short-term installment obligations
Less current portion
Mortgage notes:
The Company has a mortgage facility on its land and building. The mortgage is held by a commercial bank and includes approximately 35% that is guaranteed by the U. S. Small Business Administration (SBA). The loan is collateralized by the real property and the SBA portion is also personally guaranteed by a former officer of the Company. The commercial bank portion of the mortgage was refinanced with the existing lender in May 2013. The revised terms include a payment schedule based on a fifteen year amortization, with a balloon maturity at five years. The commercial bank portion has the interest rate fixed at 3.95%, and the SBA portion bears interest at the rate of 5.86%. The commercial bank portion of the loan requires total monthly payments of approximately $11,700, which includes approximately $5,200 per month in interest. The SBA portion of the loan requires total monthly payments of approximately $9,200 through July 2023, which currently includes approximately $4,100 per month in interest and fees.

In November 2011, the Company entered into a Termination Agreement with Novartis Animal Health, Inc. (the "Novartis Termination Agreement") to terminate the Novartis License Agreement (Note 7).  Under the Novartis Termination Agreement, the termination obligation originally totaled $1,374,000. The Company discounted this obligation at an assumed interest rate of 7% (which represents the rate management believes it could have borrowed at for similar financings), which totaled $1,303,000.  As of December 31, 2013, the balance had been paid in full.

Other short-term installment obligations:
The Company has executed financing agreements for certain of the Company's insurance premiums.  At December 31, 2013, these obligations totaled $173,460 all of which are due in 2014.
Future maturities:
The Company's total debt obligations require minimum annual principal payments of approximately $320,000 in 2014, $153,000 in 2015, $159,000 in 2016, $166,000 in 2017, $1,268,000 in 2018 and $404,000 thereafter, through the terms of the applicable debt agreements.  The Company's Exclusive License Agreement with The Washington University also requires minimum annual royalty payments of $20,000 per year during its term (Note 7).