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Short-Term and Long-Term Debt
 3 Months Ended
Mar. 31, 2013
Short-Term and Long-Term Debt [Abstract]  
Short-Term and Long-Term Debt

4.    Short-Term and Long-Term Debt

 

Revolving Credit Lines - The Company entered into a credit facility agreement with RBS Citizens, N.A. ("Citizens Bank") in connection with the Company's acquisition of Premier Packaging Corporation ("Premier"). As amended on July 26, 2011, the credit facility agreement provides Premier with a revolving credit line of up to $1,000,000.  The revolving line bears interest at 1 Month LIBOR plus 3.75% (3.95% as of March 31, 2013) and matures on May 31, 2013. As of March 31, 2013, the revolving line had a zero balance ($194,680, net of sweep account of $349,976 as of December 31, 2012).

 

Long-Term Debt - On December 30, 2011, the Company issued a $575,000 convertible note that matures on December 29, 2013, and carries an interest rate of 10% per annum. Interest is payable quarterly, in arrears. The convertible note can be converted at any time during the term at lender's option into a total of 260,180 shares of the Company's common stock at a conversion price of $2.21 per share. In conjunction with the issuance of the convertible note, the Company determined a beneficial conversion feature existed amounting to approximately $88,000, which was recorded as a debt discount and will be amortized over the term of the note. The note is secured by all of the assets (excluding assets leased) of Secuprint Inc., a subsidiary of the Company, is subject to various events of default, and had a balance of $575,000 as of March 31, 2013 ($575,000 - December 31, 2012).

 

On February 12, 2010, in conjunction with the credit facility agreement with Citizens Bank, the Company entered into a term loan with Citizens Bank for $1,500,000.    As amended on July 26, 2011, the term loan requires monthly principal payments of $25,000 plus interest through maturity of February 2015. Interest accrues at 1 Month LIBOR plus 3.75% (3.95% at March 31, 2013).  The Company entered into an interest rate swap agreement to lock into a 5.7% effective interest rate over the remaining life of the amended term loan. As of March 31, 2013, the balance of the term loan was $575,000 ($650,000 - December 31, 2012).

 

Promissory Note - On August 30, 2011, the Company's wholly owned subsidiary Premier purchased the packaging plant it occupies in Victor, New York for $1,500,000, which was partially financed with a $1,200,000 promissory note obtained by Premier from Citizens Bank ("Promissory Note"). The Promissory Note calls for monthly payments of principal and interest in the amount of $7,658, with interest calculated as 1 month LIBOR plus 3.15% (3.35% at March 31, 2013). Concurrently with the transaction, the Company entered into an interest rate swap agreement to lock into a 5.865% effective interest rate for the life of the loan.  The Promissory Note matures in August 2021 at which time a balloon payment of the remaining principal balance of $919,677 is due. As of March 31, 2013, the Promissory Note had a balance of $1,165,106 ($1,170,831 - December 31, 2012).

 

Term Note - On October 8, 2010, the Company amended its credit facility Agreement with Citizens Bank to add a standby term loan Note pursuant to which Citizens Bank will provide Premier with up to $450,000 towards the funding of eligible equipment purchases. In October 2011, the standby term loan note was converted into a term note payable in monthly installments of $887 plus interest over 5 years. As of March 31, 2013, the balance under this term note was $38,157 ($40,819 - December 31, 2012).

 

All of the Citizens Bank credit facilities are secured by all of the assets of Premier, and are also secured through cross guarantees by the Company and two of its other wholly owned subsidiaries, Plastic Printing Professionals, Inc. and Secuprint Inc. Under the Citizens Bank credit facilities, the Company's subsidiary, Premier is subject to various covenants including fixed charge coverage ratio, tangible net worth and current ratio covenants.