Quarterly report pursuant to Section 13 or 15(d)

Notes and Other Obligations

Notes and Other Obligations
9 Months Ended
Sep. 30, 2013
Notes and Other Obligations [Abstract]  
Notes and Other Obligations
Note 4. Notes and Other Obligations:

Notes payable and other obligations consisted of the following:
September 30,
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 current 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.
Termination obligation:

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, which was payable $150,000 upon signing the Novartis Termination Agreement and in six equal subsequent quarterly installments of $204,000 each.  The Company discounted this obligation for financial reporting purposes, using an assumed interest rate of 7% (which represented the rate management believes it could have borrowed at for similar financings). As of September 30, 2013, the balance had been paid in full.

Future maturities:
The Company's total debt obligations require minimum annual principal payments of approximately $139,000 for the remainder of 2013, $320,000 in 2014, $153,000 in 2015, $159,000 in 2016 and $1,838,000 thereafter, through the terms of the applicable debt agreements.