At the dates indicated, debt consisted of the following:

	January 31, 2016		October 31, 2015
Term Note A dated October 7, 2013, due in monthly installments of $50,000 plus interest payments equal to the prime rate of interest plus 2% maturing April 1, 2017, collateralized by substantially all of the assets of the Company.	$	8,600,000	$	8,750,000
Installment notes payable to banks, due in monthly installments plus interest at rates approximating the bank’s prime rate or the prime rate subject to various floors maturing in various periods ranging from February 2016 - January 2018, collateralized by equipment and vehicles.		563,444		634,998
Notes payable to shareholders. The shareholder note of $2.5 million plus all accrued interest was initially due in one balloon payment in September 2014; pursuant to Term Note A, the maturity was adjusted to April 2015. The interest is accrued at a rate of 3.50%. See discussion on next page for more details. (1)		2,500,000		2,500,000
Note payable to a bank, due April 2016, including interest accrued at 5.25%, collateralized by specific accounts receivable of the Company. (2)		980,000		750,000
Capital lease obligation for printing equipment at an imputed interest rate of 6.02% per annum		24,505		28,380
Note, payable to a bank in monthly installment of $8,441 including interest at 5.00% collateralized by equipment		430,057		443,208
Note, payable to a bank in monthly installments of $4,197 including an imputed interest rate of 0.0% collateralized by equipment		139,489		147,694
		13,237,495		13,254,280

Less current portion long-term debt		1,160,323		1,179,358
Less short-term notes payable to related party (1)		2,500,000		2,500,000
Less current portion obligation under capital lease		16,091		15,852
Less short-term debt (2)		980,000		750,000
Long-term debt, net of current portion and capital lease obligation	$	8,581,081	$	8,809,070


Long-term debt, net of current portion	$	8,572,667	$	8,796,542
Long-term capital lease obligation		8,414		12,528
Current portion of long-term debt		1,160,323		1,179,358
Short-term notes payable to related party (1)		2,500,000		2,500,000
Short-term debt (2)		980,000		750,000
Current portion of capital lease obligation		16,091		15,852
Total indebtedness	$	13,237,495	$	13,254,280

(1) On June 15, 2015 the Company’s Board of Directors approved the conversion of the Company’s $2.5 million related party debt to Preferred Stock equity. The Preferred Stock will pay a 6.00% or 0.00% annual dividend contingent on the Company’s income after income taxes. If the Company's income after income taxes is $1.0 million or greater, the dividend rate is 6.00%; if the Company's income after income taxes is less than $1.0 million, the dividend rate is 0.00%.

This conversion will reduce the Company’s liabilities by $2.5 million and increase its equity by $2.5 million. In addition, this conversion will reduce the Company’s annual interest expense by $0.1 million. However, contingent on the after income tax income, this conversion could trigger the payment of an annual Preferred Stock dividend of $0.2 million or zero. If the $1.0 million after income tax income target is achieved, the Company’s annual cash outflow would increase $0.1 million, or decrease $0.1 million if the $1.0 million after income tax income target is not achieved.

This conversion is pending a shareholder vote to amend the Company’s Articles of Incorporation to allow for the issuance of Preferred Stock. The proposed amendment to the Company's Articles of Incorporation was approved by the Company's Board of Directors on January 18, 2016. This was anticipated to be part of the Company's definitive Proxy Statement with respect to the Annual Meeting of Shareholders to be held on March 21, 2016, but the Company will now present the amendment at a special shareholder meeting expected to be held in May 2016. The Company will continue to accrue interest on the related party debt equal to the prime rate until such conversion has been consummated.

(2) These notes are short-term borrowings associated with large furniture projects that are on terms of 120 days or less. A portion of these borrowings were subsequently paid upon collection of the collateral in February 2016.