NOTE 15.

PENSION PLAN

The Company maintained a Defined Benefit Pension Plan (the “Pension Plan”) which had been, prior to December 31, 2011, for all employees who had attained the age of 21 and completed one year of service. The pension benefits were based primarily on years of service and the average compensation for the five highest consecutive years during the final ten years of employment. The benefit formula generally provided for a life annuity benefit.

Effective December 31, 2011, the Company amended its Pension Plan to freeze participants’ benefits with no future accruals after that date. Any current or future employee who was not a participant of the Pension Plan on December 31, 2011 was not eligible to enter the Pension Plan.

NOTE 15.

PENSION PLAN (continued)

On October 23, 2013 the Company’s Board of Directors approved the commencement of the steps necessary to terminate the Pension Plan, pursuant to the Pension Plan, and, if necessary, for the Company to make the required level of contribution whereby the Pension Plan would have sufficient funds to pay all benefits owed participants and beneficiaries. On January 22, 2014, the Company’s Board of Directors approved the termination of the Pension Plan effective March 31, 2014. Termination of the Pension Plan was completed through the distribution of the Pension Plan assets to participants and beneficiaries through either the purchase of an annuity from an insurance company or, payment of the benefit owed in a one-time lump sum payment based on a final calculation of benefit as of March 31, 2014. The final termination settlement was completed during the three months ended December 31, 2014. The Company contributed approximately $43,000 in 2014 to fully fund the Pension Plan to enable the distribution to participants of a lump sum benefit or the purchase of a life annuity to effectuate the termination. In addition, the Company incurred approximately $170,000 for the cost of legal and other advisors to complete the termination. During the year ended December 31, 2015, the Company received the favorable determination letter from the IRS, which was the final step in terminating the Pension Plan.

The Company used a December 31 measurement date.

Following are the components of the Net Period Pension Cost (Benefit):

	December 31,
	2015		2014		2013
Service Cost	$	—	$	87,219	$	87,496
Interest Cost		—		425,735		385,884
Actual Return on Plan Assets		—		342,637		(1,310,053	)
Amortization of Unrecognized Transition Loss (Gain) from Earlier Periods		—		—		91,111
Amortization of Unrecognized Prior Service Cost		—		—		—
Amortization of Net Gain (Loss) from Earlier Periods		—		—		736,025
Net Periodic Pension Cost (Benefit)	$	—	$	855,591	$	(9,537	)

The Company contributed approximately $43,000 to fully fund the Pension Plan for the final termination settlement in 2014. The Company made contributions totaling $84,600 in 2013.

The change in projected benefit obligation is as follows:

	December 31,
	2015		2014
Benefit Obligation at Beginning of Year	$	—	$	8,852,262
Service Cost		—		87,219
Interest Cost		—		425,735
Actuarial Loss (Gain)		—		(27,160	)
Plan Expenses Paid		—		(108,997	)
Benefits Paid		—		(541,896	)
Effect of Termination Settlement		—		(8,687,163	)
Benefit Obligation at End of Year	$	—	$	—

The change in plan assets is as follows:

	December 31,
	2015		2014
Fair Value of Plan Assets at Beginning of Year	$	—	$	9,259,932
Actual Return on Plan Assets		—		342,637
Employer Contribution		—		43,254
Plan Expenses Paid		—		(108,997	)
Benefits Paid		—		(541,896	)
Termination Settlement		—		(8,994,930	)
Fair Value of Plan Assets at End of Year	$	—	$	—

NOTE 15.

PENSION PLAN (continued)

The funded status of the pension obligation consisted of the following:

	December 31,
	2015		2014
Estimated Pension Benefit Obligation
Projected Benefit Obligation	$	—	$	—
Fair Value of Plan Assets		—		—
Accrued Net Pension Asset	$	—	$	—

The actuarial assumptions made to determine the projected benefit obligation and the fair value of plan assets are as follows:

	December 31,
	2015	2014
Weighted Average Discount Rate	N/A	N/A
Weighted Average Asset Rate of Return	N/A	N/A
Compensation Scale	N/A	N/A

The Company used the “Citigroup Pension Liability Index” to determine the discount rate. The weighted average asset rate of return was primarily based on both historical and projected future returns of the portfolio as a whole.

Amortization Periods

The transition liability (asset), was considered fully amortized as a result of the 2011 curtailment. The excess of the unrecognized (gain) or loss (if any) over the larger of 10% of the projected benefit obligation or 10% of the market related value of assets was amortized, prior to the termination, in level amounts over 12.60 years. The prior service cost re-established on January 1, 2001, was considered fully amortized as a result of the 2011 curtailment. The prior service cost established on January 1, 2002, was considered fully amortized as a result of the 2011 curtailment.

Funding Policy

Periodic employer contributions were made in conformance with minimum funding requirements and maximum deductible limitations.

Benefit Payments and Other Disbursements

During the measurement period, disbursements from Pension Plan assets were as follows:

	December 31,
	2015		2014
Benefit Payments	$	—	$	541,896
Administrative Expenses		—		108,997
Termination Settlement		—		8,994,930
Total	$	—	$	9,645,823

Plan Assets

The Company’s investment policy for pension funds, prior to the termination of the Pension Plan, was to achieve four major objectives as follows:

Growth in the invested assets to maintain future purchasing power;

Provide a stable, increasing stream of investment income to support needs;

Ensure the preservation of asset values equal to or greater than the nominal book value of assets over the intermediate term or a complete economic cycle, whichever is longer; and

Maintain liquidity.

NOTE 15.

PENSION PLAN (continued)

The allocation of investments targeted 60% in common equities and 40% in fixed income securities, exclusive of cash and cash equivalents with a typical 10% range of fluctuation. Equity securities primarily included investments in large-cap, mid-cap, and small-cap companies located in the United States and internationally. Fixed income securities primarily included corporate bonds of diversified industries and government bonds primarily located in the United States. Prior to the termination of the Pension plan, no single security, except short-term obligations of the U.S. government, constituted more than 4% of consolidated assets.

The Pension Plan held no assets as of December 31, 2015 or 2014, respectively, as all plan assets had been liquidated prior to December 31, 2014.

Cash Flows

The Company made periodic contributions in accordance with minimum funding requirements and maximum allowable deductions. Due to the termination, no future contributions will be required.

Estimated Future Benefit Payments

Termination of the Pension Plan was completed during the three months ended December 31, 2014, therefore, the benefit payments have been satisfied and no future benefit payments are expected.