6. Debt

Debt at December 31, 2013 and 2012 consists of the following:

	2013		2012

Term loan	$	2,400,697	$	2,807,298
Revolving line of credit		1,150,000		-
Obligation for acquisition of technology license, net		811,914		-
Obligation for purchase of distributorship, as modified		-		223,645
		4,362,611		3,030,943
Less current maturities		581,004		629,631
	$	3,781,607	$	2,401,312

Principal maturities of debt at December 31, 2013, are as follows:

2014	$	581,004
2015		643,467
2016		2,926,226
2017		211,914
2018		-
Thereafter		-
	$	4,362,611

Revolving loan agreements

Effective October 1, 2011, upon expiration of a previous revolving loan agreement, the Company entered into a new $5 million one-year revolving loan agreement (2011) with its primary lender. The 2011 agreement expired September 2012.

Effective September 30, 2012, the Company entered into a new one-year $5 million revolving loan agreement (2012) with its primary lender. Similar to the previous agreements, any advances under the revolver accrue interest at a variable interest rate based on 30-day LIBOR + 1.85%. Interest, if any, is payable monthly. In August 2013, in conjunction with its acquisition of a technology license, the Company borrowed $1.15 million under its revolving line of credit and this balance remained outstanding at December 31, 2013.

On February 28, 2014, the Company and its primary lender amended the revolving line of credit agreement and the term loan agreement. As part of the amendment, the $5 million revolving line of credit agreement has been extended to July 1, 2016 and the outstanding revolving loan balance of $1.15 million has been re-financed into the term loan balance. As a result, the Company has presented the December 31, 2013 revolving line of credit balance of $1,150,000 as non-current in the accompanying consolidated balance sheets.

Term Loan

On November 30, 2010, the Company re-financed its then-existing term loan agreement with its primary lender. The 2010 re-financed term loan was for a period of three years with interest accruing at a floating interest rate based on the 30-day LIBOR plus 2%. Monthly principal and interest were based on approximately a nine-year amortization with a balloon payment for the outstanding balance due and payable on November 30, 2013.

On September 30, 2012, the Company re-financed the 2010 term loan agreement with its primary lender. The 2012 re-financed term loan is for a period of thirty-eight months with interest accruing at a floating interest rate based on the 30-day LIBOR plus 2%. At December 31, 2013, the term loan’s interest rate was 2.17%. Monthly principal and interest are based on approximately a seven-year amortization. The aggregate outstanding balance of principal and interest was due and payable on November 30, 2015.

On February 28, 2014, the Company re-financed the 2012 term loan agreement and its revolving line of credit agreement with its primary lender. The 2014 re-financed term loan is for a period of twenty-eight months with the same floating interest rate pricing as the 2012 term loan. The total borrowings on the new 2014 term loan is approximately $3.5 million and consists of the February 28, 2014 outstanding balances of the 2012 term loan and the revolving line of credit loan balance of $1.15 million. Thus, upon the completion of this February 28, 2014 re-financing, the Company had no outstanding borrowings under its revolving line of credit agreement.

The term loan agreement and revolving line of credit agreement are secured by all tangible and intangible assets of the Company and also by a mortgage on the real estate of the Company’s headquarters. These agreements also include loan covenants requiring the Company to maintain net tangible worth of not less than $11 million, and that borrowings under the agreements shall not exceed EBITDA by a ratio of 2.5 to 1. At December 31, 2013, the Company was in compliance with its loan covenants.

Obligation for Acquisition of Technology License, net

In July 2013, a newly-formed, wholly-owned subsidiary of the Company entered into a Technology License Agreement (TLA) with a privately-held company. The TLA provides the Company the exclusive license for certain intellectual property related to the nutritional ingredient lunasin and other soy-related peptides and proteins. In consideration for the TLA, the Company agreed to pay the licensor a purchase price of $2 million; $1.15 million paid at closing, with the remaining obligation (non-interest bearing) paid over the next four years in a series of annual payments ranging from $150,000 to $250,000 as stated in the agreement. Subject to certain minimum and maximum thresholds, the Company may also pay the licensor royalties of 5% of sales during the first five years of the TLA and royalties ranging from 1% to 3% of sales during the remaining life of the TLA. As of December 31, 2013, management’s estimate of earned but unpaid royalties is zero. The Company has accounted for the TLA as an asset purchase acquisition consisting of a long-term finite-lived asset to be amortized over the life of the associated intellectual property (approximately seventeen years).

Obligation for Purchase of Distributorship, as modified

On August 31, 2009, the Company acquired an independent Reliv distributorship from its owner (“Seller”) which resulted in the Seller financing $1,343,881 of the purchase price over a period of seven years with monthly payments of principal and interest totaling $18,994.

At June 30, 2012, the Company’s remaining balance due to the Seller under this transaction was approximately $856,000. On July 17, 2012, the Company and Seller entered into an Agreement to modify the Company’s remaining obligation to equal twelve consecutive monthly payments of principal and interest of $37,500 with the first payment commencing in July 2012. The Company has presented the 2012 non-cash gain of $410,320 relating to this modification as Other Income in the accompanying consolidated statements of net income and comprehensive income. As of December 31, 2013, the Company’s obligation for purchase of a distributorship has been repaid.