LONG-TERM DEBT AND SUBSEQUENT EVENT

12 Months Ended

Jan. 31, 2012

Long Term Debt And Subsequent Event Disclosure [Abstract]

Long Term Debt And Subsequent Event Disclosure [Text Block]

6. LONG-TERM DEBT AND SUBSEQUENT EVENT

Revolving Credit Facility

In January 2010, the Company entered into a one-year $23.5 million revolving credit facility with TD Bank, N.A. In January 2011, TD Bank, N.A. agreed to a two-year extension to expire January 2013 and in June 2011, TD Bank, N.A. agreed to extend the term to June 2014 and add a $6.5 million term loan facility to be used to fund capital expansion in Brazil, Mexico and Argentina, as well as the ability to refinance existing debt in Canada. Borrowings under this $6.5 million term loan facility are in the form of a five-year term loan.

· As a result of the losses sustained in the third and fourth quarters of FY12, the Company was in breach of several covenants of its bank loan. In April 2012, TD Bank, N.A., to allow the Company to be in covenant compliance, agreed to Amendment No. 4 which does the following:

· Reclassified $3.0 million of the outstanding balance on the revolving credit into a term loan, principal payable $25,000 monthly from May 2012 to June 2013, monthly payments of $37,500 thereafter through maturity of June 30, 2014. Interest will be at LIBOR plus 2.75%.

· Interest rate pricing on the revolving credit balance at LIBOR plus 2.50% so long as the funded debt/EBITDA ratio is greater than 3.0.

· Unrecorded mortgages on the Company’s domestic owned real-estate.

· Imposed a borrowing base sublimit based on a formula applied to eligible inventory and receivables.

· Modified the required asset coverage ratio such that the Company must have eligible receivables and inventory totaling not less than 1.25 times its total debt outstanding under the TD Bank facility, including term loans.

· Modified the funded debt to EBITDA ratios previously required for each quarter in 2012, reverting back to 3.50 at January 2013.

· Modified the minimum EBITDA of $3.5 million at January 2012, ramping up to $5.5 million at January 2013 (exclusions allowed for certain costs relating to India and a plant shutdown).

· Modified the fixed charge coverage ratio to not be less than 1.00 to 1.00 at January 31, 2012, omitted for the first two quarters and increasing to 1.20 at January 31, 2013.

As of January 31, 2012 the Company was no longer in breach and had available borrowing of approximately $1.7 million under the amended facility.

The maximum amounts borrowed under the revolving credit facility during FY12 and FY11 were $18.4 million and $12.3 million, respectively and the weighted average interest rates during the periods were 1.96% and 1.82% respectively. The maximum amount borrowed under the term loans was $3.8 million in FY12 with a weighted average interest ratio of 2.5%

The credit facility contains financial covenants including, but not limited to, fixed charge ratio, funded debt to EBITDA ratio, inventory and accounts receivable collateral coverage ratio, with respect to which the Company was in compliance at January 31, 2012, as amended in April 2012. The current interest rate on this term loan at January 31, 2012 was 2.55% and principal and interest was due $63,333 monthly.

Borrowings in Brazil in FY12

· Short-term borrowing of $R777,923 (USD$447,314) at January 31, 2012 due in equal monthly installments (USD$49,701)through October 2012 at an interest rate of 1.47% monthly.

· Long-term borrowing of $R1,968,281 (USD$1,131,781) due in equal monthly installments (USD$49,208) through December 2013 at an interest rate of 1.80% monthly.

Five-year Debt Payout Schedule

This table reflects the TD Bank loans as amended subsequent to January 31, 2012.

			1 Year or
	Total		less		2 Years		3 Years		4 Years		5 Years		After 5 Years
Canada facility loan	$	1,598,846	$	100,451	$	100,451	$	100,451	$	100,451	$	100,451	$	1,096,591
Term loans-TD Bank	$	3,535,000	$	760,000	$	760,000		2,015,000		—		—		—
Borrowings in Brazil	$	1,579,095	$	1,037,808	$	541,287		—		—		—		—
New term loan as amended	$	3,000,000	$	200,000	$	375,000		2,425,000		—		—		—
Revised revolving credit facility	$	8,457,807		—		—		8,457,807		—		—		—
Total	$	18,170,748	$	2,098,259	$	1,776,738	$	12,998,258	$	100,454	$	100,454	$	1,096,591

Canadian Building:

In June 2006, a subsidiary of the Company entered into an agreement to construct a distribution facility in Brantford, Ontario at a fixed cost of approximately $2,400,000. In order to finance the acquisition, the Company has arranged a term loan in the amount of $2,000,000 (Canadian) bearing interest at the Business Development Bank of Canada’s floating base rate minus 1.25% (currently equal to 6.75%) and is repayable in 240 monthly principal installments of $8,350 (Canadian) plus interest. The subsidiary has drawn down the full amount of this loan and has included $33,899 (Canadian) as capitalized interest reflected in the asset cost. Such building was completed, and the Company took occupancy in December 2007. The term loan is collateralized by the land and buildings in Brantford, Ontario, as well as certain personal property of our Canadian subsidiaries. In addition, $700,000 (Canadian) of the term loan is guaranteed by the Company.

A five-year commitment schedule for this is as follows:

Year ended January 31,	Canadian		USD
2013	$	100,200	$	100,051
2014		100,200		100,051
2015		100,200		100,051
2016		100,200		100,051
2017		100,200		100,051
and thereafter		1,194,050		1,096,592