On February 24, 2021 (the “Closing Date”), American Bio Medica Corporation (the “Company”) completed a transaction related to one-year Extension Agreements dated February 14, 2021 (the “Extension Agreement(s)”) with Cherokee Financial, LLC (“Cherokee”) under which Cherokee extended the due date of the Company’s credit facilities; a Loan and Security Agreement with Cherokee ($900,000) and a 2019 Term Loan with Cherokee ($220,000).

Loan and Security Agreement with Cherokee Financial, LLC

This facility was a 5 year note executed on February 15, 2015, at a fixed annual interest rate of 8% plus a 1% annual oversight fee, interest only and oversight fee paid quarterly with first payment being made on May 15, 2015, annual principal reduction payment of $75,000 due each year beginning on February 15, 2016, with a final balloon payment being due on February 15, 2020 (“Cherokee LSA”). In February 2020, the Cherokee LSA was extended for one year (until February 15, 2021) under the same terms and conditions. The Cherokee LSA is collateralized by a first security interest in building, land and property.

Under the terms of this latest extension agreement, the $900,000 (secured) Cherokee LSA was increased to $1,000,000 to include a $100,000 penalty that was due as a result of the Company being unable to pay back the principal balance to Cherokee on February 15, 2021. The annual interest rate on the extended Cherokee LSA will be fixed at 10% plus a 1% annual oversight fee, interest only and oversight fee paid quarterly with the first payment being due on May 15, 2021. If the Company doesn’t pay off the principal on or before February 15, 2022, there will be an 8% delinquent fee charged. This delinquent fee will only apply to whatever the principal balance is on February 15, 2022. If the Company pays any portion (or all) of the principal back, the 8% fee will not be due on the prepaid amounts. The Company can prepay all of part of the facility back prior to February 15, 2022 with no penalty.

Cantone Research, Inc. will earn a 3% fee on the extended principal of $900,000 (or $27,000) for their services related to securing the extension with Cherokee investors. This 3% service fee will be “rebated” when/if the Company prepays any, or a portion, of the loan. As an example, if the Company makes a principal reduction payment of $100,000, only $97,000 in cash will need to be remitted to Cherokee to have the $100,000 taken off the principal balance.

2019 Term Loan with Cherokee Financial, LLC

1 year note at an annual fixed interest rate of 18% paid quarterly in arrears with first interest payment being made on May 15, 2019 and a balloon payment being due on February 15, 2020 (the “2019 Cherokee Term Loan”). In February 2020, the 2019 Cherokee Term Loan was extended for one year (until February 15, 2021) under the same terms and conditions. A penalty of $20,000 was added to the principal (of $200,000) on February 15, 2020 in connection with the extension of the 2019 Cherokee Term Loan, bringing the principal to $220,000.

Under the terms of this latest extension agreement, the 2019 Cherokee Term Loan Cherokee LSA was increased to $240,000 to include a $20,000 penalty that was due as a result of the Company being unable to pay back the principal balance to Cherokee on February 15, 2021. The annual interest rate under the 2019 Cherokee Term Loan will remain fixed at 18% paid quarterly in arrears with first interest payment with the first payment being due on May 15, 2021. If the Company doesn’t pay off the principal on or before February 15, 2022, there will be an 8% delinquent fee charged. This delinquent fee will only apply to whatever the principal balance is on February 15, 2022. If the Company pays any portion (or all) of the principal back, the 8% fee will not be due on the prepaid amounts. The Company can prepay all of part of the facility back prior to February 15, 2022 with no penalty.

No common stock was issued in connection with the extensions.

The Company also agreed to pay Cherokee’s legal fees in the amount of $1,000.

About AMERICAN BIO MEDICA CORPORATION (OTCMKTS:ABMC)

American Bio Medica Corporation develops, manufactures and sells immunoassay tests, primarily for the immediate, point of collection testing (POCT) for drugs of abuse (DOA) in urine and oral fluids. The Company’s DOA POCT products offer employers, law enforcement, government, healthcare and education professionals to identify illicit drug use. In addition to the manufacture and sale of DOA POCT products, the Company provides bulk test strip manufacturing services to unaffiliated third parties on a contract basis. Its Rapid Drug Screen (RDS) is a POCT product that detects the presence or absence of 2 to 10 DOA simultaneously in a single urine specimen. The Rapid ONE product line consists of single drug tests, each of which tests for the presence or absence of a single drug of abuse in a urine specimen. The RDS InCup is a POCT product that detects the presence or absence of 1 to 12 DOA in a single urine specimen. The POCT products for oral fluid-based DOA testing include OralStat.