NOTE 4. LONG-TERM DEBT

3 Months Ended

Jan. 03, 2021

Notes

NOTE 4. LONG-TERM DEBT

NOTE 4. LONG-TERM DEBT

On April 27, 2020, the Company acquired Aggieland Wild Animal – Texas, see “NOTE 3. ACQUISITION”, financing the transaction with the 2020 Term Loan from First Financial and the Aggieland Seller Note. The 2020 Term Loan in the original principal amount of $5,000,000 from First Financial is secured by substantially all of the Aggieland Wild Animal – Texas assets, as well as guarantees from the Company and its subsidiaries. The 2020 Term Loan bears interest at a rate of 5.0% per annum, has a maturity date of April 27, 2031, with interest only payable monthly through April 2021. The Company paid a total of approximately $62,375 in fees and expenses in connection with the 2020 Term Loan. The Aggieland Seller Note represents a deferred portion of the purchase price, has a face value of $750,000, bears no interest, has a maturity date of June 30, 2021, and is secured by a second priority subordinated lien and security interest in the acquired mineral rights and the animal inventory. The Company applied a 2.5% discount rate to determine a fair value of $728,500 for the Aggieland Seller Note as of April 27, 2020 and the resulting $21,500 discount will be amortized as interest expense over the 14 month period until the note matures. Including the remaining unamortized discount, the recorded value of the Aggieland Seller Note as of January 3, 2021 was $740,655.

On July 11, 2018, the Company, through its wholly owned subsidiary Wild Animal – Georgia, completed a refinancing transaction (the “2018 Refinancing”) with Synovus Bank (“Synovus”). The 2018 Refinancing included a term loan in the original principal amount of $1,600,000 (the “2018 Term Loan”). The 2018 Term Loan bears interest at a rate of 5.0% per annum and is payable in monthly payments of approximately $22,672, based on a seven year amortization period. The 2018 Term Loan has a maturity date of June 11, 2021, with an option to renew at 5.0% per annum for an additional 49-month term. The 2018 Term Loan is secured by a security deed on the assets of Wild Animal – Georgia. The Company paid a total of approximately $15,680 in fees and expenses in connection with the 2018 Refinancing. The outstanding balance of the 2018 Term Loan was $1,110,594 as of January 3, 2021.

As a result of the initial negative economic impacts and uncertainties caused by the COVID-19 pandemic, Wild Animal – Georgia and Wild Animal – Missouri each applied for Paycheck Protection Program (“PPP”) loans. On April 14, 2020 and April 16, 2020, the Company received two unsecured PPP loans totaling $188,087. Including accrued interest, the principal outstanding on the Company’s PPP loans was $189,451 as of January 3, 2021. The PPP was established under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which was signed into law on March 27, 2020, and is administered by the U.S. Small Business Administration (the “SBA”). The term of the PPP loans is two years, with an interest rate of 1.0% per annum. All payments are deferred for the first twelve months of these PPP loans, with accrued interest being added to the principal during the payment deferral period. After the initial twelve-month deferral period, monthly principal and interest payments will be due until maturity for any portion of the PPP loans not forgiven. Under the terms of the CARES Act, some or all of the PPP loan proceeds are eligible to be forgiven. The amount of the PPP loans eligible to be forgiven are based on the use of the proceeds for payroll costs, mortgage interest, rent or utility costs, and the maintenance of employee and compensation levels, subject to limitations and ongoing rulemaking by the SBA. While not assured, the Company believes a substantial portion of its PPP loan proceeds were used for costs that are eligible for forgiveness, based on the current SBA guidelines. The Company will continue to account for its PPP loans under their defined terms until such time as forgiveness is granted by the SBA.

Interest expense of $91,413 and $17,721 for the three months ended January 3, 2021 and December 29, 2019, respectively, includes $1,978 and $560, respectively, of amortization of debt closing costs in each period. In addition, interest expense for the three months ended January 3, 2021 includes $4,640 of loan discount amortization.

The following table represents the aggregate of the Company’s outstanding long-term debt:

	As of
	January 3, 2021		September 27, 2020
Loan principal outstanding	$	7,040,700	$	7,089,053
Less: unamortized debt financing costs		(68,674)		(70,652)
Gross long-term debt		6,972,026		7,018,401
Less current portion of long-term debt,
net of unamortized costs and discount		(1,274,580)		(1,221,009)
Long-term debt	$	5,697,446	$	5,797,392

As of January 3, 2021, the scheduled future principal maturities of the Company’s long-term debt by fiscal year are as follows:

2021		1,127,929
2022		755,927
2023		661,976
2024		696,466
2025		688,895
thereafter		3,109,507
Total	$	7,040,700