11. Note Payable

On March 28, 2017, the Company and Salamander Innisbrook Condominium, LLC, a related party, obtained a loan in the amount of fifteen million dollars ($15,000,000) from Branch Banking and Trust Company (“BB&T”). The loan is to be repaid over a five year period in monthly installments of principal plus interest based on a 15 year amortization schedule commencing on May 5, 2017, with the remaining unpaid balance due in full on April 5, 2022. The interest for the loan is the One Month LIBOR Rate plus two and one quarter percent 2.25% per annum adjusted monthly on the first day of each LIBOR interest period (4.63% as of December 31, 2018). The loan is collateralized by the real and personal property of the Company and Salamander Innisbrook Condominium, LLC, the assignment and/or subordination of leases and our management agreement with an affiliate and guarantees by certain affiliates. We have distributed these funds to our member as a partial return of the capital it has invested. As of December 31, 2018, the carrying value of the note payable, $13,542,285, approximates fair value.

The loan agreement contains customary financial covenants, including a covenant to maintain a debt service coverage ratio of at least 1.10 to 1.0, measured annually at the end of each fiscal year and a covenant to maintain a tangible net worth of not less than $15,000,000 at all times. In April 2019, we entered into an amendment to the loan agreement which waived the debt service coverage ratio requirement for the year ended December 31, 2018 and reduced the debt service coverage ratio requirement to at least 1.0 to 1.0 for the fiscal year ending December 31, 2019. The debt service coverage ratio requirement returns to at least 1.10 to 1.0 for the fiscal year ending December 31, 2020 through maturity.

As part of our loan agreement, we deposited $1,500,000 into a cash reserve account in March 2017. On February 28, 2018, we deposited an additional $1,000,000 into such account as required. The reserve account is restricted and may not be used to service the loan, except as noted in the “Subsequent Event” section.

We incurred financing costs of $318,278, which are deferred and are being amortized over the term of the loan using a method that approximates the effective interest method. These costs have been reflected as a reduction of the note payable.

Future scheduled maturities under our note payable agreement are as follows:


Years ending December 31,
2019	$	822,835
2020		836,378
2021		868,870
2022		11,220,040
		13,748,123
Less unamortized deferred financing costs		(205,838)
	$	13,542,285