Long-Term Debt and Shareholders' Equity

12 Months Ended

Dec. 31, 2024

Debt [Abstract]

Long-Term Debt and Shareholders' Equity

8. Long-Term Debt and Stockholders’ Equity

Long-term debt consists of (i) borrowings under the Company’s revolving loan agreement with HSBC Bank, N.A. and (ii) amounts outstanding under the fixed rate mortgage related to the Company’s manufacturing and distribution facilities in Rocky Mount, NC and Vancouver, WA. The revolving loan agreement provides for borrowings of up to $65 million at an interest rate that ranges from Secured Overnight Financing Rate (SOFR) +1.70% up to a high of SOFR + 2.35% on a basis that varies quarterly with the funded debt to EBITDA ratio. The current interest rate is SOFR plus 1.70%; interest is payable monthly. The credit facility has an expiration date of May 31, 2026. The Company must pay a facility fee, payable quarterly, in an amount equal to one eighth of one percent (.125%) per annum of the average daily unused portion of the revolving credit line. The facility is intended to provide liquidity for growth, acquisitions, dividends, share repurchases, and other business activities. Under the revolving loan agreement, the Company is required to maintain specific amounts of funded debt to EBITDA, a fixed charge coverage ratio and must have annual net income greater than $0, measured as of the end of each fiscal year. As of December 31, 2024, the Company was in compliance with the covenants under the revolving loan agreement as then in effect.

As of December 31, 2024, $17,640,550, excluding net deferred financing cost of $34,983, was outstanding and $47,359,450 was available for borrowing under the Company’s revolving loan agreement.

The Company’s manufacturing and distribution facilities in Rocky Mount, NC and Vancouver, WA were financed by a fixed rate mortgage with HSBC Bank, N.A. at a fixed interest rate of 3.8%. The Company entered into the agreement on December 1, 2021. Commencing on January 1, 2022, payments of principal and interest are due monthly, with all amounts outstanding due on maturity on December 1, 2031. Long-term debt associated with the mortgage consisted of the following at December 31, 2024 and 2023:

	December 31, 2024			December 31, 2023
Mortgage payable - HSBC Bank N.A.	$	10,409,797		$	10,823,033
Less debt issuance costs		(104,681	)		(119,736	)
		10,305,116			10,703,297
Less current maturities		436,949			419,309
Long-term mortgage payable less current maturities	$	9,868,167		$	10,283,988

Minimum annual mortgage payments are due as follows: 2025 - $436,949; 2026 - $454,112; 2027 - $471,949; 2028 - $489,510; 2029 - $509,713 and thereafter - $8,047,570.

As of December 31, 2024, the Company has pledged certain assets as collateral for its debt obligations under its revolving loan agreement with HSBC. The collateral consists of all inventory, property, plant, equipment, and accounts receivable. The Company believes that the collateral provided is sufficient to secure the related debt.

The carrying value of the Company’s bank debt is a reasonable estimate of fair value, which uses Level 3 inputs, because of the nature of its payment terms and maturity.

On November 14, 2019, the Company announced a Common Stock repurchase program of up to a total of 200,000 shares. The program does not have an expiration date. During the years ended December 31, 2024 and 2023, the Company did not repurchase any shares of its Common Stock. As of December 31, 2024, a total of 160,365 shares may be purchased in the future under the repurchase program.