Note

– Long-term Debt

Long-term debt as of December 31 consists of the following:
	201 9			201 8
HSBC $10,387,500 Mortgage payable secured by real property Buildings and improvements at 555 N Research Drive, Central Islip, NY payable in monthly principle installments of $62,481 including Interest at a rate of 3.9148% maturing on December 1, 2022.	$	9,686,211		$	10,043,802

MesoScribe Technologies, Inc. $300,000 acquisition related contingent payment (1)		-			200,000

HSBC $6,000,000 Mortgage payable secured by building Buildings and improvements at 355 South Technology Drive, Central Islip, NY payable in monthly principle installments of $25,000 plus interest. Interest presently accrues at our option, at the variable rate of LIBOR plus 1.75% or HSBC’s Prime rate minus 0.50% The loan matures on March 1, 2022.		2,365,508			2,665,508
Total long-term debt	$	12,051,719		$	12,909,310
Less: Current maturities		(674,593	)		(857,590	)
Long-term debt	$	11,377,126		$	12,051,720

(

)

For the

twelve

-month measurement periods

December 31, 2019

and

2018,

the Company did

not

meet the threshold required and

$200,000

and

$100,000,

respectively, of contingent payments was recorded into earnings.

Future maturities of long-term debt as of

December 31, 2019

are as follows:

2020	$	674,593
2021		690,813
2022		10,686,313

Total long-term debt	$	12,051,719

The Company has a loan agreement with HSBC which is secured by a mortgage against our Central Islip, NY Headquarters. The loan is payable in

120

consecutive equal monthly installments of

$25,000

in principal plus interest and a final balloon payment upon maturity in

March 2022.

The balances as of

December 31, 2019

and

December 31, 2018

were approximately

$2.4

million and

$2.7

million respectively. Interest accrues on the Loan, at our option, at the variable rate of LIBOR plus

1.75%

or Prime less

0.5%

(

3.49%

and

2.18%

December 31, 2019

and

2018,

respectively).

November 30, 2017,

the Company purchased the premises located at

555

North Research Place, Central Islip, NY. The purchase price of the building was

$13,850,000

exclusive of closing costs. The Company’s newly formed wholly-owned subsidiary,

555

N Research Corporation (the “Assignee”) and the Islip IDA, entered into a Fee and Leasehold Mortgage and Security Agreement (the ”Loan”) with HSBC in the amount of

$10,387,500,

which was used to finance a portion of the purchase price to acquire the premises located at

555

North Research Place, Central Islip, New York. The Loan was evidenced by the certain Note, dated

November 30, 2017 (

the “Note”), by and between Assignee and the Bank, and secured by a certain Fee and Leasehold Mortgage and Security Agreement (the “Mortgage”), dated

November 30, 2017,

as well as a collateral Assignment of Leases and Rents.

The Note is payable in

consecutive equal monthly installments of

$62,481

including interest and a final balloon payment upon maturity in

December 2022.

The balance outstanding as of

December 31, 2019

and

December 31, 2018

were approximately

$9.7

million and

$10.0

million respectively. The Note bears interest for each Interest Period (as defined in the Note), at the fixed rate of

3.9148%.

As a condition of the Bank making the Loan, the Company was required to guaranty Assignee’s obligations under the Loan pursuant that certain Unlimited Guaranty, dated

November 30, 2017 (

the “Guaranty”). On

May 31, 2019,

the Company entered into

two

sublease agreements for a portion of the CVD Materials facility. During the year ended

December 31, 2019,

the Company recognized

$411,000

of rental income which commenced in

June 2019.

Commencing

July 2019,

the monthly rental income increased from

$36,000

to approximately

$67,000

per month, which includes both of the sublease agreements (eastside and westside), or approximately

$800,000

per annum. On

October 30, 2019,

the Tenant exercised its option to terminate the eastside Lease, which termination will be effective as of

December 31, 2019 (

the “Termination”). The Lease was for a

one

-year term ending on

June 30, 2020,

and provided for an initial base monthly rent of

$31,667

per month (

$380,000

per annum).

December 31, 2018,

the Company was

not

in compliance with the

one

financial covenant (fixed charge coverage ratio) contained in the Mortgage. On

March 26, 2019

the Company received a waiver from HSBC until

April 1, 2020.

August 5, 2019,

the Company entered into a Mortgage Modification Agreement which replaced the former covenant with a Minimum Liquid Assets covenant. The Company is in compliance with its financial covenant under the mortgage at

December 31, 2019.