Bank Debt

3 Months Ended

Mar. 31, 2020

Debt Disclosure [Abstract]

BANK DEBT

10. BANK DEBT

Prior to a refinancing with Gorham Savings Bank during the first quarter of 2020, we had in place five different credit facilities and a line of credit with TD Bank N.A. Proceeds from a $1,000,000 first mortgage on our corporate headquarters and production and research facility at 56 Evergreen Drive in Portland (Loan #1) were received during the third quarter of 2010 bearing interest at the fixed rate of 6.04% per annum (with a 10-year term and a 15-year amortization schedule). A balloon principal payment of $451,885 would have been due during the third quarter of 2020. Proceeds from a $2,500,000 second mortgage on this corporate headquarters (Loan #2) were received during the third quarter of 2015 bearing interest at the fixed rate of 4.38% per annum (with a 10-year term and 25-year amortization schedule). A balloon principal payment of approximately $1,550,000 would have been due during the third quarter of 2025. During the first quarter of 2016, we entered into two additional credit facilities (Loans #3 and #4) aggregating up to approximately $4,500,000. As a result of loan amendments entered into during the first quarter of 2017, these two credit facilities were increased to up to $6,500,000. Loan #3 was a construction loan of $3,940,000. In September 2018, the loan converted to a term loan facility bearing interest at the variable rate equal to the one-month LIBOR plus a margin of 2.25% per annum (with a 7-year term and 7-year amortization schedule). Loan #4 was a construction loan of $2,560,000. In March 2018, the loan converted to a term loan facility bearing interest at the variable rate equal to the one-month LIBOR plus a margin of 2.25% per annum (with a 10-year term and 25-year amortization schedule). A balloon principal payment of approximately $1,408,000 would have been due during the first quarter of 2027. Proceeds from a $340,000 first mortgage on our 4,114 square foot warehouse and cold storage facility (Loan #5) were received during the first quarter of 2017 bearing interest at the variable rate equal to the one-month LIBOR plus a margin of 2.25% per annum (with a 10-year term and 20-year amortization schedule). A balloon principal payment of approximately $206,000 would have been due during the first quarter of 2027.

On March 11, 2020, we closed on a debt financing with Gorham Savings Bank aggregating $8,600,000 and a $1,000,000 line of credit. The debt is comprised of a $5,100,000 mortgage note (Loan #6) that bears interest at a fixed rate of 3.50% per annum (with a 10-year term and 25-year amortization schedule) and a $3,500,000 note (Loan #7) that bears interest at a fixed rate of 3.50% per annum (with a 7-year term and amortization schedule). The line of credit bears interest at a variable rate equal to the one-month LIBOR plus 2.15% per annum. The proceeds were used to repay all bank debt outstanding at the time of closing and to provide some additional working capital. These two credit facilities are secured by liens on substantially all of our assets and are subject to certain restrictions and financial covenants. We were required by a bank debt covenant (before the debt refinancing discussed above) to maintain at least $2,000,000 of otherwise unrestricted cash, cash equivalents and short-term investments. Under the new debt, we are required to hold $1,400,000 in escrow (a non-current asset), which reduces the effective availability of our liquid assets for operational needs by that amount.

In connection with Loan #6 and Loan #7, we incurred debt issuance costs of $39,789. The amortization of debt issuance costs is being recorded as a component of interest expense, included with other expenses, net, and is being amortized over the underlying terms of the respective credit facilities. Debt proceeds received and principal repayments made during the three-month periods ended March 31, 2020 and 2019 are reflected in the following table by year and by loan:

	During the Three-Month Period Ended March 31, 2020					During the Three-Month Period Ended March 31, 2019
	Proceeds from Debt Issuance		Debt Principal Repayments			Proceeds from Debt Issuance		Debt Principal Repayments
Loan #1	$	—	$	(493,696	)	$	—	$	(16,881	)
Loan #2		—		(2,143,771	)		—		(22,260	)
Loan #3		—		(3,236,429	)		—		(140,715	)
Loan #4		—		(2,336,000	)		—		(32,000	)
Loan #5		—		(309,182	)		—		(2,445	)
Loan #6		5,100,000		—			—		—
Loan #7		3,500,000		—			—		—
Total	$	8,600,000	$	(8,519,078	)	$	—	$	(214,301	)

Principal payments (net of debt issue costs) due under bank loans outstanding as of March 31, 2020 (excluding our $1,000,000 line of credit) are reflected in the following table by the year that payments are due:

	During the Nine-Month Period Ending		During the Years Ending December 31,
	December 31, 2020		2021		2022		2023		2024		2025 and After		Total
Loan #6	$	96,820	$	133,397	$	138,141	$	143,055	$	148,142	$	4,440,445	$	5,100,000
Loan #7		335,201		461,055		477,454		494,435		512,021		1,219,834		3,500,000
Subtotal	$	432,021	$	594,452	$	615,595	$	637,490	$	660,163	$	5,660,279		8,600,000
Debt Issuance Costs														(39,452	)
Total													$	8,560,548

On March 11, 2020, we entered into a $1,000,000 line of credit with Gorham Savings Bank, which is secured by substantially all of our assets and is subject to certain restrictions and financial covenants. This line of credit is available as needed through March 10, 2022. There was no outstanding balance under this line of credit as of March 31, 2020. Interest on borrowings against the line of credit is at the rate of the one-month LIBOR plus 2.15% per annum.