Bank Debt

6 Months Ended

Jun. 30, 2021

Debt Disclosure [Abstract]

BANK DEBT

10. BANK DEBT

Prior to a refinancing with Gorham Savings Bank (GSB) during the first quarter of 2020, we had in place five different credit facilities and a line of credit with TD Bank N.A. (Loans #1 to #5). During the first quarter of 2020, we closed on a debt financing with GSB aggregating $8,600,000 and a $1,000,000 line of credit. The debt was 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 balloon principal payment of $3,145,888 due during the first quarter of 2030) 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 is available as needed through March 10, 2022. Interest on borrowings against the line of credit is variable at the rate of the one-month LIBOR plus 2.15% per annum. There was no outstanding balance under this line of credit as of June 30, 2021 or December 31, 2020. In connection with these three credit facilities, 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 two notes and the line of credit. The proceeds from the debt refinancing were used to repay all bank debt outstanding at the time of closing (Loans #1 to #5) and to provide some additional working capital. We were required by bank debt covenant to maintain $1,400,000 in escrow (a non-current asset). During the fourth quarter of 2020, we closed on a $1,500,000 note with GSB (Loan #10) that bears interest at a fixed rate of 3.50% per annum (with a 7-year term and amortization schedule). In connection with this note, we incurred debt issuance costs of $11,075. The amortization of these debt issuance costs is also being recorded as a component of interest expense, included with other expenses, net, and is being amortized over the underlying term of the note. Proceeds of $624,167 were used to prepay a portion of the outstanding principal on our mortgage note (Loan #6), which reduced the outstanding balance to 80% of the most recent appraised value of the property securing the debt, which allowed GSB to release the $1,400,000 that had been held in escrow. This resulted in no change in the balloon principal payment of $3,145,888 due during the first quarter of 2030. The remaining proceeds were available for general working capital purposes. These three new credit facilities are secured by liens on substantially all of our assets and are subject to certain restrictions and financial covenants. Given the equity we raised in April 2021, GSB agreed to waive the minimum debt service coverage ratio requirement of 1.35 for 2021.

During the second quarter of 2020, we received $937,700 in support from the federal government under the Paycheck Protection Program (PPP) (Loan #8). We used the proceeds only for eligible payroll costs incurred and paid during the 24-week period beginning April 13, 2020. Our obligation to repay the principal was forgiven, and we recognized this amount as part of other (income) expenses, net, during the fourth quarter of 2020. This forgiveness of indebtedness, in accordance with the CARES Act, does not give rise to federal or State of Maine taxable income, and the expenses incurred using PPP proceeds are fully deductible for federal and Maine income tax purposes.

During the second quarter of 2020, we received a $500,000 loan from the Maine Technology Institute (Loan #9) that is subordinated to all other bank debt. The first 27 months of this loan are interest-free with no interest accrual or required principal payments. Principal and interest payments at 5% per annum are due quarterly over the final five years of the loan, beginning during the fourth quarter of 2022 and continuing through the third quarter of 2027. The loan may be prepaid without penalty at any time.

Debt proceeds received and principal repayments made during the years ended December 31, 2020 and 2019 are reflected in the following table by period and by loan:

	During the Year Ended December 31, 2020					During the Year Ended December 31, 2019
	Proceeds from Debt Issuance		Debt Principal Repayments			Proceeds from Debt Issuance		Debt Principal Repayments
Loan #1	$	—	$	(493,696	)	$	—	$	(68,908	)
Loan #2		—		(2,143,771	)		—		(89,997	)
Loan #3		—		(3,236,429	)		—		(562,857	)
Loan #4		—		(2,336,000	)		—		(128,000	)
Loan #5		—		(309,182	)		—		(11,585	)
Loan #6		5,100,000		(720,001	)		—		—
Loan #7		3,500,000		(334,489	)		—		—
Loan #8(1)		937,700		(937,700	)		—		—
Loan #9		500,000		—			—		—
Loan #10		1,500,000		—			—		—
Total	$	11,537,700	$	(10,511,268	)	$	—	$	(861,347	)

⁽¹⁾ Loan #8 was forgiven by the federal government during the fourth quarter of 2020.

Debt proceeds received and principal repayments made during the three-month periods ended June 30, 2021 and 2020 are reflected in the following table by period and by loan:

	During the Three-Month Period Ended June 30, 2021					During the Three-Month Period Ended June 30, 2020
	Proceeds from Debt Issuance		Debt Principal Repayments			Proceeds from Debt Issuance		Debt Principal Repayments
Loan #6	$	—	$	(28,580	)	$	—	$	(31,497	)
Loan #7		—		(114,421	)		—		(110,397	)
Loan #8(1)		—		—			937,700		—
Loan #9		—		—			500,000		—
Loan #10		—		(47,631	)		—		—
Total	$	—	$	(190,632	)	$	1,437,700	$	(141,894	)

⁽¹⁾ Loan #8 was forgiven by the federal government during the fourth quarter of 2020.

Debt proceeds received and principal repayments made during the six-month periods ended June 30, 2021 and 2020 are reflected in the following table by period and by loan:

	During the Six-Month Period Ended June 30, 2021					During the Six-Month Period Ended June 30, 2020
	Proceeds from Debt Issuance		Debt Principal Repayments			Proceeds from Debt Issuance		Debt Principal Repayments
Loan #1	$	—	$	—		$	—	$	(493,696	)
Loan #2		—		—			—		(2,143,771	)
Loan #3		—		—			—		(3,236,429	)
Loan #4		—		—			—		(2,336,000	)
Loan #5		—		—			—		(309,182	)
Loan #6		—		(57,502	)		5,100,000		(31,497	)
Loan #7		—		(228,412	)		3,500,000		(110,397	)
Loan #8(1)		—		—			937,700		—
Loan #9		—		—			500,000		—
Loan #10		—		(95,094	)		—		—
Total	$	—	$	(381,008	)	$	10,037,700	$	(8,660,972	)

⁽¹⁾ Loan #8 was forgiven by the federal government during the fourth quarter of 2020.

Principal payments (net of debt issue costs) due under bank loans outstanding as of June 30, 2021 (excluding our $1,000,000 line of credit) are reflected in the following table by the year that payments are due:

	During the Six-Month Period Ending December 31,			During the Years Ending December 31,
	2021			2022			2023			2024			2025			2026			Thereafter			Total
Loan #6	$	58,354		$	120,291		$	124,629		$	128,725		$	133,768		$	138,592		$	3,618,138		$	4,322,497
Loan #7		232,199			477,220			494,433			512,102			530,738			549,881			140,525			2,937,098
Loan #9		—			22,160			91,446			96,104			101,001			106,146			83,143			500,000
Loan #10		96,677			198,710			205,877			213,217			220,994			228,965			240,466			1,404,906
Subtotal		387,230			818,381			916,385			950,148			986,501			1,023,584			4,082,272			9,164,501
Debt issuance costs		(3,920	)		(6,175	)		(5,768	)		(5,768	)		(5,769	)		(5,768	)		(8,663	)		(41,831	)
Total	$	383,310		$	812,206		$	910,617		$	944,380		$	980,732		$	1,017,816		$	4,073,609		$	9,122,670