Notes Payable

12 Months Ended

Dec. 31, 2021

Notes Payable

Notes Payable

2. NOTES PAYABLE

Notes payable consist of the following (in thousands):

	December 31,
	2021			2020
Note payable to Summit Community Bank (the “Bank”), which matured on September 2021; with monthly payments of approximately $26 of principal and interest fixed at 3.99%; collateralized by the Company’s property, plant, and buildings.	$	—		$	227
Note payable to the Bank, maturing October 2029; with monthly payments of approximately $22 of principal and interest fixed at 3.64% under a Promissory Notes Rate Conversion Agreement; collateralized by all assets of Smith-Carolina Corporation and guaranteed by the Company.		1,812			2,008
Note payable to the Bank, maturing March 2030; with monthly payments of approximately $27 of principal and interest fixed at 3.99%; collateralized by the Company’s property, plant, and buildings.		2,304			2,535
Installment notes, collateralized by certain machinery and equipment maturing at various dates; with monthly payments varying from $0.9 to $3.4 with annual interest rates between 2.90% and 4.50%.		76			166
A revolving line-of-credit evidenced by promissory note with the Bank, with the available amount of $4,000, maturing October 1, 2022, with interest only payments and an initial rate of 3.50% adjustable monthly (3.50% at December 31, 2021). The amount available is based on the lower of the maximum $4,000 or eligible inventory and accounts receivable balances at the financial statement date. The line-of-credit is collateralized by a first lien position on the Company’s accounts receivable and inventory and a second lien position on all other business assets.		—			—
		4,192			4,936
Less current maturities		(468	)		(740	)
	$	3,724		$	4,196

In addition to the notes payable discussed above, on April 16, 2020, the Company obtained a loan, evidenced by a promissory note, under the Paycheck Protection Program (the “PPP”) from the Bank in the amount of $2,692. The PPP provides for loans to qualifying businesses, the proceeds of which may only be used for payroll costs, rent, utilities, mortgage interest, and interest on other pre-existing indebtedness. The interest rate per the promissory note, dated April 16, 2020 and executed by the Company in favor of the Bank, was fixed at 1.00% per annum, with principal and interest payments starting thirty (30) days after the amount of forgiveness is determined under section 1106 of the CARES Act. The proceeds of the loan were required to be utilized pursuant to the requirements of the PPP, and all or a portion of the loan could be forgiven in accordance with the PPP applicable rules, regulations, and guidelines. On July 9, 2021, the Company received loan forgiveness for the full amount of the loan of $2,692.

Subsequent to December 31, 2021, on February 10, 2022, the Company completed the financing for its prior acquisition of certain real property in Midland, VA totaling approximately 29.8 acres with a note payable to the Bank in the amount of $2,805. The loan is collateralized by a first lien position on the related real property. The interest rate is fixed at 4.09% per annum, with principal and interest payments payable monthly over 180 months in the amount of $21, with the balance due on the maturity date. The loan matures on February 10, 2037.

The Company’s notes payable includes certain restrictive covenants, which require the Company to maintain minimum levels of tangible net worth, places limits on annual capital expenditures, and limits on the payment of cash dividends. At December 31, 2021, the Company was in compliance with all covenants.

The aggregate amounts of notes payable maturing in each of the next five years and thereafter are as follows (in thousands):

Year Ending December 31,
2022	$	468
2023		483
2024		496
2025		511
2026		518
Thereafter		1,716
	$	4,192

The amounts listed in the table above do not include the note payable financed on February 10, 2022.