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SHORT-TERM LINE OF CREDIT | 6 Months Ended
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Jun. 30, 2022
Debt Disclosure [Abstract] |
SHORT-TERM LINE OF CREDIT | 11. SHORT-TERM LINE OF CREDIT (a) In March 2022, ENP Investments signed a new agreement with Midland to renew the credit line. In June 2022, ENP Investments closed the account. The revolving line of credit was for an aggregate amount up to $4,000,000. The interest rate of this loan was subject to change from time to time based on changes in an independent index which is the 1 month LIBOR as published in the Wall Street Journal (the “Index”). Interest on the unpaid principal balance of this loan was calculated using a rate of 1.000 percentage points over the Index. Under no circumstances was the interest rate of this loan less than 4.25% per annum or more than the maximum rate allowed by applicable law. The interest rate at December 31, 2021 was 4.25%. The revolving line of credit contained customary affirmative and negative covenants, including the following: compliance with laws, provisions of financial statements and periodic reports, payment of taxes, maintenance of inventory and insurance, maintenance of operating accounts at Midland, Midland’s access to collateral, formation or acquisition of subsidiaries, incurrence of indebtedness, dispositions of assets, granting liens, changes in business, ownership or business locations, engaging in mergers and acquisitions, making investments or distributions and affiliate transactions. NanoChem was a guarantor of 65% of all the principal and other loan costs not to exceed $2,600,000. To secure the repayment of any amounts borrowed under the revolving line of credit, ENP Investments granted Midland a security interest in all inventory, equipment and fixtures and acknowledges a separate commercial security agreement from guarantor to Midland dated February 15, 2011 which has now been terminated. Short-term borrowings outstanding under the revolving line as of June 30, 2022 were $nil (December 31, 2021 - $811,665). (b) In October 2021, the Company signed a new agreement with Midland to replace the expiring credit line at Harris. In June 2022, the Company closed the account. The revolving line of credit was for an aggregate amount of up to the lesser of (i) $3,500,000, or (ii) 80% of eligible domestic accounts receivable and certain foreign accounts receivable plus 50% of inventory. Interest on the unpaid principal balance of this loan was calculated using a rate of 0.500 percentage points over the Index. Under no circumstances was the interest rate of this loan less than 4.50% per annum or more than the maximum rate allowed by applicable law. The interest rate at December 31, 2021 was 4.50%. The revolving line of credit contained customary affirmative and negative covenants, including the following: compliance with laws, provision of financial statements and periodic reports, payment of taxes, maintenance of inventory and insurance, maintenance of operating accounts at Midland, Midland’s access to collateral, formation or acquisition of subsidiaries, incurrence of indebtedness, dispositions of assets, granting liens, changes in business, ownership or business locations, engaging in mergers and acquisitions, making investments or distributions and affiliate transactions. The covenants also required that the Company maintain a minimum ratio of qualifying financial assets to the sum of qualifying financial obligations. To secure the repayment of any amounts borrowed under the revolving line of credit, the Company had granted Midland a security interest in substantially all of the assets of NanoChem, exclusive of intellectual property assets which has been revoked. Short-term borrowings outstanding under the revolving line as of June 30, 2022 were $nil (December 31, 2021 - $1,489,154). (c) In June 2022, ENP Investments signed a new agreement with Stock Yards Bank and Trust (“Stock Yards”) to replace the credit line at Midland. The revolving line of credit is for an aggregate amount of up to the lesser of (i) $4,000,000, or (ii) 50-80% of eligible domestic accounts receivable plus 50% of inventory, capped at $2,000,000. Interest on the unpaid principal balance of this loan will be calculated using the greater of prime or 4.0%. The interest rate at June 30, 2022 is 5.50%. The revolving line of credit contains customary affirmative and negative covenants, including the following: compliance with laws, provisions of financial statements and periodic reports, payment of taxes, maintenance of inventory and insurance, maintenance of operating accounts at Stock Yards, Stock Yard’s access to collateral, formation or acquisition of subsidiaries, incurrence of indebtedness, dispositions of assets, granting liens, changes in business, ownership or business locations, engaging in mergers and acquisitions, making investments or distributions and affiliate transactions. NanoChem is a guarantor of 65% of all the principal and other loan costs not to exceed $2,600,000. As of June 30, 2022, ENP Investments was in compliance with all loan covenants. To secure the repayment of any amounts borrowed under the revolving line of credit, the Company granted Stock Yards a security interest in substantially all of the assets of ENP Investments, exclusive of intellectual property assets. Short-term borrowings outstanding under the revolving line as of June 30, 2022 were $nil. (d) In June 2022, the Company signed a new agreement with Stock Yards to replace the credit line at Midland. The revolving line of credit is for an aggregate amount of up to the lesser of (i) $4,000,000, or (ii) 80% of eligible domestic accounts receivable and certain foreign accounts receivable plus 50% of inventory, capped at $2,000,000. Interest on the unpaid principal balance of this loan will be calculated using the greater of prime or 4.0%. The interest rate at June 30, 2022 is 5.50%. The revolving line of credit contains customary affirmative and negative covenants, including the following: compliance with laws, provision of financial statements and periodic reports, payment of taxes, maintenance of inventory and insurance, maintenance of operating accounts at Stock Yards, Stock Yards access to collateral, formation or acquisition of subsidiaries, incurrence of indebtedness, dispositions of assets, granting liens, changes in business, ownership or business locations, engaging in mergers and acquisitions, making investments or distributions and affiliate transactions. The covenants also require that the Company maintain a minimum ratio of qualifying financial assets to the sum of qualifying financial obligations. As of June 30, 2022, Company was in compliance with all loan covenants. To secure the repayment of any amounts borrowed under the revolving line of credit, the Company granted Stock Yards a security interest in substantially all of the assets of NanoChem, exclusive of intellectual property assets. Short-term borrowings outstanding under the revolving line as of June 30, 2022 were $1,149,654.

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- Definition The entire disclosure for short-term debt. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI https://asc.fasb.org/topic&trid=2208564 + Details
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