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Bank Debt | 9 Months Ended
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Sep. 30, 2016
Bank Debt [Abstract] |
BANK DEBT |
11. | BANK DEBT
During the first quarter of 2016, we entered into a bank debt agreement covering certain additional credit facilities with TD Bank N.A. aggregating approximately $4.5 million comprised of: (a) a $2.5 million construction loan, drawable over an 18-month period at up to 80% of the cost of equipment installed in the to be constructed commercial-scale production facility for Mast Out®, during which interest only will be payable at a variable rate equal to the 30-day LIBOR plus 2.25%, which converts to a seven-year term loan facility at the end of construction at the same interest rate with monthly principal and interest payments based on a seven-year amortization schedule and (b) a $2.0 million construction loan, drawable over a 12-month period at up to 75% of the appraised value of the to be constructed commercial-scale production facility for Mast Out®, during which interest only will be payable at a variable rate equal to the 30-day LIBOR plus 2.25%, which converts to a nine-year term loan facility at the end of construction at the same interest rate with monthly principal and interest payments based on a twenty-year amortization schedule. There were no amounts outstanding under these facilities as of September 30, 2016. These credit facilities are to be secured by substantially all of our assets and are subject to certain financial covenants. Additionally, we have in place certain credit facilities with TD Bank N.A., which are secured by substantially all of our assets and are subject to certain financial covenants. Proceeds from the $1,000,000 mortgage note were received during the third quarter of 2010. Based on a 15-year amortization schedule, a balloon principal payment of approximately $451,885 will be due during the third quarter of 2020. Proceeds from the $2,500,000 mortgage note were received during the third quarter of 2015. Based on a 20-year amortization schedule, a balloon principal payment of approximately $1,550,007 will be due during the third quarter of 2025. Principal payments due under debt outstanding as of September 30, 2016 (excluding any debt proceeds to be drawn under the credit facilities entered into during the first quarter of 2016) are reflected in the following table by the year that payments are due:
Period |  | $1,000,000 Mortgage Note |  |  | $2,500,000 Mortgage Note |  |  | Debt Issuance Costs |  |  | Total |
Three months ending December 31, 2016 |  | $ | 14,952 |  |  | $ | 20,343 |  |  | ($ | 2,525 | ) |  | $ | 32,770 |
Year ending December 31, 2017 |  |  | 61,056 |  |  |  | 82,308 |  |  |  | (10,095 | ) |  |  | 133,269 |
Year ending December 31, 2018 |  |  | 64,876 |  |  |  | 86,097 |  |  |  | (10,095 | ) |  |  | 140,878 |
Year ending December 31, 2019 |  |  | 68,908 |  |  |  | 89,997 |  |  |  | (10,095 | ) |  |  | 148,810 |
Year ending December 31, 2020 |  |  | 493,696 |  |  |  | 94,005 |  |  |  | (9,462 | ) |  |  | 578,239 |
After December 31, 2020 |  |  | 0 |  |  |  | 2,049,766 |  |  |  | (38,887 | ) |  |  | 2,010,879 |
Total |  | $ | 703,488 |  |  | $ | 2,422,516 |  |  | ($ | 81,159 | ) |  | $ | 3,044,845 |
We hedged our interest rate exposure on these mortgage notes with interest rate swap agreements that effectively converted floating interest rates based on the one-month LIBOR plus a bank profit margin of 3.25% and 2.25% to the fixed rates of 6.04% and 4.38%, respectively. As of September 30, 2016, the variable rates on these two mortgage notes were 3.78% and 2.79%, respectively. All derivatives are recognized on the balance sheet at their fair value. At the time of the closings and thereafter, the agreements were determined to be highly effective in hedging the variability of the identified cash flows and have been designated as cash flow hedges of the variability in the hedged interest payments. Changes in the fair value of the interest rate swap agreements are recorded in other comprehensive income (loss), net of taxes. The original notional amounts of the interest rate swap agreements of $1,000,000 and $2,500,000 amortize in accordance with the amortization of the mortgage notes. The notional amount of the interest rate swaps was $3,126,004 as of September 30, 2016. Payments required by the interest rate swaps totaled $14,470 and $5,112 during the three-month periods ended September 30, 2016 and 2015, and $44,653 and $15,549 during the nine-month periods ended September 30, 2016 and 2015, respectively. As the result of our decision to hedge this interest rate risk, we recorded other comprehensive income (loss), net of taxes, in the amount of $15,523 and ($49,147) during the three-month periods ended September 30, 2016 and 2015, and ($79,767) and ($48,059) during the nine-month periods ended September 30, 2016 and 2015, respectively, which reflects the change in the fair value of the interest rate swap (liabilities), net of taxes. The fair values of the interest rate swaps have been determined using observable market-based inputs or unobservable inputs that are corroborated by market data. Accordingly, the interest rate swaps are classified as level 2 within the fair value hierarchy provided in Codification Topic 820, Fair Value Measurements and Disclosures. In connection with the credit facilities entered into during the third quarters of 2010 and 2015 and the first quarter of 2016, we incurred debt issue costs of $26,489, $34,125 and $46,734, respectively, which costs are being recorded as a component of other expenses over the terms of the credit facilities. Proceeds from a $600,000 note bearing interest at 4.25% were received during the first quarter of 2011. This note was repaid during the third quarter of 2015. The $500,000 line of credit with TD Bank N.A. was first entered into during the third quarter of 2010 and has been renewed approximately annually since then and is available as needed and has been extended through May 31, 2017 and is renewable annually thereafter. The line of credit was unused as of September 30, 2016 and December 31, 2015. Interest on any borrowings against the line of credit would be variable at the higher of 4.25% per annum or the one-month LIBOR plus 3.5% per annum.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.19,20,22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 + Details
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