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Bank Debt | 3 Months Ended
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Mar. 31, 2017
Bank Debt [Abstract] |
BANK DEBT |
11. | BANK DEBT
During the first quarter of 2016, we entered into bank debt agreements covering certain additional credit facilities with TD Bank N.A. aggregating up to approximately $4.5 million. As a result of loan amendments entered into with TD Bank N.A. on March 1, 2017, these credit facilities now aggregate up to approximately $6.5 million, subject to certain restrictions set forth in the agreements. These amendments were accounted for as modifications, and the related debt issuance costs are being amortized over the new terms. The first instrument is comprised of a construction loan of up to $2.5 million and not to exceed 80% of the cost of equipment installed in the to-be-constructed commercial-scale Nisin production facility for Mast Out®. Effective March 1, 2017, this loan amount was increased by $1.44 million to $3.94 million. As amended, interest only will be payable at a variable rate equal to the one-month LIBOR plus a margin of 2.25% through July 2018, at which time the loan converts to a seven-year term loan facility at the same variable interest rate with monthly principal and interest payments due based on a seven-year amortization schedule. The second instrument is comprised of a construction loan of up to $2.0 million and not to exceed 80% (75% prior to the March 1, 2017 amendment) of the appraised value of the to-be-constructed commercial-scale Nisin production facility in Portland, Maine. Effective March 1, 2017, this loan amount was increased by $560,000 to $2.56 million. As amended, interest only will be payable at a variable rate equal to the one-month LIBOR plus a margin of 2.25% through January 2018, at which time the loan converts to a nine-year term loan facility at the same variable interest rate with monthly principal and interest payments due based on a twenty-year amortization schedule with a balloon principal payment of approximately $1.654 million due in January 2027. These credit facilities are secured by substantially all of our assets and are subject to certain financial covenants. There were no amounts outstanding under these facilities as of March 31, 2017. We have in place two credit facilities with TD Bank N.A. not to exceed 80% of the appraised value of our corporate headquarters and production and research facility in Portland. Proceeds from a $1.0 million mortgage note were received during the third quarter of 2010. Based on a fifteen-year amortization schedule, a balloon principal payment of $451,885 will be due during the third quarter of 2020. Proceeds from a $2.5 million mortgage note were received during the third quarter of 2015. Based on a twenty-year amortization schedule, a balloon principal payment of approximately $1.55 million will be due during the third quarter of 2025. Additionally, proceeds from a $340,000 mortgage note, which is secured by the 4,114 square foot warehouse and storage facility we acquired adjacent to our Nisin production plant, were received during the first quarter of 2017. This note bears interest at a variable rate equal to the one-month LIBOR plus a margin of 2.25% (which was equal to 3.23% as of March 31, 2017) with monthly principal and interest payments due for ten years based on a twenty-year amortization table. These three notes are secured by substantially all of our assets and are subject to certain financial covenants. Principal payments (net of debt issuance costs) due under debt outstanding as of March 31, 2017 are reflected in the following table by the year that payments are due:
Period |  | $1,000,000 Mortgage Note |  |  | $2,500,000 Mortgage Note |  |  | $340,000 Mortgage Note(1) |  |  | Debt Issuance Costs |  |  | Total |
Nine-month period ending December 31, 2017 |  | $ | 46,104 |  |  | $ | 61,965 |  |  | $ | 9,192 |  |  | ($ | 11,614 | ) |  | $ | 105,647 |
Year ending December 31, 2018 |  |  | 64,876 |  |  |  | 86,097 |  |  |  | 12,607 |  |  |  | (15,485 | ) |  |  | 148,095 |
Year ending December 31, 2019 |  |  | 68,908 |  |  |  | 89,997 |  |  |  | 13,019 |  |  |  | (15,485 | ) |  |  | 156,439 |
Year ending December 31, 2020 |  |  | 493,696 |  |  |  | 94,005 |  |  |  | 13,446 |  |  |  | (14,851 | ) |  |  | 586,296 |
Year ending December 31, 2021 |  |  | - |  |  |  | 98,538 |  |  |  | 13,886 |  |  |  | (13,837 | ) |  |  | 98,587 |
After December 31, 2021 |  |  | - |  |  |  | 1,951,228 |  |  |  | 277,850 |  |  |  | (58,458 | ) |  |  | 2,170,620 |
Total |  | $ | 673,584 |  |  | $ | 2,381,830 |  |  | $ | 340,000 |  |  | ($ | 129,730 | ) |  | $ | 3,265,684 |
(1) This note bears interest at a variable rate equal to the one-month LIBOR plus a margin of 2.25%. Figures in this table are estimated using an interest rate of approximately 3.2%. The actual interest rate and principal payments will be different. We hedged our interest rate exposure on the $1.0 million and the $2.5 million mortgage notes with interest rate swap agreements that effectively converted floating interest rates based on the one-month LIBOR plus a margin of 3.25% and 2.25% to the fixed rates of 6.04% and 4.38%, respectively. As of March 31, 2017, the variable rates on these two mortgage notes were 4.13% and 3.23%, 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 $3,055,414 as of March 31, 2017. 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.
|  | Three-Month Periods Ended March 31, |  |  | Years Ended December 31, |
|  | 2017 |  |  | 2016 |  |  | 2016 |  |  | 2015 |
Payments required by interest rate swaps |  | $ | 11,676 |  |  | $ | 15,200 |  |  | $ | 58,346 |  |  | $ | 32,515 |
Other comprehensive income (loss), net of taxes |  | $ | 10,070 |  |  | ($ | 65,074 | ) |  | $ | 26,354 |  |  | ($ | 26,925 | )
In connection with the credit facilities entered into during the third quarters of 2010 and 2015 and the first quarters of 2016 and 2017, we incurred debt issue costs of $26,489, $34,125, $46,734 and $54,036, respectively, which costs are being recorded as a component of other expenses over the terms of the credit facilities. 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, 2018. The line of credit, which is subject to certain financial covenants, was unused as of March 31, 2017 and December 31, 2016. 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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