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Bank Debt | 9 Months Ended
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Sep. 30, 2019
Debt Disclosure [Abstract] |
BANK DEBT |
11. | BANK DEBT
We have in place five credit facilities and a line of credit with TD Bank N.A. These five credit facilities are secured by substantially all of our assets and are subject to certain restrictions and financial covenants. Proceeds from a $1,000,000 first mortgage on our corporate headquarters and production and research facility at 56 Evergreen Drive in Portland (Loan #1) were received during the third quarter of 2010 with monthly principal and interest payments due for ten years, calculated based on a fifteen-year amortization schedule. A balloon principal payment of $451,885 will be due during the third quarter of 2020. As of September 30, 2019, $511,615 was outstanding under Loan #1. Proceeds from a $2,500,000 second mortgage on this corporate headquarters (Loan #2) were received during the third quarter of 2015 with monthly principal and interest payments due for ten years, calculated based on a twenty-year amortization schedule. A balloon principal payment of approximately $1,550,000 will be due during the third quarter of 2025. As of September 30, 2019, $2,166,988 was outstanding under Loan #2. During the first quarter of 2016, we entered into two additional credit facilities (Loans #3 and #4) aggregating up to approximately $4,500,000. As a result of loan amendments entered into during the first quarter of 2017, these two credit facilities were increased to up to $6,500,000. Loan #3 is a construction loan of $3,940,000. As amended, interest only was payable at a variable rate equal to the one-month LIBOR (adjusted at each monthly payment date) plus a margin of 2.25% through September 2018, at which time the loan converted to a seven-year term loan facility at the same variable interest rate (which was equal to 4.35% as of September 30, 2019) with monthly principal and interest payments due based on a seven-year amortization schedule. As of September 30, 2019, $3,377,143 was outstanding under Loan #3. Loan #4 is a construction loan of $2,560,000. As amended, interest only was payable at a variable rate equal to the one-month LIBOR (adjusted at each monthly payment date) plus a margin of 2.25% through March 2018, at which time the loan converted to a term loan facility at the same variable interest rate (which was equal to 4.35% as of September 30, 2019) with monthly principal and interest payments due for ten years, calculated based on a twenty-year amortization schedule. A balloon principal payment of approximately $1,408,000 will be due during the first quarter of 2027. As of September 30, 2019, $2,368,000 was outstanding under Loan #4. Proceeds from a $340,000 first mortgage on our 4,114 square foot warehouse and cold storage facility near our Re-Tain™ production facility (Loan #5) were received during the first quarter of 2017. This note bears interest at a variable rate equal to the one-month LIBOR (adjusted at each monthly payment date) plus a margin of 2.25% (which was equal to 4.45% as of September 30, 2019) with monthly principal and interest payments due for ten years, calculated based on a twenty-year amortization schedule. A balloon principal payment of approximately $208,000 will be due during the first quarter of 2027. As of September 30, 2019, $312,550 was outstanding under Loan #5. We hedged our interest rate exposures on Loan #1 and Loan #2 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 the debt principal repayment date immediately preceding September 30, 2019, the variable rates on these two mortgage notes were 5.29% and 4.30%, 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, 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 $2,678,603 as of September 30, 2019. 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.
|  | During the Three-Month Periods Ended September 30, |  |  | During the Nine-Month Periods Ended September 30, |
|  | 2019 |  |  | 2018 |  |  | 2019 |  |  | 2018 |
(Receipts) payments required by interest rate swaps |  | $ | (158 | ) |  | $ | 1,391 |  |  | $ | (3,214 | ) |  | $ | 9,499 |
Other comprehensive (loss) income, net of taxes |  | $ | (22,318 | ) |  | $ | 14,330 |  |  | $ | (95,387 | ) |  | $ | 74,430 |
In connection with Loan #1 and Loan #2, we incurred debt issue costs of $26,489 and $34,125, respectively. In connection with Loan #3, Loan #4 and Loan #5, we incurred debt issue costs of $114,806. The 2017 amendments to Loan #3 and Loan #4 were accounted for as modifications. The amortization of debt issue 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 respective credit facilities. Debt proceeds received and principal repayments made during the three-month periods ended September 30, 2019 and 2018 are reflected in the following table by year and by loan:
|  | During the Three-Month Period Ended September 30, 2019 |  |  | During the Three-Month Period Ended September 30, 2018 |
|  | Proceeds from Debt Issue |  |  | Debt Principal Repayments |  |  | Proceeds from Debt Issue |  |  | Debt Principal Repayments |
Loan #1 |  | $ | — |  |  | $ | (17,227 | ) |  | $ | — |  |  | $ | (16,219 | )
Loan #2 |  |  | — |  |  |  | (22,260 | ) |  |  | — |  |  |  | (21,279 | )
Loan #3 |  |  | — |  |  |  | (140,714 | ) |  | $ | 426,499 |  |  |  | — |
Loan #4 |  |  | — |  |  |  | (32,000 | ) |  |  | — |  |  |  | (32,000 | )
Loan #5 |  |  | — |  |  |  | (2,967 | ) |  |  | — |  |  |  | (2,640 | )
Total |  | $ | — |  |  | $ | (215,168 | ) |  | $ | 426,499 |  |  | $ | (72,138 | )
Debt proceeds received and principal repayments made during the nine-month periods ended September 30, 2019 and 2018 are reflected in the following table by year and by loan:
|  | During the Nine-Month Period Ended September 30, 2019 |  |  | During the Nine-Month Period Ended September 30, 2018 |
|  | Proceeds from Debt Issue |  |  | Debt Principal Repayments |  |  | Proceeds from Debt Issue |  |  | Debt Principal Repayments |
Loan #1 |  | $ | — |  |  | $ | (50,989 | ) |  | $ | — |  |  | $ | (47,995 | )
Loan #2 |  |  | — |  |  |  | (66,780 | ) |  |  | — |  |  |  | (63,837 | )
Loan #3 |  |  | — |  |  |  | (422,143 | ) |  |  | 426,499 |  |  |  | — |
Loan #4 |  |  | — |  |  |  | (96,000 | ) |  |  | 267,141 |  |  |  | (64,000 | )
Loan #5 |  |  | — |  |  |  | (8,217 | ) |  |  | — |  |  |  | (8,055 | )
Total |  | $ | — |  |  | $ | (644,129 | ) |  | $ | 693,640 |  |  | $ | (183,887 | )
Principal payments (net of debt issue costs) due under bank loans outstanding as of September 30, 2019 (excluding our $500,000 line of credit) are reflected in the following table by the year that payments are due:
|  | Three-Months ending 12/31/2019 |  |  | Year ending 12/31/2020 |  |  | Year ending 12/31/2021 |  |  | Year ending 12/31/2022 |  |  | Year Ending 12/31/2023 |  |  | After 12/31/2023 |  |  | Total |
Loan #1 |  | $ | 17,919 |  |  | $ | 493,696 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 511,615 |
Loan #2 |  |  | 23,217 |  |  |  | 94,005 |  |  |  | 98,538 |  |  |  | 103,077 |  |  |  | 107,769 |  |  |  | 1,740,382 |  |  |  | 2,166,988 |
Loan #3(1) |  |  | 140,714 |  |  |  | 562,857 |  |  |  | 562,857 |  |  |  | 562,857 |  |  |  | 562,857 |  |  |  | 985,001 |  |  |  | 3,377,143 |
Loan #4(1) |  |  | 32,000 |  |  |  | 128,000 |  |  |  | 128,000 |  |  |  | 128,000 |  |  |  | 128,000 |  |  |  | 1,824,000 |  |  |  | 2,368,000 |
Loan #5(2) |  |  | 2,960 |  |  |  | 12,174 |  |  |  | 12,726 |  |  |  | 13,304 |  |  |  | 13,908 |  |  |  | 257,478 |  |  |  | 312,550 |
Subtotal |  | $ | 216,810 |  |  | $ | 1,290,732 |  |  | $ | 802,121 |  |  | $ | 807,238 |  |  | $ | 812,534 |  |  | $ | 4,806,861 |  |  |  | 8,736,296 |
Debt Issue Costs |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (101,856 | )
Total |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | 8,634,440 |
(1) | These notes bear 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 4.35%. The actual interest rate and principal payments will be different.
(2) | 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 4.45%. The actual interest rate and principal payments will be different.
During the third quarter of 2010, we entered into a $500,000 line of credit with TD Bank N.A., which is secured by substantially all of our assets and is subject to certain restrictions and financial covenants. This line of credit has been renewed approximately annually since then, is available as needed and has been extended through May 31, 2020. There was no outstanding balance under this line of credit as of September 30, 2019. As of December 31, 2018, $500,000 was outstanding under this line of credit, which was repaid during the first quarter of 2019. Interest on borrowings against the line of credit is 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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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