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Bank Debt | 6 Months Ended
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Jun. 30, 2020
Debt Disclosure [Abstract] |
BANK DEBT | 10. BANK DEBT Prior to a refinancing with Gorham Savings Bank during the first quarter of 2020, we had in place five different credit facilities and a line of credit with TD Bank N.A. 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 bearing interest at the fixed rate of 6.04% per annum (with a 10-year term and a 15-year amortization schedule). A balloon principal payment of $451,885 would have been due during the third quarter of 2020. Proceeds from a $2,500,000 second mortgage on this corporate headquarters (Loan #2) were received during the third quarter of 2015 bearing interest at the fixed rate of 4.38% per annum (with a 10-year term and 25-year amortization schedule). A balloon principal payment of approximately $1,550,000 would have been due during the third quarter of 2025. 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 was a construction loan of $3,940,000 that converted to a term loan facility bearing interest at the variable rate equal to the one-month LIBOR plus a margin of 2.25% per annum (with a 7-year term and amortization schedule). Loan #4 was a construction loan of $2,560,000 that converted to a term loan facility bearing interest at the variable rate equal to the one-month LIBOR plus a margin of 2.25% per annum (with a 10-year term and 25-year amortization schedule). A balloon principal payment of approximately $1,408,000 under Loan #4 would have been due during the first quarter of 2027. Proceeds from a $340,000 first mortgage on our 4,114 square foot warehouse and cold storage facility (Loan #5) were received during the first quarter of 2017 bearing interest at the variable rate equal to the one-month LIBOR plus a margin of 2.25% per annum (with a 10-year term and 20-year amortization schedule). A balloon principal payment of approximately $206,000 would have been due during the first quarter of 2027. During the first quarter of 2020, we closed on a debt financing with Gorham Savings Bank aggregating $8,600,000 and a $1,000,000 line of credit. The debt is comprised of a $5,100,000 mortgage note (Loan #6) that bears interest at a fixed rate of 3.50% per annum (with a 10-year term and 25-year amortization schedule) and a $3,500,000 note (Loan #7) that bears interest at a fixed rate of 3.50% per annum (with a 7-year term and amortization schedule). The line of credit is available as needed through March 10, 2022. There was no outstanding balance under this line of credit as of June 30, 2020. Interest on borrowings against the line of credit is variable at the rate of the one-month LIBOR plus 2.15% per annum. In connection with these three credit facilities, we incurred debt issuance costs of $39,789. The amortization of debt issuance 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 two notes and the line of credit. The proceeds from the debt refinancing were used to repay all bank debt outstanding at the time of closing and to provide some additional working capital. These three credit facilities are secured by liens on substantially all of our assets and are subject to certain restrictions and financial covenants. We were required by a bank debt covenant (before the debt refinancing discussed above) to maintain at least $2,000,000 of otherwise unrestricted cash, cash equivalents and short-term investments. Under the new debt, we are required to hold $1,400,000 in escrow (a non-current asset), which reduces the effective availability of our liquid assets for operational needs by that amount. During April 2020, we received $937,700 in support from the federal government under the Paycheck Protection Program (PPP) (Loan #8). Provided that we use the proceeds only for eligible payroll costs, utility expenses, rent payments and interest expense on mortgage debt, in each case incurred and paid during the 24-week period beginning April 13, 2020, our obligation to repay the principal should be forgiven. At least 60% of such forgiven amounts must be used for eligible payroll costs. During the third quarter of 2020, we applied for forgiveness of this funding using 100% eligible payroll expenses. Given current guidance that is available, we believe that we should be eligible to achieve forgiveness of the full loan amount, but this income will not be recognized until our eligible expenses are certified by our bank and the federal government. Any such forgiveness of indebtedness, in accordance with the CARES Act, does not give rise to federal taxable income, but these forgiven expenses may not also be deducted for federal tax return purposes. If not forgiven, this funding accrues interest at a rate of 1% per annum beginning on April 10, 2020, and monthly principal and interest payments on the amount outstanding as of October 10, 2020 would be due until April 2022. During June 2020, we entered into a $500,000 subordinated loan from the Maine Technology Institute (Loan #9) that was subordinated to all debt. The first 27 months of this loan are interest-free with no interest accrual or required principal payments. Principal and interest payments at 5% per annum are due quarterly over the final five years of the loan, beginning during the fourth quarter of 2022 and continuing through the third quarter of 2027. The loan may be prepaid without penalty at any time. Debt proceeds received and principal repayments made during the three-month and six-month periods ended June 30, 2020 and 2019 are reflected in the following tables by year and by loan:
|  | During the Three-Month Period Ended June 30, 2020 |  |  | During the Three-Month Period Ended June 30, 2019 |
|  | Proceeds from Debt Issuance |  |  | Debt Principal Repayments |  |  | Proceeds from Debt Issuance |  |  | Debt Principal Repayments |
Loan #1 |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | (16,881 | )
Loan #2 |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (22,260 | )
Loan #3 |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (140,714 | )
Loan #4 |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (32,000 | )
Loan #5 |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (2,805 | )
Loan #6 |  |  | — |  |  |  | (31,497 | ) |  |  | — |  |  |  | — |
Loan #7 |  |  | — |  |  |  | (110,397 | ) |  |  | — |  |  |  | — |
Loan #8 |  |  | 937,700 |  |  |  | — |  |  |  | — |  |  |  | — |
Loan #9 |  |  | 500,000 |  |  |  | — |  |  |  | — |  |  |  | — |
Total |  | $ | 1,437,700 |  |  | $ | (141,894 | ) |  | $ | — |  |  | $ | (214,660 | )
|  | During the Six-Month Period Ended June 30, 2020 |  |  | During the Six-Month Period Ended June 30, 2019 |
|  | Proceeds from Debt Issuance |  |  | Debt Principal Repayments |  |  | Proceeds from Debt Issuance |  |  | Debt Principal Repayments |
Loan #1 |  | $ | — |  |  | $ | (493,696 | ) |  | $ | — |  |  | $ | (33,762 | )
Loan #2 |  |  | — |  |  |  | (2,143,771 | ) |  |  | — |  |  |  | (44,520 | )
Loan #3 |  |  | — |  |  |  | (3,236,429 | ) |  |  | — |  |  |  | (281,429 | )
Loan #4 |  |  | — |  |  |  | (2,336,000 | ) |  |  | — |  |  |  | (64,000 | )
Loan #5 |  |  | — |  |  |  | (309,182 | ) |  |  | — |  |  |  | (5,250 | )
Loan #6 |  |  | 5,100,000 |  |  |  | (31,497 | ) |  |  | — |  |  |  | — |
Loan #7 |  |  | 3,500,000 |  |  |  | (110,397 | ) |  |  | — |  |  |  | — |
Loan #8 |  |  | 937,700 |  |  |  | — |  |  |  | — |  |  |  | — |
Loan #9 |  |  | 500,000 |  |  |  | — |  |  |  | — |  |  |  | — |
Total |  | $ | 10,037,700 |  |  | $ | (8,660,972 | ) |  | $ | — |  |  | $ | (428,961 | )
Principal payments (net of debt issue costs) due under bank loans outstanding as of June 30, 2020 (excluding our $1,000,000 line of credit) are reflected in the following table by the year that payments are due:
|  | During the Six-Month Period Ending December 31, |  |  | During the Years Ending December 31, |  |  |
|  | 2020 |  |  | 2021 |  |  | 2022 |  |  | 2023 |  |  | 2024 |  |  | 2025 and After |  |  | Total |
Loan #6 |  | $ | 64,964 |  |  | $ | 133,384 |  |  | $ | 138,128 |  |  | $ | 143,041 |  |  | $ | 148,128 |  |  | $ | 4,440,858 |  |  | $ | 5,068,503 |
Loan #7 |  |  | 224,551 |  |  |  | 461,046 |  |  |  | 477,444 |  |  |  | 494,425 |  |  |  | 512,011 |  |  |  | 1,220,125 |  |  |  | 3,389,602 |
Loan #8(1) |  |  | 155,309 |  |  |  | 625,130 |  |  |  | 157,261 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 937,700 |
Loan #9 |  |  | — |  |  |  | — |  |  |  | 22,160 |  |  |  | 91,446 |  |  |  | 96,104 |  |  |  | 290,290 |  |  |  | 500,000 |
Subtotal |  | $ | 444,824 |  |  | $ | 1,219,560 |  |  | $ | 794,993 |  |  | $ | 728,912 |  |  | $ | 756,243 |  |  | $ | 5,951,273 |  |  | $ | 9,895,805 |
Debt Issuance Costs |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (37,888 | )
Total |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | 9,857,917 |
(1) | These principal payments would not be due if the loan amount is forgiven by the federal government.

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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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