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Bank Debt

9 Months Ended

Sep. 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. (Loans #1 to #5). 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 September 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 (Loans #1 to #5) and to provide some additional working capital. These three new credit facilities are secured by liens on substantially all of our assets and are subject to certain restrictions and financial covenants. 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 the second quarter of 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 certain 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 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 might 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 March 10, 2021 would be due until April 2025.

During June 2020, we received a $500,000 loan from the Maine Technology Institute (Loan #9) that is subordinated to all other bank 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 nine-month periods ended September 30, 2020 and 2019 are reflected in the following tables by year and by loan:

		During the Three-Month Period Ended September 30, 2020								During the Three-Month Period Ended September 30, 2019
		Proceeds from Debt Issuance				Debt Principal Repayments				Proceeds from Debt Issuance				Debt Principal Repayments
Loan #1		$	—			$	—			$	—			$	(17,227	)
Loan #2			—				—				—				(22,260	)
Loan #3			—				—				—				(140,714	)
Loan #4			—				—				—				(32,000	)
Loan #5			—				—				—				(2,967	)
Loan #6			—				(31,782	)			—				—
Loan #7			—				(111,392	)			—				—
Loan #8			—				—				—				—
Loan #9			—				—				—				—
Total		$	—			$	(143,174	)		$	—			$	(215,168	)

		During the Nine-Month Period Ended September 30, 2020								During the Nine-Month Period Ended September 30, 2019
		Proceeds from Debt Issuance				Debt Principal Repayments				Proceeds from Debt Issuance				Debt Principal Repayments
Loan #1		$	—			$	(493,696	)		$	—			$	(50,989	)
Loan #2			—				(2,143,771	)			—				(66,780	)
Loan #3			—				(3,236,429	)			—				(422,143	)
Loan #4			—				(2,336,000	)			—				(96,000	)
Loan #5			—				(309,182	)			—				(8,217	)
Loan #6			5,100,000				(63,279	)			—				—
Loan #7			3,500,000				(221,790	)			—				—
Loan #8			937,700				—				—				—
Loan #9			500,000				—				—				—
Total		$	10,037,700			$	(8,804,147	)		$	—			$	(644,129	)

Principal payments (net of debt issue costs) due under bank loans outstanding as of September 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 Three-Month Period Ending				During the Years Ending December 31,
		December 31, 2020				2021				2022				2023				2024				2025 and After				Total
Loan #6		$	32,758			$	133,369			$	138,112			$	143,025			$	148,112			$	4,441,345			$	5,036,721
Loan #7			112,836				461,035				477,432				494,413				511,998				1,220,496				3,278,210
Loan #8⁽¹⁾			—				184,429				223,352				225,596				227,862				76,461				937,700
Loan #9			—				—				22,160				91,446				96,104				290,290				500,000
Subtotal		$	145,594			$	778,833			$	861,056			$	954,480			$	984,076			$	6,028,592			$	9,752,631
Debt Issuance Costs																											(36,323	)
Total																										$	9,716,308

⁽¹⁾

These principal payments would not be due if the loan amount is forgiven by the federal government.