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Bank Debt | 9 Months Ended
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Sep. 30, 2024
Bank Debt [Abstract] |
BANK DEBT | 10. BANK DEBT Loans #1 and #2: During the first quarter of 2020, we closed on a debt financing with Gorham Savings Bank (GSB) aggregating $8,600,000, which was comprised of a $5,100,000 mortgage note (Loan #1) that bears interest at a fixed rate of 3.50% per annum (with a 10-year term and 25-year amortization schedule and a balloon principal payment of $3,145,888 due during the first quarter of 2030) and a $3,500,000 note (Loan #2) that bears interest at a fixed rate of 3.50% per annum (with a 7-year term and amortization schedule). The proceeds from the 2020 debt refinancing were used to repay all bank debt outstanding at the time of closing and to provide some additional working capital. During the first quarter of 2022, we closed on an additional $2,000,000 in mortgage debt, which bears interest at the fixed rate of 3.58% per annum. This was accomplished through an amendment of the original mortgage note (Loan #1) that increased the then outstanding principal balance from $4,233,957 to $6,233,957 bearing interest at the blended fixed rate of 3.53% per annum. This increased the balloon payment from $3,145,888 to $3,687,577 and extended the due date of the balloon payment from the first quarter of 2030 to the first quarter of 2032. Line of Credit (LOC): Also during the first quarter of 2020, GSB extended a $1,000,000 LOC to us that is available, as needed, through September 11, 2025. Interest on borrowings against the LOC is variable at the National Prime Rate per annum. There was no outstanding balance under this LOC as of September 30, 2024 or December 31, 2023. Loan #3: During the second quarter of 2020, we received a loan from the Maine Technology Institute (MTI) in the aggregate principal amount of $500,000. The first 2.25 years of this loan were interest-free with no interest accrual or required principal payments. Beginning during the fourth quarter of 2022, Loan #3 became subject to quarterly principal and interest payments at a fixed rate of 5% per annum over the final five years of the loan, through the third quarter of 2027 if not repaid before then. Loan #4: During the fourth quarter of 2020, we closed on a $1,500,000 note with GSB that bears interest at a fixed rate of 3.50% per annum (with a 7-year term and amortization schedule). Proceeds of $624,167 were used to prepay a portion of the outstanding principal on our mortgage note (Loan #1), which reduced the outstanding balance to 80% of the most recent appraised value of the property securing the debt, which allowed GSB to release the $1,400,000 that had been held in escrow. The remaining proceeds were available for general working capital purposes. Loan #5: On June 30, 2021, we executed definitive agreements covering a second loan from the MTI in the aggregate principal amount of $400,000, proceeds from which were received in July of 2021. The first two years of this loan were interest-free with no interest accrual or required principal payments. Principal and interest payments at a fixed rate of 5% per annum are due quarterly over the final 5.5 years of the loan, beginning during the third quarter of 2023 and continuing through the fourth quarter of 2028 if not repaid before then. Loan #6: During the third quarter of 2023, we closed on a $2,000,000 term loan bearing interest at a fixed rate of 7% per annum from GSB. The Finance Authority of Maine (FAME) provided $1,000,000 of loan insurance to GSB. This loan is repayable under a 7-year amortization schedule with a balloon payment of $1,285,056 due during the third quarter of 2026. Loan #7: Also during the third quarter of 2023, we closed on a $1,000,000 term loan bearing interest at a fixed rate of 8% per annum from FAME. The loan is repayable under a 7-year amortization schedule with a balloon payment of $649,631 due during the third quarter of 2026. Loans #1, #2, #4, #6 and #7 are secured by liens on substantially all of our assets and are subject to certain restrictions and financial covenants. Loan #7 is subordinated to Loans #1, #2, #4 and #6. Reflecting our poor financial performance during 2023 and into the first nine months of 2024, the debt service covenant (DSC) requirements for the twelve-month periods ended December 31, 2023, June 30, 2024, September 30, 2024 and December 31, 2024 were waived pre-emptively by our lenders. We are required to meet a minimum DSC ratio of 1.35 for the year ending December 31, 2025 and annually thereafter. In connection with these credit facilities, we incurred aggregate debt issuance and debt discount costs of $173,305 ($5,037 and $0 of which was incurred during the nine-month periods ended September 30, 2024 and 2023, respectively). The amortization of these debt issuance and debt discount costs is being recorded as a component of interest expense, included in other expenses, net, and is being amortized on a straight-line basis over the underlying terms of the notes. Loans #3 and #5 are unsecured and subordinated to our indebtedness to GSB and FAME. Failure to make timely payments of principal and interest, or otherwise to comply with the terms of the agreements of Loans #3 and #5, would entitle the MTI to accelerate the maturity of such debt and demand repayment in full. These loans may be prepaid without penalty at any time. Debt proceeds received and principal repayments made (excluding our $1,000,000 line of credit) are reflected by loan during the periods as described in the tables below:
|  | During the Three-Month Period Ended September 30, 2024 |  |  | During the Three-Month Period Ended September 30, 2023 |
|  | Proceeds from Debt Issuance |  |  | Debt Principal Repayments |  |  | Proceeds from Debt Issuance |  |  | Debt Principal Repayments |
Loan #1 |  | $ | — |  |  | $ | 57,671 |  |  | $ | — |  |  | $ | 55,619 |
Loan #2 |  |  | — |  |  |  | 128,534 |  |  |  | — |  |  |  | 124,020 |
Loan #3 |  |  | — |  |  |  | 24,173 |  |  |  | — |  |  |  | 23,002 |
Loan #4 |  |  | — |  |  |  | 53,505 |  |  |  | — |  |  |  | 51,622 |
Loan #5 |  |  | — |  |  |  | 16,719 |  |  |  | — |  |  |  | 15,909 |
Loan #6 |  |  | — |  |  |  | 59,191 |  |  |  | 2,000,000 |  |  |  | 36,582 |
Loan #7 |  |  | — |  |  |  | 28,456 |  |  |  | 1,000,000 |  |  |  | 18,983 |
Total |  | $ | — |  |  | $ | 368,249 |  |  | $ | 3,000,000 |  |  | $ | 325,737 |
|  | During the Nine-Month Period Ended September 30, 2024 |  |  | During the Nine-Month Period Ended September 30, 2023 |
|  | Proceeds from Debt Issuance |  |  | Debt Principal Repayments |  |  | Proceeds from Debt Issuance |  |  | Debt Principal Repayments |
Loan #1 |  | $ | — |  |  | $ | 172,017 |  |  | $ | — |  |  | $ | 166,527 |
Loan #2 |  |  | — |  |  |  | 382,324 |  |  |  | — |  |  |  | 369,154 |
Loan #3 |  |  | — |  |  |  | 71,629 |  |  |  | — |  |  |  | 68,156 |
Loan #4 |  |  | — |  |  |  | 159,171 |  |  |  | — |  |  |  | 153,704 |
Loan #5 |  |  | — |  |  |  | 49,542 |  |  |  | — |  |  |  | 15,909 |
Loan #6 |  |  | — |  |  |  | 174,804 |  |  |  | 2,000,000 |  |  |  | 36,582 |
Loan #7 |  |  | — |  |  |  | 84,619 |  |  |  | 1,000,000 |  |  |  | 18,983 |
Total |  | $ | — |  |  | $ | 1,094,106 |  |  | $ | 3,000,000 |  |  | $ | 829,015 |
|  | During the Year Ended December 31, 2023 |  |  | During the Year Ended December 31, 2022 |
|  | Proceeds from Debt Issuance |  |  | Debt Principal Repayments |  |  | Proceeds from Debt Issuance |  |  | Debt Principal Repayments |
Loan #1 |  | $ | — |  |  | $ | 223,222 |  |  | $ | 2,000,000 |  |  | $ | 199,013 |
Loan #2 |  |  | — |  |  |  | 494,455 |  |  |  | — |  |  |  | 477,237 |
Loan #3 |  |  | — |  |  |  | 91,446 |  |  |  | — |  |  |  | 22,160 |
Loan #4 |  |  | — |  |  |  | 205,884 |  |  |  | — |  |  |  | 198,715 |
Loan #5 |  |  | — |  |  |  | 32,017 |  |  |  | — |  |  |  | — |
Loan #6 |  |  | 2,000,000 |  |  |  | 93,054 |  |  |  | — |  |  |  | — |
Loan #7 |  |  | 1,000,000 |  |  |  | 45,696 |  |  |  | — |  |  |  | — |
Total |  | $ | 3,000,000 |  |  | $ | 1,185,774 |  |  | $ | 2,000,000 |  |  | $ | 897,125 |
Principal payments (net of debt issuance and debt discount costs) due under bank loans outstanding as of September 30, 2024 (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 December 31, |  |  | During the Years Ending December 31, |  |  |  |  |  |  |
|  | 2024 |  |  | 2025 |  |  | 2026 |  |  | 2027 |  |  | 2028 |  |  | Thereafter |  |  | Total |
Loan #1 |  | $ | 58,765 |  |  | $ | 239,876 |  |  | $ | 248,604 |  |  | $ | 257,649 |  |  | $ | 266,537 |  |  | $ | 4,598,457 |  |  | $ | 5,669,888 |
Loan #2 |  |  | 129,801 |  |  |  | 530,738 |  |  |  | 549,881 |  |  |  | 140,436 |  |  |  | — |  |  |  | — |  |  |  | 1,350,856 |
Loan #3 |  |  | 24,476 |  |  |  | 101,000 |  |  |  | 106,146 |  |  |  | 83,143 |  |  |  | — |  |  |  | — |  |  |  | 314,765 |
Loan #4 |  |  | 54,055 |  |  |  | 220,994 |  |  |  | 228,965 |  |  |  | 240,442 |  |  |  | — |  |  |  | — |  |  |  | 744,456 |
Loan #5 |  |  | 16,929 |  |  |  | 69,856 |  |  |  | 73,415 |  |  |  | 77,156 |  |  |  | 81,086 |  |  |  | — |  |  |  | 318,442 |
Loan #6 |  |  | 60,581 |  |  |  | 253,003 |  |  |  | 1,418,558 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,732,142 |
Loan #7 |  |  | 29,617 |  |  |  | 124,364 |  |  |  | 715,704 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 869,685 |
Subtotal |  |  | 374,224 |  |  |  | 1,539,831 |  |  |  | 3,341,273 |  |  |  | 798,826 |  |  |  | 347,623 |  |  |  | 4,598,457 |  |  |  | 11,000,234 |
Debt issuance cost |  |  | (5,583 | ) |  |  | (21,314 | ) |  |  | (13,580 | ) |  |  | (5,420 | ) |  |  | (3,513 | ) |  |  | (11,347 | ) |  |  | (60,757 | )
Debt discount cost |  |  | (5,223 | ) |  |  | (20,891 | ) |  |  | (11,344 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (37,458 | )
Total |  | $ | 363,418 |  |  | $ | 1,497,626 |  |  | $ | 3,316,349 |  |  | $ | 793,406 |  |  | $ | 344,110 |  |  | $ | 4,587,110 |  |  | $ | 10,902,019 |

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