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Note 9 - Bank Debt
 9 Months Ended
Sep. 30, 2025
Notes to Financial Statements  
Debt Disclosure [Text Block]

9. BANK DEBT

 

Loans #1 and #2: During the first quarter of 2020, we closed on a debt financing with Maine Community Bank (formerly known as Gorham Savings Bank) (MCB) 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 $3,687,726 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): During the first quarter of 2020, MCB extended a $1,000,000 LOC to us, which was extended during the third quarter of 2025, such that it is available, as needed, through September 11, 2026. 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, 2025 or December 31, 2024.

 

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 MCB 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 MCB 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 MCB. The Finance Authority of Maine (FAME) provided $1,000,000 of loan insurance to MCB. This loan was repayable under a 7-year amortization schedule with a balloon payment of $1,285,029 due during the third quarter of 2026. This loan was refinanced during the third quarter of 2025 utilizing the proceeds from Loan #8 discussed below.

 

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 was repayable under a 7-year amortization schedule with a balloon payment of $649,267 due during the third quarter of 2026. This loan was refinanced during the third quarter of 2025 utilizing the proceeds from Loan #8 discussed below.

 

Loan #8: During the third quarter of 2025, we refinanced some of our bank debt. The principal amount of approximately $1,525,852 outstanding as of the closing date under Loan #6 and the principal amount of approximately $768,209 outstanding as of the closing date under Loan #7 were both refinanced into one MCB loan with a principal amount of $2,327,119 bearing interest at a fixed rate of 6.5% per annum. This interest rate is reduced from 7% on Loan #6 and from 8% on Loan #7. This refinancing removes the balloon principal payments that were due in July of 2026 under both Loans #6 and #7. Principal and interest payments under the new loan of $45,637 per month are due over a five-year term ending during the third quarter of 2030. 

 

Loans #1, #2, #4 and #8 are secured by liens on substantially all of our assets and are subject to certain restrictions and financial covenants. 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 our credit facilities, we incurred aggregated debt issuance and debt discount costs of $97,522 and $173,305 as of September 30, 2025 and December 31, 2024, 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, on the statements of operations, 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 MCB. 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

  

During the Three-Month

 
  

Period Ended September 30, 2025

  

Period Ended September 30, 2024

 
  

Proceeds from

  

Debt Principal

  

Proceeds from

  

Debt Principal

 
  

Debt Issuance

  

Repayments

  

Debt Issuance

  

Repayments

 

Loan #1

 $—  $59,798  $—  $57,671 

Loan #2

  —   133,203   —   128,534 

Loan #3

  —   25,405   —   24,173 

Loan #4

  —   55,453   —   53,505 

Loan #5

  —   17,571   —   16,719 

Loan #6

  —   1,547,119   —   59,191 

Loan #7

  —   779,015   —   28,456 

Loan #8

  2,327,119   32,611   —   — 

Total

 $2,327,119  $2,650,175  $—  $368,249 

 

  

During the Nine-Month

  

During the Nine-Month

 
  

Period Ended September 30, 2025

  

Period Ended September 30, 2024

 
  

Proceeds from

  

Debt Principal

  

Proceeds from

  

Debt Principal

 
  

Debt Issuance

  

Repayments

  

Debt Issuance

  

Repayments

 

Loan #1

 $—  $178,865  $—  $172,017 

Loan #2

  —   396,276   —   382,324 

Loan #3

  —   75,278   —   71,629 

Loan #4

  —   165,007   —   159,171 

Loan #5

  —   52,066   —   49,542 

Loan #6

  —   1,671,553   —   174,804 

Loan #7

  —   840,062   —   84,619 

Loan #8

  2,327,119   32,612   —   — 

Total

 $2,327,119  $3,411,719  $—  $1,094,106 

 

  

During the Year

  

During the Year

 
  

Ended December 31, 2024

  

Ended December 31, 2023

 
  

Proceeds from

  

Debt Principal

  

Proceeds from

  

Debt Principal

 
  

Debt Issuance

  

Repayments

  

Debt Issuance

  

Repayments

 

Loan #1

 $—  $230,763  $—  $223,222 

Loan #2

  —   512,139   —   494,455 

Loan #3

  —   96,104   —   91,446 

Loan #4

  —   213,227   —   205,884 

Loan #5

  —   66,470   —   32,017 

Loan #6

  —   235,393   2,000,000   93,054 

Loan #7

  —   114,242   1,000,000   45,696 

Total

 $—  $1,468,338  $3,000,000  $1,185,774 

 

Principal payments (net of debt issuance and debt discount costs) due under bank loans outstanding as of September 30, 2025 (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,

         
  

2025

  

2026

  

2027

  

2028

  

2029

  

Thereafter

  

Total

 

Loan #1

 $60,892  $248,604  $257,649  $266,537  $276,720  $4,321,874  $5,432,276 

Loan #2

  134,469   549,881   140,415   —   —   —   824,765 

Loan #3

  25,723   106,146   83,143   —   —   —   215,012 

Loan #4

  55,996   228,965   240,433   —   —   —   525,394 

Loan #5

  17,791   73,415   77,155   81,086   —   —   249,447 

Loan #8

  99,755   415,423   443,642   473,540   505,947   356,200   2,294,507 

Subtotal

  394,626   1,622,434   1,242,437   821,163   782,667   4,678,074   9,541,401 

Debt issuance cost

  (2,492)  (9,585)  (6,969)  (5,063)  (5,062)  (8,763)  (37,934)

Debt discount cost

  (666)  (2,664)  (2,664)  (2,663)  (2,663)  (1,597)  (12,917)

Total

 $391,468  $1,610,185  $1,232,804  $813,437  $774,942  $4,667,714  $9,490,550