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Note 7 - Long-term Debt
 9 Months Ended
Sep. 30, 2019
Notes to Financial Statements  
Long-term Debt [Text Block]
NOTE
7:
LONG-TERM DEBT
 
The Company has a loan agreement with HSBC which is secured by a mortgage on our Central Islip, NY headquarters. The loan is payable in
120
consecutive equal monthly installments of
$25,000
in principal plus interest and a final balloon payment upon maturity in
March 2022.
The balances as of
September 30, 2019
and
December 31, 2018
were approximately
$2.4
million and
$2.7
million respectively. Interest accrues on the loan, at our option, at the variable rate of LIBOR plus
1.75%
or Prime less
0.5%
(
3.95%
and
2.18%
at
September 30, 2019
and
December 31, 2018,
respectively).
 
On
November 30, 2017,
the Company purchased the premises located at
555
North Research Place, Central Islip, NY. The purchase price of the building was
$13,850,000
exclusive of closing costs. The Company’s newly formed wholly-owned subsidiary,
555
N Research Corporation (the “Assignee”) and the Islip IDA, entered into a Fee and Leasehold Mortgage and Security Agreement (the ”Loan”) with HSBC in the amount of
$10,387,500,
which was used to finance a portion of the purchase price to acquire the premises located at
555
North Research Place, Central Islip, New York. The Loan was evidenced by the certain note, dated
November 30, 2017 (
the “Note”), by and between Assignee and the Bank, and secured by a certain Fee and Leasehold Mortgage and Security Agreement (the “Mortgage”), dated
November 30, 2017,
as well as a collateral Assignment of Leases and Rents.
 
The Note is payable in
60
consecutive equal monthly installments of
$62,481
including interest and a final balloon payment upon maturity in
December 2022.
The balance outstanding as of
September 30, 2019
and
December 31, 2018
were approximately
$9.8
million and
$10.0
million respectively. The Note bears interest for each Interest Period (as defined in the Note), at the fixed rate of
3.9148%.
As a condition of the Bank making the Loan, the Company was required to guaranty Assignee’s obligations under the Loan pursuant that certain Unlimited Guaranty, dated
November 30, 2017 (
the “Guaranty”). On
May 31, 2019,
the Company entered into
two
sublease agreements for a portion of the CVD Materials facility. During the
three
and
nine
months ended
September 30, 2019,
the Company recognized
$207,000
of rental income which commenced in
June 2019.
Commencing
July 2019,
the monthly rental income increased from
$36,000
to approximately
$67,000
per month, which includes both of the sublease agreements (eastside and westside), or approximately
$800,000
per annum. On
October 30, 2019,
the Tenant exercised its option to terminate the eastside Lease, which termination will be effective as of
December 31, 2019 (
the “Termination”). The Lease was for a
one
-year term ending on
June 30, 2020,
and provided for an initial base monthly rent of
$31,667
per month (
$380,000
per annum)(See Note
12
).
 
At
December 31, 2018,
the Company was
not
in compliance with the
one
financial covenant (fixed charge coverage ratio) contained in the Mortgage. On
March 26, 2019
the Company received a waiver from HSBC until
April 1, 2020.
On
August 5, 2019,
the Company entered into a Mortgage Modification Agreement which replaced the former covenant with a Minimum Liquid Assets covenant. The Company is in compliance with its financial covenant under the mortgage at
September 30, 2019.