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DEBT
 6 Months Ended
Jun. 30, 2023
Debt Disclosure [Abstract]  
DEBT

4) DEBT

 

Line of Credit Facility – In December of 2005, the Company entered into a revolving line of credit agreement with Umpqua Bank that allows borrowing up to $2,000,000 against eligible accounts receivable and inventories, as defined in the agreement. The revolving line bears interest at prime less 0.5%, with a floor of 3.25%, is payable monthly, and is subject to renewal. In July 2021, the Company renewed the credit agreement until July 31, 2023. In November 2022, the Company increased the borrowing line up to $5,000,000. The Company had an outstanding line of credit balance of $1,505,793 at June 30, 2023, at an interest rate of 7.75%, and an outstanding balance of $166,617 at December 31, 2022. In July 2023 the line of credit was renewed for an additional two years.

 

The line of credit agreement includes various covenants, which among other things, requires the Company to maintain minimum amounts of tangible net worth, debt-to-equity, and debt service coverage, as defined, and limits the level of acquisitions of property and equipment. As of December 31, 2022, the Company was out of compliance with a debt covenant. The Company has received a waiver from Umqua Bank waiving this violation until the next measurement date of December 31, 2023.

 

Notes Payable – In February 2017, the Company purchased property, including vineyard land, bare land, and structures in the Dundee Hills American Viticultural Area (AVA) under terms that included a 15 year note payable with quarterly payments of $42,534, bearing interest at 6%. The note may be called by the owner, up to the outstanding balance, with 180 days written notice. As of June 30, 2023, the Company had a balance of $1,151,633 due on this note. As of December 31, 2022, the Company had a balance of $1,201,038 due on this note.

Long-Term Debt – The Company has three long term debt agreements with AgWest with an aggregate outstanding balance of $7,841,963 and $7,062,654 as of June 30, 2023 and December 31, 2022, respectively. The first loan requires monthly principal and interest payments of $15,557 for the life of the loan, at an annual fixed interest rate of 4.75% with a maturity date of 2028, and outstanding balance of $901,949 and $972,940 as of June 30, 2023 and December, 31, 2022, respectively. The second loan requires monthly principal and interest payments of $46,510 for the life of the loan, at an annual fixed interest rate of 5.21% with a maturity date of 2032, and outstanding balance of $3,915,014 and $4,089,714 as of June 30, 2023 and December, 31, 2022, respectively. The general purposes of these loans were to make capital improvements to the winery and vineyard facilities. The third loan bears interest at Northwest Variable base which was 7.50% at June 31, 2023 and 6.50% at December 31,2022, with interest due annually and principal at maturity on November 1, 2025 with an available line of $5,000,000 and outstanding balance of $3,025,000 and $2,000,000 as of June 30, 2023 and December, 31, 2022, respectively. In July 2023 the available line was increased to $10,000,000.

 

As of June 30, 2023, the Company had unamortized debt issuance costs of $112,613. As of December 31, 2022, the Company had unamortized debt issuance costs of $119,237.

 

The Company believes that cash flow from operations and funds available under the Company’s existing credit facilities will be sufficient to meet the Company’s short-term needs. The Company will continue to evaluate funding mechanisms to support our long-term funding requirements.