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DEBT
 9 Months Ended
Sep. 30, 2024
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 (the “Credit Agreement”) that allows borrowing up to $2,000,000 against eligible accounts receivable and inventories as collateral, 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. In July 2023 the line of credit was renewed for an additional two years. The Company had an outstanding line of credit balance of $3,460,004 at September 30, 2024, at an interest rate of 8.0%, and an outstanding line of credit balance of $2,684,982 at December 31, 2023, at an interest rate of 8.0%.

 

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, 2023, the Company was out of compliance with a debt covenant. The Company has received a waiver from Umpqua Bank waiving this violation until the next measurement date of December 31, 2024.

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 6.0%. The note may be called by the owner, up to the outstanding balance, with 180 days written notice. As of September 30, 2024, the Company had a balance of $1,022,778 due on this note. As of December 31, 2023, the Company had a balance of $1,100,735 due on this note.

 

Long-Term Debt – The Company has three long term debt agreements with AgWest with an aggregate outstanding balance of $10,701,405 and $7,590,659 as of September 30, 2024 and December 31, 2023, respectively. The first two outstanding loans require monthly principal and interest payments of $62,067 for the life of the loans, at annual fixed interest rates of 4.75% and 5.21%, and with maturity dates of 2028 and 2032, respectively. The general purposes of these loans were to make capital improvements to the winery and vineyard facilities. The collateral for these two loans include the land and buildings at the main estate. The third loan bears interest at Northwest Variable base, which was 7.80% at September 30, 2024, and December 31, 2023, respectively, with interest due annually and principal at maturity on November 1, 2025. In November 2024 the Company replaced the third loan with a $10,0000,000 loan with monthly principal and interest payments with maturity in October 2039 and a current interest rate of 6.66%.

 

As of September 30, 2024, future minimum principal payments of long-term debt are as follows for the years ending December 31:

 

2024  $133,494 
2025   7,074,971 
2026   578,559 
2027   608,636 
2028   640,299 
Thereafter   1,665,446 
      
Total  $10,701,405 

 

As of September 30, 2024, the Company had unamortized debt issuance costs of $96,054. As of December 31, 2023, the Company had unamortized debt issuance costs of $105,989.