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Short-Term and Long-Term Debt
 9 Months Ended
Sep. 30, 2024
Debt Disclosure [Abstract]  
Short-Term and Long-Term Debt

10. Short-Term and Long-Term Debt

 

DSS, Inc.

 

Promissory Notes - On May 20, 2021, Premier Packaging entered into master loan and security agreement (“BOA Note”) with Bank of America, N.A. (“BOA”) to secure financing approximating $3,710,000 to purchase and use as collateral, a new Heidelberg XL 106-7+L printing press. The aggregate principal balance outstanding under the BOA Note shall bear interest at a variable rate on or before the loan closing. As of September 30, 2024, and December 31, 2023, the outstanding principal on the BOA Note was $2,562,000 and $2,932,000, respectively and had an interest rate of 4.63%. As of September 30, 2024, $514,000 was included in the Current portion of long-term debt, net, and the remaining balance of approximately $2,049,000 is recorded as Long-term debt. As of December 31, 2023, $491,000 was included in the current portion of long-term debt, net, and the remaining balance of approximately $2,442,000 recorded as long-term debt. Interest expense equaled $96,000 and $0 for the nine months ended September 30, 2024 and 2023, respectively. The BOA Note contains certain covenants that are analyzed annually. As of September 30, 2024, Premier is in compliance with these covenants.

 

On August 1, 2021, AMRE Shelton, LLC., (“AMRE Shelton”) a subsidiary of AMRE, entered into a loan agreement (“Shelton Agreement”) with Patriot Bank, N.A. (“Patriot Bank”) in an amount up to $6,155,000, with the amount financed approximating $5,105,000. The Shelton Agreement contains monthly payments of principal and an initial interest of 4.25%. The interest will be adjusted commencing on July 1, 2026 and continuing for the next succeeding 5-year period shall be determined one month prior to the change date and shall be an interest rate equal to two hundred fifty (250) basis points above the Federal Home Loan Bank Boston 5-Year/25-Year amortizing advance rate, but in no event less than 4.25% for the term of 120 months with a balloon payment approximating $2,829,000 due at term end. The affective interest rate at September 30, 2024 was 4.25%. The funds borrowed were used to purchase a 40,000 square foot, 2.0 story, Class A+ multi-tenant medical office building located on a 13.62-acre site, which serves as collateral for the Shelton Agreement. The purchase price has been allocated as $4,640,000, $1,600,000, and $325,000 for the facility, land, and tenant improvements, respectively. Also included in the value of the property is $585,000 of intangible assets with an estimated useful life of approximating 3 years. The net book value of these assets as of September 30, 2024 approximated $6,199,000. Of the total financed, approximately $213,000 of principal and accrued interest is classified as current portion of long-term debt, net, and the remaining balance of approximately $4,257,000 recorded as long-term debt, net of $33,000 in deferred financing costs. Interest expense for the nine months ended September 30, 2024 and 2023 approximated $147,000 and $153,000, respectively.

 

On October 13, 2021, LVAM entered into loan agreement with BMIC (“BMIC Loan”), a related party, whereas LVAM borrowed the principal amount of $3,000,000, with interest to be charged at a variable rate to be adjusted at the maturity date. The BMIC Loan matures on October 12, 2022, and contains an auto renewal period of three months. As of September 30, 2024 and December 31, 2023, $464,000 and $547,000, respectively, are included in Current portion of long-term debt, net on the consolidated balance sheet.

 

On October 13, 2021, LVAM entered into a loan agreement with Lee Wilson Tsz Kin (“Wilson Loan”), a related party, whereas LVAM borrowed the principal amount of $3,000,000, with interest to be charged at a variable rate to be calculated at the maturity date. The Wilson Loan matures on October 12, 2022, and contains an auto renewal period of nine months. As of September 30, 2024, $1,070,000 is included in the Current portion of long-term debt, net on the consolidated balance sheet. As of December 31, 2023 $2,131,000 is included in the Current portion of long-term debt, net on the consolidated balance sheet.

 

On November 2, 2021, AMRE LifeCare entered into a loan agreement (“LifeCare Agreement”) with Pinnacle Bank, (“Pinnacle Bank”) in the amount of $40,300,000. The LifeCare Agreement supported the acquisition of three medical facilities located in Fort Worth, Texas, Plano, Texas, and Pittsburgh, Pennsylvania for a purchase price of $62,000,000. These assets are classified as investments, real estate on the consolidated balance sheet, and serves as collateral for the LifeCare Agreement. The purchase price has been allocated as $32,100,000, $12,100,000, and $1,500,000 for the facility, land and site improvements, respectively. Also included in the value of the property is $15,901,000 of intangible assets with estimated useful lives ranging from 1 to 11 years. The net book value of the assets acquired as of September 30, 2024 is approximately $41,570,000. The LifeCare Agreement calls for the principal amount of the in equal, consecutive monthly installments based upon a twenty-five (25) year amortization of the original principal amount of the LifeCare Agreement at an initial rate of interest equal to the interest rate determined in accordance as of July 29, 2022 provided, however, such rate of interest shall not be less than 4.28%, with the first such installment being payable on August 29, 2022 and subsequent installments being payable on the first day of each succeeding month thereafter until the maturity date, at which time any outstanding principal and interest is due in full. The affective interest rate at September 30, 2024 was 9.5%. As of December 31, 2023, the outstanding principal and interested approximates $41,331,000 and is included in current portion of long-term debt, on the consolidated balance sheet. As of September 30, 2024, the outstanding principal and interested approximates $45,147,000 and is included in current portion of long-term debt, on the consolidated balance sheet. Interest expense for the nine months ended September 30, 2024 and 2023 approximated $2,939,000 and $2,632,000, respectively. This note is in default and demand was made for final payment to be made by December 22, 2023. This amount is past due.

 

 

On March 17, 2022, AMRE Winter Haven, LLC (“AMRE Winter Haven”) and Pinnacle Bank (“Pinnacle”) entered into a term loan (“Pinnacle Loan”) whereas Pinnacle lent to AMRE Winter Haven the principal sum of $2,990,000, maturing on March 7, 2024 (later extended to July 7, 2024) to acquire a medical facility located in Winter Haven, Florida for a purchase price of $4,500,000. The assets acquired are classified as investments, real estate on the consolidated balance sheet, and serves as collateral for the Pinnacle Loan. The purchase price has been allocated as $3,200,000, $1,000,000, and $222,000 for the facility, land and site and tenant improvements, respectively. Also included in the value of the property is $29,000 of intangible assets with an estimated useful life of approximately 5 years. The net book value of the assets acquired as of September 30, 2024 is approximately $4,380,000. Payments are to be made in equal, consecutive installments based on a 25-year amortization period with interest at 4.28%. The first installment is due January 1, 2023. This AMRE Winter Haven note is currently due, and has an effective interest rate of 9.6%. The outstanding principal and interest, net of debt issuance costs of $17,000, approximates $2,977,000 and is included in the current portion of long-term debt, net on the accompanying consolidated balance sheet at December 31, 2023. The outstanding principal and interest, approximates $2,968,000 and is included in current portion of long-term debt, net on the accompanying consolidated balance sheet at September 30, 2024. Interest expense equaled $179,000 and $185,000 for the nine months ended September 30, 2024 and 2023, respectively. This note was assumed by SMS Financial on August 15, 2024. This note is in default and demand was made for final payment to be made by December 22, 2023. This amount is past due.

 

On March 30, 2023, Premier Packaging, a subsidiary of the Company entered into a loan and security agreement with Union Bank & Trust Company for the principal amount of $790,000 and shall accrued interest at the rate of 7.44%. Principal and interest shall be repaid in the approximate amount of $14,000 through March 2029. This loan is collateralized by a Bobst Model Novacut and is guaranteed by DSS, Inc. As of September 30, 2024, the outstanding principal and interest approximates $634,000 of which $121,000 was included in the current portion of long-term debt, net, and the remaining balance of approximately $513,000 recorded as long-term debt. As of December 31, 2023, the outstanding principal and interest approximates $719,000 of which $112,000 was included in the current portion of long-term debt, net, and the remaining balance of approximately $607,000 recorded as long-term debt. Interest expense equaled $38,000 and $0 for the nine months ended September 30, 2024 and

 

A summary of scheduled principal payments of long-term debt, not including revolving lines of credit, subsequent to September 30, 2024, are as follows:

 

Year  Amount 
2024  $49,873,000 
2025   858,000 
2026   902,000 
2027   948,000 
2028   996,000 
Thereafter   3,739,000