NOTES PAYABLE |
6 Months Ended |
|---|---|
Jun. 30, 2025 | |
| NOTES PAYABLE | |
| NOTES PAYABLE | 3. NOTES PAYABLE
The Company has a mortgage note payable to Burke & Herbert Bank & Trust Company, formerly Summit Community Bank (the “Bank”) for the construction of its North Carolina facility. The note carries a ten-year term at a fixed interest rate of 3.64% annually per the Promissory Note Rate Conversion Agreement, with monthly payments of $22, and is secured by all of the assets of Smith-Carolina and a guarantee by the Company. The balance of the note payable at June 30, 2025 and December 31, 2024 was $1,067 and $1,166 respectively.
The Company also has a note payable to the Bank in the amount of $1,425 and $1,536 as of June 30, 2025 and December 31, 2024 respectively. The loan is collateralized by a first lien position on the Midland, VA plant, building, and assets. The interest rate per the Promissory Note is fixed at 3.99% per annum, with principal and interest payments payable monthly in the amount of $27. The loan matures on March 27, 2030.
On February 10, 2022, the Company completed the financing for its acquisition of certain real property in Midland, VA from the fourth quarter of 2021, totaling approximately 29.8 acres, with a note payable to the Bank. The loan is collateralized by a first lien position on the related real property. The interest rate is fixed at 4.09% per annum, with principal and interest payments payable monthly over 180 months for $21. The loan matures on February 10, 2037. The balance of the note payable on June 30, 2025 and December 31, 2024 was $2,323 and $2,379 respectively.
The Company additionally has one smaller installment loan with an annual interest rate of 2.90% maturing in 2025, with a balance at June 30, 2025 and December 31, 2024 totaling $7 and $13 respectively.
Under the loan covenants with the Bank, the Company is limited to annual capital expenditures of $5,000 and must maintain tangible net worth of $25,000. The Company is in compliance with the tangible net worth loan covenant and has received waivers from the Bank for the capital expenditure loan covenant as of June 30, 2025 and December 31, 2024.
In addition to the notes payable discussed above, the Company has a revolving line of credit evidenced by promissory note with the Bank, with the available amount of $5,000 with no balance outstanding as of June 30, 2025 and December 31, 2024. The line of credit is evidenced by a commercial revolving promissory note, which carries a variable interest rate of prime, with a floor of 4.99%. The line of credit was renewed on January 1, 2025 and matures January 1, 2026. The amount available is based on the lower of the maximum $5,000 or 50% of eligible cash, inventory, and accounts receivable balances at the financial statement date. Key provisions of the line of credit require the Company (i) to obtain bank approval for capital expenditures in excess of $5,000 during the term of the loan and (ii) to obtain bank approval prior to its funding of any acquisition. The line of credit is collateralized by a first lien position on the Company's accounts receivable, inventory, and equipment. |