Quarterly report pursuant to Section 13 or 15(d)

Notes Payable

v3.23.3
Notes Payable
9 Months Ended
Aug. 31, 2023
Debt Disclosure [Abstract]  
Notes Payable

Note 5 – Notes Payable

On May 20, 2016, the Company entered into a Credit Agreement (“Agreement”) with Texas Capital Bank, National Association (“TCB”) for a term loan of $8.0 million in senior credit facilities. The proceeds of the term loan were used by the Company to fund repurchases of the Company’s common stock. Subject to the terms of the Agreement, on May 20, 2016, TCB advanced the Company $100.00. On July 1, 2016, TCB advanced the remaining principal amount of $7,999,900 per a promissory note dated May 20, 2016 between the Company and TCB, at a rate of 3.75% per annum plus LIBOR, payable monthly with a maturity date of July 2021 extended to June 2022 with Second Amendment. On August 26, 2016, the Company entered into a First Amendment to Credit Agreement with TCB. Pursuant to terms of the First Amendment to Credit Agreement, on August 26, 2016, TCB made an additional advance to the Company in principal amount of $2,133,433 per an Amended and Restated Promissory Note dated August 26, 2016 between the Company and TCB. The additional proceeds of the term loan were used by the Company to fund the extinguishment of revenue sharing agreements. On June 11, 2018, the Company entered into a Second Amendment to Credit Agreement with TCB. Pursuant to the terms of the Second Amendment to Credit Agreement, TCB increased the current outstanding principal amount of the loan from TCB by $9,000,000 to finance a portion of the purchase price of the Cord:Use Purchase. In connection therewith, Cryo-Cell executed and delivered to TCB a Second Amended and Restated Promissory Note, in the principal amount of $15,500,000. As of July 1, 2022, the Company paid the TCB term loan in full. The Company has no further obligations under the Credit Agreement.

On July 18, 2022, the Company entered into a Credit Agreement (“Agreement Susser”) with Susser Bank, a Texas state bank, as administrative agent (“Susser”) on behalf of itself and the other lenders (collectively, the “Lenders”) for (i) an unsecured revolving line of credit in an aggregate principal amount of up to $10,000,000 (the “RCF”); and (ii) a term loan facility in an original principal amount of $8,960,000 (the “Term Loan Susser” and together with the RCF collectively, the “Loans”). In connection with the RCF the Company entered into a Revolving Credit Line, in favor of Susser, in the stated principal amount of $10,000,000 (the “RCF Note”), and in connection with the Term Loan the Company entered into a Term Note, in favor of Susser, in the stated principal amount of $8,960,000 (the “Term Note” and together with RCF Note, collectively, the “Notes”). The Loans bear interest at the Company’s option at: (a) the Base Rate, which is the highest of (i) the rate of interest published by The Wall Street Journal, from time to time, as the “U.S. Prime Rate”, (ii) the federal funds rate plus 0.5% and (iii) the Monthly SOFR rate plus 1.0% (subject in each case to a floor of 5.5%), plus 4.25% or (b) the Monthly SOFR plus 3.25% (subject to a floor of 4.5%). The RCF matures on July 18, 2025 and the Term Note matures on July 18, 2032. As of the three months ended August 31, 2023 and 2022, the Company paid interest of $200,638 and $89,585, respectively, which is reflected in interest expense on the accompanying consolidated statements of income. As of the nine months ended August 31, 2023 and 2022 the Company paid interest of $607,319 and $89,585, respectively, which is reflected in interest expense on the accompanying consolidated statements of income. The interest rates for the RCF and Term Note as of August 31, 2023 were 8.56% and 6.96%, respectively.

The average outstanding balance during the nine months ended August 31, 2023 for the revolving line of credit was $1,840,794. The average outstanding balance during the twelve months ended November 30, 2022 for the revolving line of credit was $3,578,207. The revolving line of credit balance as of August 31, 2023 and November 30, 2022 was $2,722,728 and $2,272,728, respectively, and is reflected on the accompanying balance sheet.

The Company incurred debt issuance costs related to the term loan in the amount of $196,501 which is recorded as a direct reduction of the carrying amount of the note payable and amortized over the life of the loan. As of the three months ended August 31, 2023 and 2022, $5,396 and $0, respectively, of the debt issuance costs were amortized and are reflected in interest expense on the accompanying consolidated statements of income. As of the nine months ended August 31, 2023 and 2022, $16,258 and $0, respectively, of the debt issuance costs were amortized and are reflected in interest expense on the accompanying consolidated statements of income.

On March 27, 2023, the Company entered into an interest rate swap agreement with Susser to manage exposure to interest rate risk related to its variable rate debt obligation under the Term Note. The swap agreement had a notional amount equal to the Term Loan. The agreement is to pay the Company monthly SOFR plus 3.25% on the notional amount and the Company is to pay a fixed rate of interest equal to 6.96%. The effective date of the amended term loan was March 27, 2023 with a maturity date of July 29, 2032.

The Company is required to pay a commitment fee equal to 0.5% times the daily average unused portion of the RCF.

The Agreement requires the Company to maintain a Leverage Ratio, determined as of the last day of each quarter for the four-fiscal quarter period ending on the date of determination, of no more than 3.50 to 1.00. The Agreement also requires the Company to maintain a Debt Service Coverage Ratio of no less than 1.25 to 1.00 determined as of the last day of each quarter for the four-fiscal quarter period ending on the date of determination.

As of August 31, 2023 and November 30, 2022, the note payable obligation was as follows:

 

 

 

August 31, 2023

 

 

November 30, 2022

 

Note payable - Susser

 

$

8,805,747

 

 

$

8,921,437

 

Unamortized debt issuance costs - Susser

 

 

(174,776

)

 

 

(191,035

)

Net note payable

 

$

8,630,971

 

 

$

8,730,402

 

Current portion of note payable

 

$

162,659

 

 

$

150,527

 

Long-term note payable, net of debt issuance costs

 

 

8,468,312

 

 

 

8,579,875

 

Total

 

$

8,630,971

 

 

$

8,730,402

 

 

Interest expense on the note payable for the three and nine months ended August 31, 2023 and 2022 was as follows:

 

 

 

For the three months ended

 

 

For the nine months ended

 

 

 

August 31, 2023

 

 

August 31, 2023

 

Interest expense on notes payable - Susser

 

$

200,638

 

 

$

607,319

 

Debt issuance costs - Susser

 

 

5,396

 

 

 

16,258

 

Total interest expense

 

$

206,034

 

 

$

623,577

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months ended

 

 

For the nine months ended

 

 

 

August 31, 2022

 

 

August 31, 2022

 

Interest expense on notes payable - TCB

 

$

370

 

 

$

18,485

 

Interest expense on notes payable - Susser

 

$

89,585

 

 

$

89,585

 

Debt issuance costs - TCB

 

 

592

 

 

 

10,368

 

Total interest expense

 

$

90,547

 

 

$

118,438