Annual report [Section 13 and 15(d), not S-K Item 405]

Note Payable

v3.25.0.1
Note Payable
 12 Months Ended
Nov. 30, 2024
Debt Disclosure [Abstract]  
Note Payable

NOTE 4 – NOTE PAYABLE

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 November 30, 2024, and November 30, 2023, the Company paid interest of $918,496 and $802,482, respectively, which is reflected in interest expense on the accompanying consolidated statements of operations. The interest rates for the RCF and Term Note as of November 30, 2024 were 7.77% and 7.86%, respectively. The interest rates for the RCF and Term Note as of November 30, 2023 were 6.96% and 8.57%, respectively.

The average outstanding balance during the year ended November 30, 2024 and November 30, 2023 for the revolving line of credit was $2,496,171 and $1,848,344, respectively. The revolving line of credit balance as of November 30, 2024 and November 30, 2023 is $3,520,000 and $1,222,728, 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 November 30, 2024, and November 30, 2023, $21,237 and $21,631, respectively, of the debt issuance costs were amortized and are reflected in interest expense on the accompanying consolidated statements of operations.

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. On April 15, 2024, the Company terminated the interest rate swap agreement and recorded proceeds of $228,000.

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 November 30, 2024, and November 30, 2023, the note payable obligation was as follows:

 

 

 

November 30, 2024

 

 

November 30, 2023

 

Note payable - Susser

 

$

8,628,700

 

 

$

8,765,082

 

Unamortized debt issuance costs - Susser

 

 

(148,167

)

 

 

(169,404

)

Net note payable

 

$

8,480,533

 

 

$

8,595,678

 

Current portion of note payable

 

$

170,488

 

 

$

165,641

 

Long-term note payable, net of debt issuance costs

 

 

8,310,045

 

 

 

8,430,037

 

Total

 

$

8,480,533

 

 

$

8,595,678

 

 

Future principal payments under the note payable obligation are as follows:

 

Years ending November 30:

 

Amount

 

2025

 

$

170,488

 

2026

 

 

187,035

 

2027

 

 

201,985

 

2028

 

 

213,753

 

2029

 

 

227,438

 

Thereafter

 

 

7,628,001

 

Less: Unamortized debt issuance costs

 

 

(148,167

)

Total

 

$

8,480,533

 

 

Interest expense on the note payable for the years ended November 30, 2024 and November 30, 2023 was as follows:

 

 

 

November 30, 2024

 

 

November 30, 2023

 

Interest expense on notes payable - Susser

 

$

521,619

 

 

$

136,958

 

Debt issuance costs - Susser

 

 

10,569

 

 

 

3,631

 

Total interest expense

 

$

532,188

 

 

$

140,589

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

During fiscal 2024 and 2023, the Company recorded gross interest expense of $941,495 and $824,113, respectively. The Company capitalized $409,307 and $683,524, respectively, of interest expense related to the construction of the Company's new facility in North Carolina for fiscal 2024 and 2023. The net interest expense recorded for fiscal 2024 and 2023 was $532,188 and $140,589, respectively.