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LOANS PAYABLE
9 Months Ended
Dec. 31, 2023
Debt Disclosure [Abstract]  
LOANS PAYABLE

NOTE 6. LOANS PAYABLE

 

On April 2, 2022, the Company and Elite Labs entered into a Loan and Security Agreement (the “EWB Loan Agreement”) with East West Bank (“EWB”). Pursuant to the EWB Loan Agreement, the Company and Elite Labs received one term loan for a principal amount of $12,000,000 (the “EWB Term Loan”) and a revolving line of credit up to $2,000,000 (the “EWB Revolver,” together with the “EWB Term Loan,” the “EWB Loans”), each of which shall be used for working capital. The EWB Term Loan bears interest at a rate of 9.73% (1.73% plus the prime rate (“Prime”)) and is repayable over five years, maturing on May 1, 2027. The EWB Revolver bears interest at a rate of (8.87% (0.87% plus Prime)) and matures on May 1, 2027. The total transaction costs associated with the EWB Term Loan incurred as of March 31, 2023, were $40,120, which are being amortized on a monthly basis over five years, beginning in April 2022. The EWB Loans are secured by a security interest in the personal property of the Company and Elite Labs. The EWB Loan Agreement contains customary representations, warranties and covenants. These covenants include, but are not limited to, maintaining maximum leverage ratios of 3.50 to 1.00, minimum liquidity of $5,000,000, minimum cash of $1,000,000, a fixed charge coverage ratio of 1.25 to 1.00 and restrictions on mergers or sales of assets and debt borrowings. As of March 31, 2023, the principal and interest on the EWB Term Loan has been paid in full by the Company and the EWB Loan Agreement is terminated.

 

In place of the EWB Term Loan, the Company has entered into a collateralized promissory note with individual lenders with rates comparable to the EWB Term Loan but with less restrictive covenants (a “Promissory Note”). As of June 2, 2023, a Promissory Note was placed with Nasrat Hakim, CEO and Chairman of the Board of Directors, for $3,000,000. The Promissory Note has an interest rate of 9% for the first year and 10% for an optional second year and the proceeds will be used for working capital and other business purposes.

 

Loans payable consisted of the following:

 

   December 31, 2023   March 31, 2023 
Mortgage loan payable 4.75% interest and maturing June 2032  $2,438,958   $2,472,923 
Equipment and insurance financing loans payable, between 7.10% and 12.02% interest and maturing between January 2024 and October 2025   158,726    259,611 
Less: Current portion of loans payable   (190,607)   (200,032)
Long-term portion of loans payable  $2,407,077   $2,532,502 

 

The interest expense associated with the loans payable was $30,384 and $317,844 for the three months ended December 31, 2023 and 2022, and $101,478 and $579,109 for the nine months ended December 31, 2023 and 2022, respectively.

 

 

ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

Loan principal payments for the next five years are as follows:

 

     
Future principal balances    
Years ending March 31,   Amount 
2024 (excluding the nine months ended December 31, 2023)  $44,535 
2025   186,657 
2026   120,748 
2027   92,773 
2028   94,433 
2029 and thereafter   2,058,538 
Total remaining principal balance  $2,597,684