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DEBT AND DEBT - RELATED PARTIES
 9 Months Ended
Sep. 30, 2022
Debt Disclosure [Abstract]  
DEBT AND DEBT - RELATED PARTIES

5. DEBT AND DEBT - RELATED PARTIES

 

The following is a summary of the Company’s debt outstanding as of September 30, 2022, and December 31, 2021:

 

   September 30, 2022   December 31, 2021 
Senior Secured Promissory Notes  $1,025,000   $1,305,000 
Senior Secured Promissory Notes - Related Parties   750,000    750,000 
Fixed-Rate Mortgage Loans   30,695,361    31,407,503 
Variable-Rate Mortgage Loans   4,919,504    5,063,841 
Other Debt, Subordinated Secured   

741,000

    

741,000

 
Other Debt, Subordinated Secured - Related Parties   150,000    150,000 
Other Debt, Subordinated Secured - Seller Financing   65,361    93,251 
Debt Instrument, Gross   38,346,641    39,510,595 
Unamortized Discount and Debt Issuance Costs   (868,561)   (1,243,071)
           
Debt Instrument, Net of Discount  $37,478,080   $38,267,524 
As presented in the Consolidated Balance Sheets:          
           
Current Maturities of Long Term Debt, Net  $2,049,750   $6,312,562 
Short term debt – Related Parties, Net   150,000    150,000 
Debt, Net   34,528,330    31,054,962 
Debt – Related Parties, Net   750,000    750,000 

 

The weighted average interest rate and term of our fixed rate debt are 4.03% and 16.33 years, respectively, as of September 30, 2022. The weighted average interest rate and term of our variable rate debt are 5.90% and 16.11 years, respectively, as of September 30, 2022.

 

Corporate Senior and Senior Secured Promissory Notes

 

As of September 30, 2022, and December 31, 2021, the senior secured notes are subject to annual interest ranging from 10% to 11% and initially matured on October 31, 2021. These notes were extended to June 30, 2023 and as consideration the Company modified the outstanding warrants to extend the life and additional 1.67 years. As a result of the warrant modification, the Company recorded the incremental increase in fair value of $844,425 as a debt discount which will be amortized over the new life of the loans.

 

 

Mortgage Loans and Lines of Credit Secured by Real Estate

 

Mortgage loans and other debts such as line of credit here are collateralized by all assets of each nursing home property and an assignment of its rents. Collateral for certain mortgage loans includes the personal guarantee of Christopher Brogdon, formerly but no longer a related party, or corporate guarantees. Mortgage loans for the periods presented consisted of the following:

 

   Number of   Total Face   Total Principal Outstanding as of 
State  Properties   Amount   September 30, 2022   December 31, 2021 
Arkansas(1)   1   $5,000,000   $3,937,978   $4,058,338 
Georgia(2)   5   $17,765,992   $16,156,093   $16,581,232 
Ohio   1   $3,000,000   $2,728,599   $2,728,599 
Oklahoma(3)   6   $13,331,325   $12,792,194   $12,895,890 
    13   $39,097,317   $35,614,825   $36,264,059 

 

(1)The mortgage loan collateralized by this property is 80% guaranteed by the USDA and requires an annual renewal fee payable in the amount of 0.25% of the USDA guaranteed portion of the outstanding principal balance as of December 31 of each year. Guarantors under the mortgage loan include Christopher Brogdon. Mr. Brogdon has assumed operations of the facility and is making payments of principal and interest on the loan on our behalf in lieu of paying rent on the facility to us. During the nine months ended September 30, 2022, the Company recognized other income of $118,716 for repayments on the loan.
  
(2)The Company has refinanced two of its mortgages that would have matured in June and October of 2021 amounting to $2,961,167 and $3,289,595, to extend their maturity dates to May 2024 for both.
  
(3)The Company refinanced all three mortgages in July 2021, that would have matured in June and July of 2021 amounting to $2,065,969, $750,000, and $500,000, to extend their maturity dates to June, 2027 for all three. Additionally, the Company has refinanced the primary mortgage at the Southern Hills Campus, for 35 years at 2.38%

 

Subordinated, Corporate and Other Debt

 

Other debt due at September 30, 2022 and December 31, 2021 includes unsecured notes payable issued to entities controlled by the Company used to facilitate the acquisition of the nursing home properties.

 

       Principal Outstanding at   Stated Interest   
Property  Face Amount   September 30, 2022   December 31, 2021   Rate  Maturity Date
Goodwill Nursing Home (1)  $2,030,000   $741,000   $741,000   13% Fixed  December 31, 2019
Goodwill Nursing Home - Related Party (1)  $150,000   $150,000   $150,000   13% Fixed  December 31, 2019
Higher Call Nursing Center (2)  $150,000   $65,361   $93,251   8% Fixed  April 1, 2024
                      
        $956,361   $984,251       

 

 

Our corporate debt at September 30, 2022, and December 31, 2021 includes unsecured notes and notes secured by all assets of the Company not serving as collateral for other notes.

 

       Principal Outstanding at   Stated Interest   
Series  Face Amount   September 30, 2022   December 31,2021   Rate  Maturity Date
                   
10% Senior Secured Promissory Notes   1,670,000    1,025,000    1,305,000   10.0% Fixed  June 30, 2024
11% Senior Secured Promissory Notes – Related Party   975,000    750,000    750,000   10.0% Fixed  June 30, 2024
                      
        $1,025,000   $2,055,000