Page 21 - FY 2021-2022 Audited Financial Statements

Child Care Resource Center, Inc. Notes to Financial Statements
Note 6 – Property and Equipment (continued)
Depreciation and amortization expense for the years ended June 30, 2022 and 2021, amounted to $2,134,508 and $1,979,362, respectively.
Commitments for future construction costs are reported in Note 11.
Note 7 – Debt
CCRC has a revolving line of credit with Pacific Premier Bank with a maximum borrowing allowed of $15,000,000 with a maturity date of January 15, 2023. In December of 2021, CCRC signed an amended agreement to increase the line of credit to a maximum borrowing rate of $45,000,000 on a temporary basis through August 31, 2022, due to the anticipated level of funds needed for operations should advances on contracts with the state during this time frame not be received during this time frame. Subsequent to August 31, 2022, the borrowing reverted back to $15,000,000. Borrowings bear an interest rate equal to the Wall Street Journal prime rate computed based on a 365/360 basis. The effective interest rate at June 30, 2022 and 2021, was 2.75% per annum. Collateral used to secure the line of credit does not include any property acquired or improved with federal funds from the DHHS – ACF for the benefit of the Head Start Program. CCRC is required to maintain a debt coverage ratio of no less than 1.5 to 1.0 and a current ratio of no less than 1.1 to 1.0. At June 30, 2022 and 2021, there were no outstanding balances on the line of credit.
On August 15, 2017, CCRC entered into a tax-exempt mortgage loan payable with Pacific Premier Bank as issued by the California Enterprise Development Authority (CEDA) in the amount of $5,355,000 to acquire land and a building located in Palmdale, California.
Monthly principal and interest payments of $38,422 began October 1, 2017, and were originally scheduled to continue through September 1, 2032. During the year ended June 30, 2019, CCRC made a principal payment of $594,485 that modified the payment period to end on September 30, 2030. The mortgage loan payable bears a fixed annual interest rate equal to 3.5% from October 1, 2017 to August 31, 2027, and will be adjusted thereafter based on the five-year treasury maturity rate as set by the Federal Reserve Bank plus 2.5% from September 1, 2027 to September 1, 2030. CCRC is also subject to various affirmative and negative covenants. The loan is secured by the acquired property.
Scheduled payments of principal on the mortgage loan for the future years are as follows:
Years Ending June 30,
2023 $ 2024
2025
2026
2027
Thereafter
$
350,315 362,687 379,032 389,596 403,648
1,394,646 3,279,924
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