Item 2. Properties
ITEM
2. PROPERTIES
We
own a facility located at 165 Ludlow Avenue, Northvale, New Jersey (“165 Ludlow”) which contains approximately 15,000 square
feet of floor space. This real property and the improvements thereon are encumbered by a mortgage in favor of the New Jersey Economic
Development Authority (“NJEDA”) as security for a loan through tax-exempt bonds from the NJEDA to Elite. The mortgage contains
certain customary provisions including, without limitation, the right of NJEDA to foreclose upon a default by Elite. The NJEDA has declared
the payment of this bond to be in default (for more information on the NJEDA Bonds, see Part II, Item 7 “Management’s Discussion
and Analysis of Financial Condition and Results of Operations; Liquidity and Capital Resources; NJEDA Bonds”). We are currently
using the Facility as a laboratory, manufacturing, storage, distribution, and office space.
We
entered into an operating lease for a portion of a one-story warehouse, located at 135 Ludlow Avenue, Northvale, New Jersey (the “135
Ludlow Ave. lease”). The 135 Ludlow Ave. lease is for approximately 15,000 square feet of floor space and began on July 1, 2010.
During July 2014, we modified the 135 Ludlow Ave. lease in which the Company was permitted to occupy the entire 35,000 square feet of
floor space in the building (“135 Ludlow Ave. modified lease”).
The
135 Ludlow Ave. modified lease includes an initial term, which expired on December 31, 2016 with two tenant renewal options of five years
each, at the sole discretion of the Company. On June 22, 2016, the Company exercised the first of these renewal options, with such option
including a term that began on January 1, 2017 and expired on December 31, 2021. On June 30, 2021, the Company exercised the second of
the renewal options, with such option including a term that began on January 1, 2022 and expires on December 31, 2026.
The
135 Ludlow Ave. property required significant leasehold improvements and qualifications, as a prerequisite, for its intended future use.
While manufacturing, packaging, warehousing and regulatory activities are currently conducted at this location, additional renovations
and construction continue to occur as required by operations.
In
October 2020, the Company entered into an operating lease for office space in Pompano Beach, Florida (the “Pompano Office Lease”).
The Pompano Office Lease is for approximately 1,275 square feet of office space, with Elite taking occupancy on November 1, 2020. The
Pompano Office includes a three-month rent abatement from November 2020 through February 2021 and has a term of three years, ending
on October 31, 2023.
165
Ludlow and 135 Ludlow are hereinafter referred to as the “Northvale Facility”, or, together with Pompano, the “Facilities.”
Properties
used in our operation are considered suitable for the purposes for which they are used, at the time they are placed into service, and
are believed adequate to meet our needs for the reasonably foreseeable future.