Long Term Debt
|6 Months Ended|
Jun. 30, 2022
|Debt Disclosure [Abstract]|
|Long Term Debt||
Long-term debt consists of the following:
Schedule of Long Term Debt
Revolving Credit, Term Loan and Capital Line Agreement
The Company entered into a Second Amended and Restated Revolving Credit, Term Loan and Security Agreement, dated May 8, 2020 (“Loan Agreement”), with PNC National Association (“PNC”), acting as agent and lender. The Loan Agreement provides the Company with the following credit facility with a maturity date of March 15, 2024: (a) up to $18,000,000 revolving credit (“revolving credit”) and (b) a term loan (“term loan”) of approximately $1,742,000, requiring monthly installments of $35,547. The maximum that the Company can borrow under the revolving credit is based on a percentage of eligible receivables (as defined) at any one time reduced by outstanding standby letters of credit and borrowing reductions that our lender may impose from time to time. The Loan Agreement, as amended, also provides a capital expenditure line of up to $1,000,000 with advances on the line, subject to certain limitations, permitted for up to twelve months starting May 4, 2021 (the “Borrowing Period”). Only interest is payable on advances during the Borrowing Period. At the end of the Borrowing Period, the total amount advanced under the line will amortize equally based on a five-year amortization schedule with principal payment due monthly plus interest. At the maturity date of the Loan Agreement, as amended, any unpaid principal balance plus interest, if any, will become due. During the second quarter of 2022, the Company advanced approximately $524,000 under the capital line which requires monthly installments in principal of approximately $8,700 plus interest, starting June 1, 2022. The advance was used to purchase the underlying asset under a previous finance lease.
On March 29, 2022, the Company entered into an amendment to its Loan Agreement with its lender which provided, among other things, the following:
In connection with the amendment, we paid PNC a fee of $15,000 which is being amortized over the remaining term of the Loan Agreement, as amended, as interest expense-financing fees.
The Company’s credit facility under its Loan Agreement, as amended, with PNC contains certain financial covenants, along with customary representations and warranties. A breach of any of these financial covenants, unless waived by PNC, could result in a default under our credit facility allowing our lender to immediately require the repayment of all outstanding debt under our credit facility and terminate all commitments to extend further credit. The Company was not required to perform testing of the FCCR requirement in the first quarter of 2022 pursuant to the March 29, 2022 amendment as discussed above, otherwise, it met all of its other financial covenant requirements in the first quarter of 2022. The Company failed to meet it FCCR requirement in the second quarter of 2022; however, this non-compliance was waived by the Company’s lender pursuant to an amendment to our Loan Agreement dated August 2, 2022 (See “Note 15 – Subsequent Event – Credit Facility” for a discussion of this waiver and additional provisions of this amendment). Other than the FCCR, the Company met all of its other financial covenant requirements in the second quarter of 2022.
Pursuant to the Loan Agreement, as amended, payment of annual rate of interest due on the revolving credit is at prime (4.75% at June 30, 2022) plus 2% or LIBOR plus 3.00% and the term loan and the capital expenditure line at prime plus 2.50% or LIBOR plus 3.50%. Under the LIBOR option of interest payment, a LIBOR floor of 0.75% applies in the event that LIBOR falls below 0.75% at any point in time.
The Company may terminate its Loan Agreement, as amended, upon 90 days’ prior written notice upon payment in full of our obligations under the Loan Agreement. No early termination fee will apply if the Company pays off its obligations under the Loan Agreement after May 7, 2022.
At June 30, 2022, the borrowing availability under the Company’s revolving credit was approximately $4,754,000 based on our eligible receivables and includes a reduction in borrowing availability of approximately $3,020,000 from outstanding standby letters of credit.
The entire disclosure for long-term debt.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef