Note 10 - Long-term Debt

6 Months Ended

Mar. 31, 2023

Notes to Financial Statements

Debt Disclosure [Text Block]

10. Long-Term Debt

The Company had no long-term debt outstanding at March 31, 2023 and September 30, 2022.

In May 2022, the Company entered into a credit agreement (the “Agreement”) with Amerisource Funding, Inc, as administrative agent and as a lender, and Woodforest National Bank, as a lender. Available borrowings under the Agreement are determined by a borrowing base with a maximum availability of $10 million. The borrowing base is determined based upon certain of the Company's domestic assets which include (i) 70% loan to value of the Company's property located at 6410 Langfield Road in Houston, Texas (the “Property”), (ii) 50% of forced liquidation value of equipment, (iii) 80% of certain accounts receivable and (iv) 50% of forced liquidation value of certain inventory (inventory borrowing base limited to 100% of borrowing base credit given toward accounts receivable). The Agreement is for a two-year term with all funds borrowed due at the expiration of the term. The interest rate on borrowed funds is the Wall Street prime rate (with a minimum of 3.25%) plus 4.00%. The Company is required to make monthly interest payments on borrowed funds. Borrowings under the Agreement will be principally secured by the Property and the Company's domestic equipment, inventory and accounts receivables. In addition, certain domestic subsidiaries of the Company have guaranteed the obligations of the Company under the Agreement and such subsidiaries have secured the obligations by pledging certain assets. The Agreement requires the Company to maintain a minimum consolidated tangible net worth of $100 million.  At March 31, 2023, the Company was compliant with all covenants under the Agreement.

As discussed in Note 7, the Property was sold in February 2023.  The sale reduced the Company's borrowing availability under the Agreement to $5.5 million at  March 31, 2023.  The Company is currently in discussions with one of the lenders on a new credit facility which would be secured by other alternative domestic assets.

Debt issuance costs of $0.2 million were incurred in connection with the Agreement. These costs were capitalized in other assets on the consolidated balance sheet and are being amortized to interest expense over the term of the Agreement.