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Note 5 - Debt
6 Months Ended
Jun. 30, 2020
Notes to Financial Statements  
Debt Disclosure [Text Block]
Note
5.
  Debt
 
The Company has a credit agreement with Amegy Bank which provides a
$4.0
million revolving line of credit and previously provided up to a
$3.0
million term loan which could be drawn through
October 24, 2016.
Amounts outstanding under the term loan reduce the availability under the revolving line of credit. The revolving line of credit is also subject to a borrowing base derived from
80%
of eligible accounts receivable (as defined) and the Company's minimum net worth covenant of
$20.0
million. The revolving line of credit bears interest at prime plus
0.50%
payable monthly. As of
June 30, 2020,
the Company had a
$0.2
million irrevocable standby letter of credit outstanding under the revolving line of credit.
 
On
August 16, 2016,
the Company drew
$2.7
million of the term loan and used the proceeds to fund the purchase of shares of its common stock in a private transaction. The term loan bears interest at
4.5%
per annum and is payable in monthly payments of interest only until
November, 2016,
followed by
47
equal monthly payments of principal and interest computed on a
60
-month amortization schedule and a
$0.6
million final payment of principal and interest due on
October 24, 2020.
 
On
July 16, 2018,
the Company amended its Credit Agreement with Amegy Bank to provide for an additional term loan of up to
$1.0
million that could be drawn by the Company through
July 12, 2019,
for the purpose of repurchases of its common stock. The additional term loan is evidenced by a promissory note bearing interest at
5.15%
per annum and payable in monthly installments of interest only through
July 12, 2019.
Thereafter, the note is payable in monthly installments sufficient to fully amortize the outstanding principal balance in
60
months with the balance of principal and accrued interest due on
July 12, 2023.
The amendment also revised the calculation of the fixed charge coverage ratio for the
three
quarters following the maturity date of the previous term loan.
 
Amounts outstanding under the additional term loan further reduce the availability under the Company's revolving line of credit with Amegy Bank. On
August 1, 2018,
the Company drew
$0.7
million of the additional term loan and used the proceeds to fund the purchase of
100,000
shares of its common stock in a private transaction. On
December 12, 2018,
the Company drew
$0.3
million of the additional term loan and used the proceeds to partially fund a purchase of
50,000
shares of its common stock in a private transaction. As of
June 30, 2020,
a total of
$1.6
million was outstanding on the
two
Amegy Bank term loans.
 
Reduced outstanding accounts receivable available as collateral under the Company's credit agreement with Amegy Bank has limited access to additional financing. Net losses in recent periods have also impacted compliance with the financial covenants under the Amegy Bank credit agreement, further impeding the Company's ability to obtain additional financing. On
March 26, 2020,
the Company entered into a Thirteenth Amendment to Credit Agreement (the “Thirteenth Amendment”) with Amegy Bank. The Thirteenth Amendment amended the minimum net worth covenant to require the Company to maintain tangible net worth (as defined therein) of
$4.0
million, determined on a quarterly basis. Under the Thirteenth Amendment, Amegy Bank also waived an existing default caused by the Company's failure to satisfy the old minimum net worth covenant as of
December 31, 2019.
On
May 12, 2020,
the Company entered into a Fourteenth Amendment to Credit Agreement (the “Fourteenth Amendment”) with Amegy Bank. The Fourteenth Amendment amended the line of credit to reduce the maximum borrowing capacity to
$3.0
million. Under the Fourteenth Amendment, Amegy Bank also waived an existing default caused by the Company's failure to satisfy both the minimum fixed charge coverage ratio through
March 31, 2020
and minimum tangible net worth as of
March 31, 2020.
The Company obtained a waiver from Amegy Bank of its failure to satisfy the fixed charge coverage ratio, the minimum tangible net worth, and the borrowing base for the quarter ended
June 30, 2020.
Current economic conditions make it likely that the Company will require additional waivers in subsequent periods of
2020.
 
On
April 15, 2020,
Wilhelmina International, Ltd. (the “Borrower”), a wholly-owned subsidiary of the Company, executed a Business Loan Agreement and a Promissory Note each dated
April 13, 2020 (
collectively, the “Sub PPP Loan Documents”), with respect to a loan in the amount of
$1.8
million (the “Sub PPP Loan”) from Amegy Bank. The Sub PPP Loan was obtained pursuant to the Paycheck Protection Program of the CARES Act administered by the U.S. Small Business Administration (the “SBA”). The Sub PPP Loan matures on
April 13, 2022
and bears interest at a rate of
1.00%
per annum. The Sub PPP Loan is payable in
18
equal monthly payments of
$104
thousand commencing
November 13, 2020.
 
On
April 18, 2020,
the Company executed a Business Loan Agreement and a Promissory Note each dated
April 17, 2020 (
collectively, the “Parent PPP Loan Documents”), with respect to a loan in the amount of
$128
thousand (the “Parent PPP Loan”) from Amegy Bank. The Parent PPP Loan was also obtained pursuant to the PPP. The Parent PPP Loan matures on
April 17, 2022
and bears interest at a rate of
1.00%
per annum. The Parent PPP Loan is payable in
18
equal monthly payments of
$7
thousand commencing
November 13, 2020.
 
Both the Sub PPP Loan and the Parent PPP Loan (collectively, the “PPP Loans”)
may
be prepaid at any time prior to maturity with
no
prepayment penalties. Both the Sub PPP Loan Documents and the Parent PPP Loan Documents contain various provisions related to the PPP, as well customary representations, warranties, covenants, events of default and other provisions. Neither of the PPP Loans is secured by either the Borrower or the Company, and both are guaranteed by the SBA. All or a portion of the PPP Loans
may
be forgiven by the SBA upon application by the Borrower or the Company, respectively, accompanied by documentation of expenditures in accordance with the SBA requirements under the PPP. In the event all or any portion of the PPP Loans is forgiven, the amount forgiven is applied to outstanding principal.
 
As of
June 30, 2020,
a total of
$2.0
million was outstanding on the PPP Loans.