Long-Term Debt

9 Months Ended

Mar. 31, 2022

Long-Term Debt

Long-Term Debt

NOTE 8 - Long-Term Debt

As of March 31, 2022 and June 30, 2021, the Company had a revolving line of credit of $11,000,000 (“Revolver Agreement”) which expires in June 2024. Also, at June 30, 2021, long-term debt consisted of a term loan from the U.S. Small Business Administration through its Payroll Protection Program. All amounts borrowed under this loan were forgiven in the first quarter of fiscal 2022.

Outstanding balances and interest rates as of March 31, 2022 and June 30, 2021 are as follows (dollars in thousands):

	March 31, 2022				June 30, 2021
	Outstanding		Interest Rate		Outstanding		Interest Rate
Revolving line of credit	$	—	n/a		$	—	n/a
Term loans		—	n/a	%		3,904	1	%
		—				3,904
Less: current maturities		—				(2,386)
Long-term debt	$	—			$	1,518

The Revolver Agreement also provides for a LIBOR-based interest rate option of LIBOR plus 1.15% to 2.00%, depending on the ratio of outstanding debt to EBITDA, which is to be measured and adjusted quarterly, a prime rate-based option of the prime rate plus 0.25% and other terms and conditions as more fully described in the Revolver Agreement. The Company’s obligations under the Revolver Agreement continue to be secured by substantially all of its domestic assets, including but not limited to, deposit accounts, accounts receivable, inventory, equipment and fixtures and intangible assets. In addition, the Company’s wholly owned subsidiaries, with the exception of the Company’s foreign subsidiaries, have issued guarantees and pledges of all of their assets to secure the Company’s obligations under the Revolver Agreement. All of the outstanding common stock of the Company’s domestic subsidiaries and 65% of the common stock of the Company’s foreign subsidiaries has been pledged to secure the Company’s obligations under the Revolver Agreement. The Revolver Agreement contains various restrictions and covenants including, among others, restrictions on payment of dividends, restrictions on borrowings and compliance with certain financial ratios, as defined in the Revolver Agreement.

The Company received $3,904,000 in loans (the "PPP Loan"), entered into between the Company and HSBC Bank USA N.A., as lender (the "Lender”). The Lender made the loans pursuant to the Paycheck Protection Program (the "PPP"), created by Section 1102 of the CARES Act and governed by the CARES Act, Section 7(a)(36) of the Small Business Act, any rules or guidance that has been issued by the Small Business Association (“SBA”) implementing the PPP and acting as guarantor, or any other applicable loan program requirements, as defined in 13 CFR § 120.10, as amended from time to time.

During the first quarter of fiscal 2022, the PPP Loans were forgiven in their entirety, in accordance with guidelines set forth in the PPP. The Company recognized a gain on the extinguishment of debt in the first quarter of 2022 in the amount of $3,904,000 within the other income (expense) section in the accompanying condensed consolidated statements of income. Under the PPP, the SBA reserves the right to audit PPP forgiveness applications for a period of six years from the date of forgiveness. The SBA has indicated that it will audit all of those that are in excess of $2 million.