Note 10 - Line of Credit and Notes Payable

12 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Debt Disclosure [Text Block]

Note

10

 – Line of Credit

and

Notes Payable

Credit Agreement

In

December 2018,

the Company entered into a credit agreement with a new lender. This credit agreement contains a

$2.5

million revolving line of credit and matures on

December 17, 2019.

The line of credit requires quarterly interest payments based on the prevailing Wall Street Journal Prime Rate (

5.0%

at

September 30, 2019),

and the interest rate is reset monthly. The credit agreement provides that the Company maintain a fixed charge coverage ratio (net cash flow to total fixed charges) of

not

less than

1.25

to

1.0

measured annually. At

September 30, 2019,

there was

no

amount outstanding under the line of credit. Future borrowings under the line of credit are limited to the lesser of

$2.5

million or the sum of

80%

of eligible accounts receivable and

25%

of eligible Telco segment inventory. Under these limitations, the Company’s total line of credit borrowing capacity was

$2.5

million at

September 30, 2019.

Subsequent to

September 30, 2019,

the Company renewed its revolving bank line of credit for

one

more year to a maturity date of

December 17, 2020. 

As part of this renewal, the revolving bank line of credit increased from

$2.5

million to

$4.0

million.  The other terms of the renewal were essentially the same.

Forbearance Agreement

On

May 31, 2018,

the Company entered into a forbearance agreement with BOKF, NA dba Bank of Oklahoma (“Lender”) relating to the Company’s Amended and Restated Credit and Term Loan Agreement (“Credit and Term Loan Agreement”).

Under the forbearance agreement, which was Amendment Ten to the Credit and Term Loan Agreement, Lender agreed to delete the fixed charge ratio covenant from the Credit and Term Loan Agreement and to forbear from exercising its rights and remedies under the Credit and Term Loan Agreement through

October 31, 2018

subject to certain requirements and commitments from the Company.

The Company had

two

term loans outstanding under the Credit and Term Loan Agreement. The

first

outstanding term loan had an outstanding balance of

$0.6

million and was due on

October 31, 2018,

with monthly principal payments of

$15,334

plus accrued interest. The interest rate was the prevailing

30

-day LIBOR rate plus

1.4%

(

3.66%

at

October 31, 2018).

The

second

outstanding term loan had an outstanding balance of

$1.5

million and was due

October 31, 2018,

with monthly principal and interest payments of

$118,809.

The interest rate on the term loan was a fixed interest rate of

4.40%.

During the

first

quarter of

2019,

the Company extinguished its

two

outstanding term loans under the forbearance agreement by paying the outstanding balances of

$2.1

million, and extinguished its line of credit under the forbearance agreement by paying the outstanding balance of

$0.5

million.

Since the Company extinguished all of its outstanding term loans and line of credit outstanding under the forbearance agreement in the

first

quarter of

2019,

the Company is

no

longer subject to the terms of the forbearance agreement and was released from the Credit and Term Loan Agreement.

Fair Value of Debt

The carrying value of the Company’s variable-rate line of credit approximates its fair value since the interest rate fluctuates periodically based on a floating interest rate.