Indebtedness (Tables)

6 Months Ended

Jun. 30, 2023

Indebtedness

Schedule of long-term debt

	June 30,		December 31,
	2023		2022
	($000’s omitted)
Line of credit payable to a financial institution; Interest rate is the greater of prime or 7% plus 1% per annum. (Interest rate 9.25% as of June 30, 2023) (A)	$	3,697	$	—
Equipment note obligations; Interest rate fixed for term of each funding based upon the Lender’s lease pricing at time of funding. (Interest rate/factor factor 1.79553% - 1.869304% at time of funding) (B)		—		491
Equipment financing lease obligations; Interest rate fixed for term of each funding based upon the Lender’s lease pricing at time of funding. (Interest rate/factor 1.822758% - 1.869304% at time of funding) (C)		—		10
		3,697		501
Less current portion		(3,697)		(501)
Long term debt	$	—	$	—

A) On June 27, 2023, the Company entered into a three-year financing agreement with a financial lending institution for an asset-based line of credit (the “Credit Facility”) with a maximum revolving credit of $7,000,000. The borrowing base under the Credit Facility is determined using 85% of eligible domestic and international accounts receivable balances of the ATG segment, less any other specific reserves. In general terms, ineligible receivables are defined as invoices unpaid over 90 days. The interest rate on the credit facility is equal to the greater of prime rate (as defined by JP Morgan Chase Bank) or 7% plus 1% per annum. The Company capitalized approximately $104,000 of loan origination costs related to the Credit Facility, which is collateralized by the Company’s assets.

The balance outstanding of approximately $3,697,000 as of June 30, 2023 (no balance outstanding as of December 31, 2022) consists of the loan payoff with a financial institution of approximately $3,638,000 on June 28, 2023 (resulting from borrowings in 2023 under the terms of the line of credit with the financial institution), and Credit Facility closing fees of approximately $59,000. In conjunction with the loan payoff, $320,000 of the pledged deposit of $500,000 provided to the financial institution on March 30, 2023 was returned to the Company. The remaining balance of $180,000 remains pledged as collateral with the financial institution for the Company’s credit card program.

In accordance with ASC 470-10-45-5 Classification of Revolving Credit Agreements Subject to Lock-Box Arrangements and Subjective Acceleration Clauses, borrowings outstanding under the Credit Facility that includes both a subjective acceleration clause and requirement to maintain a lock-box arrangement must be considered short-term obligations. As the Credit Facility includes both of the provisions, the outstanding balance of $3,697,000 is classified as a current liability on the Condensed Consolidated Balance Sheet as of June 30, 2023.

The Credit Facility contains two financial covenants required to be maintained by the Company at the end of each of its fiscal quarters. The Tangible Net Worth covenant requires the Company to maintain tangible net worth not less than $20,000,000. The Working Capital covenant requires the Company to maintain working capital not less than $10,000,000. The Company has met both covenant requirements as of June 30, 2023.

Based on the current net losses, working capital needs, and the previous banking relationship, initial concerns were raised about the Company’s ability to meet obligations as they become due.  However, the net loss from continuing

operations was negatively impacted by significant, non-recurring SG&A expenses (see MD&A) and income tax expense (see Note 8), both of which have materially impacted net losses in 2023.  The net loss from discontinued operations (see Note 2) was primarily driven by impairment charges related to winding down the OKC operations and divesting the CPG segment.  Therefore, based on the disposal of the unprofitable CPG segment, the current forecasted revenue and customer backlog, continued production improvements and efficiencies, and the new Credit Facility, Management has concluded that substantial doubt about the Company’s ability to continue as a going concern is alleviated.

B) The Company had an equipment loan facility in the amount of $1,000,000 available until July 9, 2021. This line was non-revolving and non-renewable and the term was 60 months. Monthly payments were fixed for the term of each funding based upon the Lender’s lease pricing in effect at the time of such funding. There was no balance outstanding as of June 30, 2023 ($491,000 outstanding as of December 31, 2022).

C) The Company had a lease line of credit for equipment financing in the amount of $1,000,000 available until June 28, 2018. This line was non-revolving and non-renewable and the term was 60 months. Monthly payments were fixed for the term of each funding based upon the Lender’s lease pricing in effect at the time of such funding. There was no balance outstanding as of June 30, 2023 ($10,000 outstanding as of December 31, 2022).