Long-Term Debt

12 Months Ended

Dec. 31, 2023

Long-Term Debt.

Long-Term Debt

5.    Long-Term Debt

	Years Ending December 31,
(in thousands)	2023		2022
Line of credit payable to a financial institution: Interest rate is equal to the greater of 8.0% or Prime Rate plus 1.0%. (Interest rate 9.5% as of December 31, 2023) (A)	$	2,103	$	—
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
		2,103		501
Less current portion		(2,103)		(501)
Long term debt	$	—	$	—

A. On June 27, 2023, the Company replaced its line of credit ($0 balance outstanding as of December 31, 2022) by entering into a three-year financing agreement with a new 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 foreign accounts receivable balances, less any amounts above foreign credit insurance limits and other specific reserves. In general terms, ineligible receivables are defined as invoices unpaid over 90 days. The balance outstanding on the Credit Facility is approximately $2,103,000 as of December 31, 2023, and availability on the Credit Facility is approximately $4,897,000 based on the borrowing base calculations as of December 31, 2023.  The Company capitalized approximately $104,000 of loan origination costs amortizing over three years through June 2026 (the expiration of the Credit Facility), and it is collateralized by the Company’s assets.

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 $2,103,000 is classified as a current liability on the Consolidated Balance Sheet as of December 31, 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 December 31, 2023.

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. The loan term for the equipment covered by the agreement 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. The equipment loan was paid off in 2023, so there is no balance outstanding as of December 31, 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. The lease term for equipment covered by the lease line of credit 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.  The line of credit was paid off in 2023, so there is no balance outstanding as of December 31, 2023 ($10,000 outstanding as of December 31, 2022).