Note 7 – Long-Term Debt

Long-term debt consists of the following:

	March, 31 2019		December, 31 2018
In thousands	March, 31 2019		December, 31 2018
8¼% Limited convertible senior subordinated notes due 2012	$	352	$	387
9½% Subordinated debentures due 2012		220		220
Revolving credit line		8		1,440
Term loans		1,540		1,590
Term loans - related party		1,000		1,000
Forgivable loan		650		650
Total debt		3,770		5,287
Less deferred financing costs		194		257
Net debt		3,576		5,030
Less portion due within one year		2,094		3,584
Net long-term debt	$	1,482	$	1,446

On July 12, 2016, the Company and its wholly-owned subsidiaries Trans-Lux Display Corporation, Trans-Lux Midwest Corporation and Trans-Lux Energy Corporation entered into a credit agreement, as subsequently amended on various dates, the latest being on March 1, 2019 (collectively, the “Credit Agreement”) with CNH Finance Fund I, L.P. (“CNH”) as lender. Under the Credit Agreement, the Company was able to borrow up to an aggregate of $4.0 million, which includes (i) up to $3.0 million of a revolving loan, at an interest rate of prime plus 9.0% (14.50% and 11.50% at March 31, 2019 and December 31, 2018, respectively), and (ii) a $1.0 million term loan, at an interest rate of prime plus 11.0% (16.50% and 11.50% at March 31, 2019 and December 31, 2018, respectively). The availability under the revolving loan was calculated based on certain percentages of eligible receivables and inventory. On November 6, 2018, the Company and CNH agreed to a forbearance agreement which was effective through February 28, 2019, as long as there were no additional defaults under the Credit Agreement. On March 1, 2019, the effectiveness of the forbearance agreement was extended through April 15, 2019. Under this agreement, CNH would forbear from exercising its rights and remedies under the Credit Agreement for the specified period subject to the agreed terms and conditions, which include an increase in the interest rate and certain other restrictions. During the three months ended March 31, 2019, the Company made net payments of $1.4 million on the revolving loan and $50,000 on the term loan, leaving $8,000 and $540,000, respectively, outstanding as of March 31, 2019. On April 10, 2019, the Company satisfied the Credit Agreement in full and the Credit Agreement was terminated.

On June 11, 2018, the Company entered into a Subordinated Secured Promissory Note (the “SMI Note”) with SM Investors, L.P. (“SMI”), pursuant to which the Company borrowed $330,000 from SMI at an interest rate of 12.00%. The maturity date of the SMI Note was the earlier of June 11, 2020 or the Company’s completion of an additional financing package of at least $1 million. The Company also issued SMI a three-year warrant to purchase 82,500 shares of the Company at an exercise price of $0.01 per share. The Company utilized the Black-Scholes method to calculate the fair value of this warrant at the time of issuance, which was $95,000, and is being treated as a debt discount amortized over the two-year term of the loan. Subsequent to March 31, 2019, the Company satisfied the SMI Note in full.

On June 11, 2018, the Company entered into another Subordinated Secured Promissory Note (the “SMII Note”) with SM Investors II, L.P. (“SMII”), pursuant to which the Company borrowed $670,000 from SMII at an interest rate of 12.00%. The maturity date of the SMII Note was the earlier of June 11, 2020 or the Company’s completion of an additional financing package of at least $1 million. The Company also issued SMII a three-year warrant to purchase 167,500 shares of the Company at an exercise price of $0.01 per share. The Company utilized the Black-Scholes method to calculate the fair value of this warrant at the time of issuance, which was $192,000, and is being treated as a debt discount amortized over the two-year term of the loan. Subsequent to March 31, 2019, the Company satisfied the SMII Note in full.

On April 27, 2016, the Company received a $500,000 loan from Carlisle Investments Inc. (“Carlisle”) at a fixed interest rate of 12.00%, which matured on April 27, 2019 with a bullet payment of all principal due at such time. Interest is payable monthly. As of March 31, 2019, the entire amount was outstanding and is included in current portion of long-term debt – current portion in the Condensed Consolidated Balance Sheets. Carlisle has agreed to not demand payment on the loan through at least May 16, 2020. Marco Elser, a director of the Company, exercises voting and dispositive power as investment manager of Carlisle.

On November 6, 2017, the Company received an additional $500,000 loan from Carlisle at a fixed interest rate of 12.00%, which matured on December 10, 2017 with a bullet payment of all principal due at such time (the “Second Carlisle Agreement”). Interest is payable monthly. As of March 31, 2019, the entire amount was outstanding and is included in current portion of long-term debt – current portion in the Condensed Consolidated Balance Sheets. Carlisle has agreed to not demand payment on the loan through at least May 16, 2020. Under the Second Carlisle Agreement, the Company granted a security interest to Carlisle in accounts receivable, materials and intangibles relating to a certain purchase order for equipment issued in April 2017.

As of March 31, 2019 and December 31, 2018, the Company had outstanding $352,000 and $387,000, respectively, of 8¼% Limited convertible senior subordinated notes due 2012 (the “Notes”) which are no longer convertible into common shares. The Notes matured as of March 1, 2012 and are currently in default. On February 15, 2019, holders of $35,000 of the Notes accepted the Company’s offer to exchange each $1,000 of principal, forgiving any related interest, for $200 in cash, for an aggregate payment by the Company of $7,000. As a result of the transaction, the Company recorded a gain on the extinguishment of debt, net of expenses, of $52,000 in 2019. As of March 31, 2019 and December 31, 2018, the Company had accrued $278,000 and $298,000, respectively, of interest related to the Notes, which is included in accrued liabilities in the Condensed Consolidated Balance Sheets.

As of March 31, 2019 and December 31, 2018, the Company had outstanding $220,000 of 9½% Subordinated debentures due 2012 (the “Debentures”). The Debentures matured as of December 1, 2012 and are currently in default. As of March 31, 2019 and December 31, 2018, the Company had accrued $195,000 and $190,000, respectively, of interest related to the Debentures, which is included in accrued liabilities in the Condensed Consolidated Balance Sheets.

On May 23, 2017, the Company received $650,000 structured as a forgivable loan from the City of Hazelwood, Missouri. The loan will be forgiven on a pro-rata basis if predetermined employment levels are attained and would expire on April 1, 2024. If the Company attains the employment levels required by the agreement, there is no interest due, otherwise interest accrues at a rate of prime plus 2.00% (7.50% at March 31, 2019). In February 2018, in accordance with the agreement, the Company requested a 1-year extension of the terms of the agreement, which was approved by the City of Hazelwood in March 2018, so the agreement now terminates on April 1, 2025. As of the March 31, 2019 measurement date, the Company has not yet attained the appropriate employment levels and has requested an additional extension from the City of Hazelwood.