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Long-Term Debt

3 Months Ended

Mar. 31, 2023

Note 7 – Long-Term Debt

Long-term debt consists of the following:

	March 31		December 31
In thousands	2023		2022
8¼% Limited convertible senior subordinated notes due 2012	$	302	$	302
9½% Subordinated debentures due 2012		220		220
Revolving credit line – related party		2,246		2,246
Term loans – related party		1,000		1,000
Term loans		500		500
Total debt		4,268		4,268
Less deferred financing costs and debt discount		-		-
Net debt		4,268		4,268
Less portion due within one year		3,768		3,768
Net long-term debt	$	500	$	500

On September 16, 2019, the Company entered into a loan agreement (the “Loan Agreement”) with MidCap, which was subsequently modified. On July 30, 2021, MidCap assigned the loan to Unilumin. On March 20, 2023, the Company and Unilumin entered into a modification agreement to the Loan Agreement effective December 31, 2022. The Loan Agreement matures on December 31, 2023. The Loan Agreement allows the Company to borrow up to an aggregate of $2.2 million at an interest rate of the Prime Rate as published in the Wall Street Journal plus 4.75% (12.75% at March 31, 2023) on a revolving credit loan based on accounts receivable, inventory and equipment for general working capital purposes. As of March 31, 2023, the balance outstanding under the Loan Agreement was $2.2 million. The Loan Agreement also requires the payment of certain fees, including a facility fee, an unused credit line fee and a collateral monitoring charge. The Loan Agreement contains financial and other covenant requirements, including financial covenants that require the Company to attain certain EBITDA amounts for certain periods, including the year ended March 31, 2023. The Company was not in compliance with this covenant. The Loan Agreement is secured by substantially all of the Company’s assets.

The Company entered into a loan note (the “Loan Note”) with the SBA (“Lender”) as lender under their Economic Injury Disaster Loan (“EIDL”) program, dated as of December 10, 2021. Under the Loan Note, the Company borrowed $500,000 from Lender under the EIDL Program. As of March 31, 2023, $500,000 was outstanding. The loan matures on December 10, 2051 and carries an interest rate of 3.75%. As of March 31, 2023 and December 31, 2022, the Company had accrued $24,000 and $20,000, respectively, of interest related to the Loan Note, which is included in Accrued liabilities in the Consolidated Balance Sheets.

On April 23, 2020, the Company entered into a loan note (the “Loan Note”) with Enterprise Bank and Trust (“Lender”) as lender under the CARES Act of the Small Business Administration of the United States of America (“SBA”), dated as of April 20, 2020. Under the Loan Note, the Company borrowed $811,000 from Lender under the Paycheck Protection Program (“PPP”) included in the SBA’s CARES Act. The Loan Note proceeds were forgivable as long as the Company uses the loan proceeds for eligible purposes including payroll costs, including salaries, commissions, and similar compensation, group health care benefits, and paid leave; rent; utilities; and maintains its payroll levels. In January 2022, the loan was forgiven in full and the payments that had previously been paid were refunded. Refund proceeds in the amount of $453,000 are included in proceeds from long-term debt in the accompanying condensed consolidated statements of Cash Flows for the three months ended March 31, 2022.

The Company has 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. Carlisle had agreed to not demand payment on the loan through at least December 31, 2020, and has not made any such demands as of the date of this filing. As of March 31, 2023, the entire amount was outstanding and is included in current portion of long-term debt in the Consolidated Balance Sheets. As of March 31, 2023 and December 31, 2022, the Company had accrued $315,000 and $300,000, respectively, of interest related to this loan, which are included in accrued liabilities in the Condensed Consolidated Balance Sheets. Marco Elser, a director of the Company, exercises voting and dispositive power as investment manager of Carlisle.

The Company has 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. Carlisle had agreed to not demand payment on the loan through at least December 31, 2020, and has not made any such demands as of the date of this filing. As of March 31, 2022, the entire amount was outstanding and is included in current portion of long-term debt Consolidated Balance Sheets. As of March 31, 2023 and December 31, 2022, the Company had accrued $315,000 and $300,000, respectively, of interest related to this loan, which are included in accrued liabilities in the Condensed Consolidated Balance Sheets. 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, 2023 and December 31, 2022, the Company had outstanding $302,000 of Notes. The Notes matured as of March 1, 2012 and are currently in default. As of March 31, 2023 and December 31, 2022, the Company had accrued $338,000 and $332,000, respectively, of interest related to the Notes, which is included in Accrued liabilities in the Consolidated Balance Sheets. The trustee, by notice to the Company, or the holders of 25% of the principal amount of the Notes outstanding, by notice to the Company and the trustee, may declare the outstanding principal plus interest due and payable immediately.

As of March 31, 2023 and December 31, 2022, the Company had outstanding $220,000 of Debentures. The Debentures matured as of December 1, 2012 and are currently in default. As of March 31, 2023 and December 31, 2022, the Company had accrued $279,000 and $273,000, respectively, of interest related to the Debentures, which is included in Accrued liabilities in the Consolidated Balance Sheets. The trustee, by notice to the Company, or the holders of 25% of the principal amount of the Debentures outstanding, by notice to the Company and the trustee, may declare the outstanding principal plus interest due and payable immediately.