XML 33 R18.htm IDEA: XBRL DOCUMENT
v3.3.1.900

Note 9 - Long-term Debt | 12 Months Ended
--- | ---
Dec. 31, 2015
Notes to Financial Statements |
Long-term Debt [Text Block] | NOTE 9 LONG-TERM DEBT Long-term debt consists of the following at December 31, 2015 and 2014:
(Amounts in Thousands) |  | December 31, 2015 |  |  | December 31, 2014 |
Revolving Credit facility dated October 31, 2011, borrowings based upon eligible accounts receivables, subject to monthly borrowing base calculation, variable interest paid monthly at option of prime rate (3.50% at December 31, 2015) plus 2.0% or London Interbank Offer Rate ("LIBOR") plus 3.0%, balance due October 31, 2016. Effective interest rate for 2015 and 2014 was 4.0% and 4.1%, respectively. (1) |  | $ | 2,349 | (3) |  | $ | — |
Term Loan dated October 31, 2011, payable in equal monthly installments of principal of $190, balance due on October 31, 2016, variable interest paid monthly at option of prime rate plus 2.5% or LIBOR plus 3.5%. Effective interest rate for 2015 and 2014 was 3.7% and 3.7%, respectively. (1) |  |  | 6,666 | (3) |  |  | 8,952 |
Promissory Note dated August 2, 2013, payable in twelve monthly installments of interest only, starting September 1, 2013 followed with twenty-four monthly installments of $125 in principal plus accrued interest. Interest accrues at annual rate of 2.99%. (2) (4) |  |  | 950 |  |  |  | 2,363 |
Promissory Note dated February 12, 2013, payable in monthly installments of $10, which includes interest and principal, starting February 28, 2013, interest accrues at annual rate of 6.0%, paid in full on January 30, 2015. (2) |  |  | — |  |  |  | 10 |
Capital lease ( interest at rate of 6.0%) |  |  | 23 |  |  |  | 47 |
|  |  | 9,988 |  |  |  | 11,372 |
Less current portion of long-term debt |  |  | 2,458 |  |  |  | 3,733 |
|  | $ | 7,530 |  |  | $ | 7,639 |
(1) Our Revolving Credit facility is collateralized by our accounts receivable and our Term Loan is collateralized by our property, plant, and equipment. (2) Uncollateralized note. (3 ) As discussed in Note 17 – “Subsequent Events,” on March 24, 2016, the Company entered into an amendment to its Amended Loan Agreement (see discussion below), dated October 31, 2011, with PNC Bank, National Association (“PNC”) which extended the due date of our current Credit Facility from October 31, 2016 to March 24, 2021 (the amendment, together with the Amended Loan Agreement, is collectively known as the “Revised Loan Agreement”). Pursuant to the Revised Loan Agreement, the revolving line of credit is to remain at up to $12,000,000 (subject to the amount of borrowings based on a percentage of eligible receivables as previously defined under the Amended Loan Agreement) with the term loan revised to $6,100,000, with monthly payment of approximately $102,000. In accordance with ASC 470, “Debt,” this post balance-sheet date agreement demonstrated the Company’s ability to refinance its short-term obligations on a long-term basis; therefore, the Company has reclassified the current portion of the outstanding debt to long-term except for $1,486,000 in principal payments that will be due by December 31, 2016 (see Note 17 - “Subsequent Events” for further details of this Revised Loan Agreement). ( 4 ) Net of debt discount of ($50,000) and ($137,000) at December 31, 2015 and December 31, 2014, respectively. See “Promissory Notes and Installment Agreements” below for additional information. Revolving Credit and Term Loan Agreement The Company entered into an Amended and Restated Revolving Credit, Term Loan and Security Agreement, dated October 31, 2011 (“Loan Agreement”), with PNC, acting as agent and lender. The Loan Agreement, as amended (“Amended Loan Agreement”) provides the Company with the following Credit Facility: (a) up to $12,000,000 revolving credit (“Revolving Credit”), subject to the amount of borrowings based on a percentage of eligible receivables (as defined) and (b) a term loan (“Term Loan”) of $16,000,000, which requires monthly installments of approximately $190,000 (based on a seven-year amortization). As of December 31, 2015, the availability under the Company’s Revolving Credit was approximately $2,687,000, based on our eligible receivables and was net of an indefinite reduction of borrowing availability of $1,500,000. The Amended Loan Agreement authorized the Company to use the $3,850,000 insurance settlement proceeds received on June 30, 2014 by our PFSG subsidiary (which suffered a fire and explosion on August 14, 2013 and is included within our discontinued operations) for working capital purposes but placed an indefinite reduction on our borrowing availability by the $1,500,000 as discussed above. The Company’s Credit Facility with PNC contains certain financial covenants, along with customary representations and warranties. A breach of any of these financial covenants, unless waived by PNC, could result in a default under our Credit Facility allowing our lender to immediately require the repayment of all outstanding debt under our Credit Facility and terminate all commitments to extend further credit. The Company’s Amended Loan Agreement prohibits us to declare, pay, or make any dividend distribution on any shares of our Common Stock or Preferred Stock. The Company met its quarterly fixed charge coverage ratio and minimum tangible adjusted net worth requirements in each of the quarters in 2015. Promissory Notes and Installment Agreements On February 12, 2013, the Company entered into an unsecured promissory note (“the new note”) with Timios National Corporation (“TNC”) in the principal amount of approximately $230,000 as a result of a settlement with TNC in connection with certain claims that the Company asserted against TNC for breach of certain representations and covenant subsequent to our acquisition of SEC from TNC on October 31, 2011. The new note was entered into as a result of the settlement in which a previously issued promissory note that the Company entered into with TNC as partial consideration of the purchase price of SEC was cancelled and terminated and replaced with the new note. Final payment of approximately $10,000 on this note was made in January 2015. On August 2, 2013, the Company completed a lending transaction with Messrs. Robert Ferguson and William Lampson (“collectively, the “Lenders”), whereby the Company borrowed from the Lenders the sum of $3,000,000 (the “Loan”) (See payment terms of this promissory note in the table above). The Lenders are stockholders of the Company, having received shares of our Common Stock in connection with the acquisition of our PFNWR subsidiary in June 2007. The proceeds from the Loan were used for general working capital purposes. In connection with this Loan, the Lenders entered into a Subordination Agreement with the Company’s Credit Facility lender, whereby the Lenders agreed to subordinate payment under the Loan, and agreed that the Loan will be junior in right of payment to the Credit Facility in the event of default or bankruptcy or other insolvency proceeding by the Company. As consideration for the Company receiving the Loan, the Company issued a Warrant to each Lender to purchase up to 35,000 shares of the Company’s Common Stock at an exercise price of $2.23 per share, which was based on the closing price of the Company’s Common Stock at the closing of the transaction. The Warrants are exercisable six months from August 2, 2013 and expire on August 2, 2016. The fair value of the Warrants was estimated to be approximately $59,000 using the Black-Scholes option pricing model with the following assumptions: 55.54% volatility, risk free interest rate of .59%, an expected life of three years and no dividends. As further consideration for the Loan, the Company also issued an aggregate 90,000 shares of the Company’s Common Stock, with each Lender receiving 45,000 shares. The Company determined the fair value of the 90,000 shares of Common Stock to be approximately $200,000 which was based on the closing price of the stock of $2.23 per share on August 2, 2013. The fair value of the Warrants and Common Stock and the related closing fees incurred from the transaction were recorded as a debt discount, which is being amortized using the effective interest method over the term of the loan as interest expense – financing fees. Mr. Robert Ferguson serves as an advisor to the Company’s Board of Directors (see Note 15 – “Related Party Transaction – Mr. Robert Ferguson” for further information on Mr. Ferguson). In the event of default of the promissory note by the Company, the Lenders have the option to receive a cash payment equal to the amount of the unpaid principal balance plus all accrued and unpaid interest (“Payoff Amount”), or the number of whole shares of the Company’s Common Stock equal to the Payoff Amount divided by the closing bid price of the Company’s Common Stock on the date immediately prior to the date of default of the promissory note, as reported by the primary national securities exchange on which the Company’s Common Stock is traded. The maximum number of payoff shares is restricted to less than 20% of the outstanding equity. The following table details the amount of the maturities of long-term debt maturing in future years as of December 31, 2015 of our continuing operations (excludes debt discount of $50,000). See footnote (3) above regarding the classification of the Company’s outstanding debt under our Amended Loan Agreement as current and long-term.
Year ending December 31: |  |  |  |
(In thousands) |  |  |  |
2016 |  | $ | 2,508 |
Beyond 2016 |  |  | 7,530 |
Total |  | $ | 10,038 |

X
- References No definition available. + Details
Name: | us-gaap_DisclosureTextBlockAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for long-term debt. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 + Details
Name: | us-gaap_LongTermDebtTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration