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Note 12 - Debt
 9 Months Ended
Oct. 04, 2020
Notes to Financial Statements  
Long-term Debt [Text Block]
(
1
2
)
Debt
 
Debt outstanding consists of the following (in thousands):
 
   
October 4,
    
December 31,
  
   
2020
    
2019
  
   
(Unaudited)
      
Current:
                
Finance lease obligation, current portion
   $
383
     $
684
  
PPP Loan, current portion
    
2,174
      
0
  
Note payable – related party, current portion
    
2,500
      
0
  
Current portion of long term debt
   $
5,057
     $
684
  
Long Term:
                
Finance lease obligation
   $
2,029
     $
2,351
  
PPP Loan
    
1,384
      
0
  
Note payable – related party
    
4,000
      
6,500
  
Less unamortized debt issuance and modification costs
    
(26
 )    
(37
 )
Long term debt net of unamortized debt costs
   $
7,387
     $
8,814
  
 
Pay
check
Protection Program
 
During the
second
quarter of
2020,
the Company secured a
$3,558,000
term loan with BMO. Proceeds from the PPP Loan have been used to retain workers and maintain payroll and make lease and utility payments. The PPP Loan is evidenced by a promissory note in favor of BMO, as lender, with a principal amount of
$3,558,000
that bears interest at a fixed annual rate of
1.00%,
with the
first
six
months of principal and interest deferred. Under the terms of the PPP Loan,
18
equal monthly payments of principal and interest would begin in
November 2020
with the final payment due in
April 2022,
however recent legislation under the Paycheck Protection Program Flexibility Act of
2020
provides for an extension of the maturity date up to
five
years, an extension of the principal and interest deferral period to the date of a loan forgiveness determination and modifications to the debt amortization schedule if the Company and BMO reach an agreement on modified terms. The PPP Loan
may
be accelerated upon the occurrence of an event of default.
 
The PPP Loan is unsecured and guaranteed by the U.S. Small Business Administration (the “SBA”). The Company
may
apply for forgiveness of the PPP Loan, with the amount which
may
be forgiven equal to the sum of payroll costs, covered rent and mortgage obligations, and covered utility payments incurred by the Company during the
24
-week period beginning upon receipt of funds from the PPP Loan, subject to limitations and calculated in accordance with the terms of the CARES Act. Any forgiveness of the PPP Loan shall be subject to approval of the SBA and will require the Company and BMO to apply to the SBA for such treatment in the future. We intend to comply with the necessary requirements to seek forgiveness of all or a portion of the PPP Loan, but
no
assurance can be provided that we will obtain forgiveness of the PPP Loan in whole or in part. As a result, the Company is taking the approach that a portion of the PPP Loan is short-term and a portion is long-term, and has reflected such borrowing on the Company's consolidated balance sheet, as appropriate. The Company will record any amounts of the loan that are forgiven as a gain on extinguishment in the period in which legal release is received.
 
Note Payable – Related Party
 
The Company has received the benefit of cash infusions from Gill Family Capital Management, Inc. (“GFCM”) in the form of secured promissory note obligations totaling
$6,500,000
in principal as of
October 
4,
 
2020
and
December 
31,
 
2019.
GFCM is an entity controlled by the Company's Chairman, President and Chief Executive Officer, Jeffrey T. Gill, and
one
of our directors, R. Scott Gill. GFCM, Jeffrey T. Gill and R. Scott Gill are significant beneficial stockholders of the Company. The promissory note bears interest at a rate of
8.0%
per year through
March 31, 2019
and, thereafter is reset on
April 1
st
of each year, at the greater of
8.0%
or
500
basis points above the
five
-year Treasury note average during the preceding
90
-day period, in each case, payable quarterly. The maturity dates for the obligation are as follows:
$2,500,000
of the obligation on
April 
1,
 
2021,
$2,000,000
on
April 1, 
2023,
and the balance on
April 
1,
 
2025.
The note allows for up to an
18
-month deferral of payment for up to
60%
of the interest due on the portion of the notes maturing in
April
of
2021
and
2023.
During the
first
quarter of
2020,
the Company provided notice to GFCM of its intention to elect to defer the specified portion of the interest payments due beginning on
April 6, 2020.
 
Obligations under the promissory note are guaranteed by all of the subsidiaries and are secured by a
first
priority lien on substantially all assets of the Company.
 
Finance Lease Obligations
 
On
March 9, 2016,
the Company completed the sale of its
24
-acre Toluca property for
215,000,000
Mexican Pesos, or approximately
$12,182,000
in U.S. dollars. Simultaneously, the Company entered into a
ten
-year lease of the
nine
acres and buildings occupied by the Company and needed for its ongoing business in Toluca. As a result of the Toluca sale-leaseback, the Company has a finance lease obligation of
$2,219,000
for the property as of
October 
4,
 
2020.
 
In
February 2019,
the Company entered into a
60
-month finance lease for
$269,000
for new machinery at its Sypris Technologies facility in the U.S. The balance of the finance lease obligation as of
October 
4,
 
2020
was
$193,000.