XML 21 R10.htm IDEA: XBRL DOCUMENT
v3.21.1

Note 4 - Credit Facilities and Other Debt | 3 Months Ended
--- | ---
Mar. 31, 2021
Notes to Financial Statements |
Debt Disclosure [Text Block] |
4. | Credit Facilities and Other Debt
Domestic Credit Facilities North Mill Capital Credit Facility The Company has a secured revolving credit facility in the United States and Canada (the " NM Credit Facility ") with North Mill Capital, LLC, d/b/a SLR Business Credit (" NM "). In order to obtain, document and govern the NM Credit Facility: SGRP and certain of its direct and indirect subsidiaries in the United States and Canada, namely SPAR Marketing Force, Inc. (" SMF "), and SPAR Canada Company (" SCC ") and SPAR Canada, Inc., SPAR Acquisition, Inc., SPAR Assembly and Installation, Inc., and SPAR Trademarks, Inc. (together with SGRP, each a " NM Guarantor " and collectively, the " NM Guarantors ", and together with SMF and SCC, each a " NM Loan Party " and collectively, the " NM Loan Parties "), entered into 18 -month individual Loan and Security Agreements with NM dated as of April 10, 2019. On January 5, 2021, the NM Loan Parties and NM executed and delivered a Waiver and Modification Agreement entered in as of January 4, 2021, and effective as of December 31, 2020 ( the " First Modification Agreement "), pursuant to which NM and the NM Loan Parties agreed to extend the NM Loan Agreements from October 2021 to April 10, 2022, and increased the amounts of the credit facilities for SMF to $14.5 (USD) million in the USA and decreased the SCC facility to $1.5 (CDN) million in Canada; in addition the First Modification Agreement increased SMF's borrowing base availability for unbilled receivables to up to 70% from January 1, 2021 through June 30, 2021, which thereafter reverts to 65%, and increased the unbilled cap for SMF to $4.5 million (USD) from $3.9 million (USD). SCC's facility received similar increases. The credit facility continues to require the NM Borrowers to pay interest on the loans thereunder equal to (A) Prime Rate designated by Wells Fargo Bank, plus (B) one hundred twenty-five basis points ( 1.25% ) or a minimum of 6.75%. In addition, the Company continues to pay a facility fee to NM of 1.5% for the first $10.5 million loan balance, or $157,500 per year over the term of the agreement, plus a $15,000 one -time fee for each incremental $1 million increase in loan balance up to $14.5 million. Additionally, for the First Modification Agreement, SPAR paid NM a fee of $7,500 and agreed to reimburse NM's legal and documentation fees. On March 22, 2021, NM Loan Parties and NM executed and delivered a Second Modification Agreement entered in as of March 22, 2021, and effective as of April 1, 2021 ( the " Second Modification Agreement "), pursuant to which NM and the NM Loan Parties agreed to extend the NM Loan Agreements from April 10, 2022 to October 10, 2023, and increased the amounts of the credit facilities for SMF to $16.5 (USD) million in the USA while the SCC facility remained at $1.5 (CDN) million in Canada; in addition, the Second Modification Agreement increased SMF's borrowing base availability for unbilled receivables to up to 70% permanently, and increased the unbilled cap for SMF to $5.5 (USD) million from $4.5 (USD) million. The amended agreement (together, the " NM Notes ") will require the NM Borrowers to pay interest on the loans thereunder equal to: (A) Prime Rate designated by Wells Fargo Bank, plus; (B) one hundred twenty-five basis points ( 0.95% ) or a minimum of 5.25%. In addition, the Company continues to pay a facility fee to NM of 0.8% decreased from 1.5% for the first $10.5 million loan balance, or $84,000 per year, over the term of the agreement, plus a $15,000 one -time fee for each incremental $1 million increase in loan balance up to $16.5 million. Additionally, the early termination fee has decreased from 1.0% to 0.85% of the advance limit. On March 31, 2021, the aggregate interest rate was 6.75% per annum, and the outstanding loan balance was $11.8 million. Outstanding amounts are classified as short-term debt. Revolving loans are available to the Borrowers under the NM Credit Facility based upon the borrowing base formula defined in the NM Loan Agreement. The NM Credit Facility contains certain financial and other restrictive covenants and also limits certain expenditures by the NM Borrowers, including, maintaining a positive trailing EBITDA for each Borrower, limits on non-ordinary course payments ad transactions, incurring or guarantying indebtedness, increases in executive, officer or director compensation, capital expenditures and other investments. The Company was in compliance of such covenants as of March 31, 2021. Fifth Third Credit Facility - Resource Plus One of the Company's consolidated subsidiaries, Resource Plus of North Florida, Inc. (" Resource Plus "), is a party to a revolving line of credit facility (the "Fifth Third Credit Facility") from Fifth Third Bank for $3.5 million, which is currently scheduled to become due on June 16, 2022. Revolving loans of up to $3.5 million are available to Resource Plus under the Fifth Third Credit Facility based upon the borrowing base formula defined in the agreement (principally 80% of "eligible" accounts receivable less certain reserves). As of March 31, 2021 , there was no outstanding balance. The Fifth Third Credit Facility is secured by substantially all assets of Resource Plus. The Fifth Third Credit Facility currently requires Resource Plus to pay interest on the loans thereunder equal to (A) the Daily LIBOR Rate (as defined in the agreement) per annum, plus (B) two hundred fifty basis points ( 2.50% ). On March 31, 2021 , the aggregate interest rate under that formula was 3.6% per annum. The Fifth Third Credit Facility contains a debt service charge coverage ratio financial covenant requiring Resource Plus to maintain a minimum of ratio of 1.2 for available cash flow to fixed charges, as defined in the agreement. Resource Plus was in compliance of the covenant as of March 31, 2021. Resource Plus - Seller Notes Effective with the closing of the Resource Plus acquisition, the Company entered into promissory notes with the sellers totaling $2.3 million. The notes are payable in annual installments at various amounts due on December 31st of each year starting with December 31, 2018 and continuing through December 31, 2023. As such these notes are classified as both short term and long term for the appropriate amounts. The total balance owed at March 31, 2021 was approximately $1.3 million. International Credit Facilities: SPARFACTS Australia Pty. Ltd. has a secured line of credit facility with National Australia Bank, effective October 31, 2017, for $800,000 (Australian) or approximately $608,659 USD (based upon the exchange rate at March 31, 2021 ). The facility provides for borrowing based upon a formula, as defined in the agreement (principally 80% of eligible accounts receivable less certain deductions). The outstanding balance with National Australia Bank as of March 31, 2021 was $12,076 (Australian) or $9,188 USD and is due on demand. SPAR China has secured a loan with Industrial Bank for 3.0 million Chinese Yuan or approximately $460,000 USD (based upon exchange rate at March 31, 2021 ). The loan will expire December 17, 2021. The annual interest rate was 6.0% as of March 31, 2021. The outstanding balance with Industrial Bank as of March 31, 2021 was 3.0 million Chinese Yuan or $460,000 USD and is due on demand. SPAR China has secured a loan with CCB Bank for 1.0 million Chinese Yuan or approximately $153,000 USD (based upon exchange rate at March 31, 2021). The annual interest rate was 6.0% as of March 31, 2021. The outstanding balance with Industrial Bank as of March 31, 2021 was 1.0 million Chinese Yuan or $153,000 USD and is due on demand. Effective February 4, 2020, SPAR Todopromo established a line of credit facility with Ve Por Mas for 8.0 million Mexican Pesos or approximately $390,096 USD (based upon the exchange rate at March 31, 2021). The line expires on May 2021. The variable interest rate is TIIE plus 3.0% resulting in a rate of 7.3% as of March 31, 2021. There was no outstanding balance as of March 31, 2021. SPAR Todopromo has secured a line of credit facility with BBVA Bancomer for 5.0 million Mexican Pesos, or approximately $243,810 USD (based upon the exchange rate at March 31, 2021). The revolving line of credit expires May 2021. The variable interest rate is TIIE plus 5.2% resulting in a rate of 9.6% as of March 31, 2021. The outstanding balance with Bancomer as of March 31, 2021 was 5.0 million Mexican Pesos or $243,810 USD and is due on demand.
|  | Interest Rate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | as of |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | March 31, 2021 |  |  | 2021 |  |  | 2022 |  |  | 2023 |  |  | 2024 |  |  | 2025 |  |  | 2026 |
Australia - National Australia Bank |  |  | 6.56 | % |  |  | 9 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
China - Industrial Bank |  |  | 6.00 | % |  |  | 460 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
China - CCB Bank |  |  | 6.00 | % |  |  | 153 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Mexico - Ve Por Mas |  |  | 7.30 | % |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Mexico - Bancomer Bank |  |  | 9.60 | % |  |  | 244 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
USA - North Mill Capital |  |  | 6.75 | % |  |  | 11,774 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
USA - Fifth Third Bank |  |  | 3.60 | % |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
USA - Resource Plus Seller Notes |  |  | 1.85 | % |  |  | 300 |  |  |  | 300 |  |  |  | 700 |  |  |  | - |  |  |  | - |  |  |  | - |
Total |  |  |  |  |  | $ | 12,940 |  |  | $ | 300 |  |  | $ | 700 |  |  | $ | - |  |  | $ | - |  |  | $ | – |
Summary of Unused Company Credit and Other Debt Facilities (in thousands):
|  | March 31, |  |  | December 31, |
|  | 2021 |  |  | 2020 |
Unused Availability: |  |  |  |  |  |  |  |
United States / Canada |  | $ | 6,726 |  |  | $ | 10,238 |
Australia |  |  | 599 |  |  |  | 463 |
Mexico |  |  | 390 |  |  |  | 262 |
Total Unused Availability |  | $ | 7,715 |  |  | $ | 10,963 |
Management believes that based upon the continuation of the Company's existing credit facilities, projected results of operations, vendor payment requirements and other financing available to the Company (including amounts due to affiliates), sources of cash availability should be manageable and sufficient to support ongoing operations over the next year. However, delays in collection of receivables due from any of the Company's major clients, or a significant reduction in business from such clients could have a material adverse effect on the Company's cash resources and its ongoing ability to fund operations.

X
- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
Name: | us-gaap_DebtDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

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