XML 20 R9.htm IDEA: XBRL DOCUMENT v3.24.3
Note 3 - Debt
 9 Months Ended
Sep. 30, 2024
Notes to Financial Statements  
Debt Disclosure [Text Block]

3.

 Debt

 

North Mill Capital Credit Facility

 

The Company, through SPAR Marketing Force, Inc. ("SMF") and SPAR Canada Company ULC ("SCC", and collectively with SMF, the “NM Borrowers”), has a secured revolving credit facility in the United States (the "US Revolving Credit Facility") and Canada (the "Canada Revolving Credit Facility", and collectively with the US Revolving Credit Facility, 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, SMF, SCC, SGRP and certain of SGRP's direct and indirect subsidiaries in the United States and Canada (including SMF and SCC as borrowers and SGRP as a guarantor, collectively, the "NM Loan Parties") entered into a Loan and Security Agreement with NM dated as of April 10, 2019, which, as amended from time to time (as amended, the "NM Loan Agreement"), governs the NM Credit Facility. Pursuant to the NM Loan Agreement, the NM Borrowers agreed to reimburse NM for legal and documentation fees incurred in connection with the NM Loan Agreement and such amendments.

 

On February 1, 2023, the NM Loan Parties and NM executed and delivered a Sixth Modification Agreement, effective immediately (the "Sixth Modification Agreement"), pursuant to which the NM Loan Parties and NM agreed to increase the amount of the US Revolving Credit Facility to $28.0 million and increase the Canada Revolving Credit Facility to CDN$2.0 million. In addition, the Sixth Modification Agreement increased the cap on unbilled accounts in the borrowing base for SMF to $7.0 million from $6.5 million.

 

On  March 27, 2024, the NM Loan Parties and NM executed and delivered a Seventh Modification Agreement, effective immediately (the "Seventh Modification Agreement"), pursuant to which the NM Loan Parties and NM agreed to extend the NM Credit Facility from  October 10, 2024 to  October 10, 2025.

 

The Restated US Note and Restated Canadian Note (together, the "NM Notes") and the NM Loan Agreement together require the NM Borrowers to pay interest on the loans thereunder equal to: (i) the Prime Rate designated from time to time by Wells Fargo Bank; plus (ii) one and nine-tenths percentage points (1.90%) or an aggregate minimum of 6.75% per annum. In addition, the NM Borrowers are paying a facility fee to NM in an amount equal to: (i) for the year commencing on October 10, 2022, approximately $0.1 million plus 0.80% of the amount of any advances other than under the US Revolving Credit Facility plus an additional facility fee of $15,000 for every incremental $1.0 million of loan balance in excess of $21.0 million, and (ii) for the year commencing on October 10, 2023, approximately $0.2 million plus 0.80% of the amount of any advances other than under the US Revolving Credit Facility plus an additional facility fee of $15,000 for every incremental $1.0 million of loan balance in excess of $21.0 million. For the Sixth Modification Agreement, the NM Borrowers paid NM a fee of approximately $28,000.

 

As of September 30, 2024, the aggregate interest rate was 9.90% per annum and the aggregate outstanding loan balance was approximately $17.8 million, which is included within lines of credit and short-term loans in the unaudited condensed consolidated balance sheets. The aggregate outstanding loan balance is divided between the US Revolving Credit Facility and the Canada Revolving Credit Facility as follows: (i) the outstanding loan balance under the US Revolving Credit Facility was approximately $16.3 million; and (ii) the outstanding loan balance under the Canada Revolving Credit Facility was approximately $1.5 million.

 

The NM Credit Facility contains certain financial and other restrictive covenants and also limits certain expenditures by the NM Loan Parties, including maintaining a positive trailing EBITDA for each the NM Borrowers (i.e., SMF and SCC) and imposes limits on all of the NM Loan Parties (including SGRP) on non-ordinary course payments and transactions, incurring or guaranteeing indebtedness, capital expenditures and certain other investments. The NM Loan Parties were in compliance with such covenants as of  September 30, 2024. The obligations of the NM Borrowers are secured by the receivables and other assets of the NM Borrowers and substantially all of the assets of the other NM Loan Parties.

 

 

Summary of the Company’s lines of credit and short-term loans (in thousands):

 

  

Interest Rate

  

Balance

  

Interest Rate

  

Balance

 
  

as of

  

as of

  

as of

  

as of

 
  

September 30, 2024

  

September 30, 2024

  

December 31, 2023

  

December 31, 2023

 

USA / Canada North Mill Capital

  9.90% $17,788   10.40% $12,475 

USA - Resource Plus Seller Notes

  4.30%  750   1.85%  1,120 

China- Industrial Bank

  N/A   -   3.56%  283 

China - Industrial and Commercial Bank of China

  N/A   -   4.00%  283 

South Africa - Investec Bank Ltd.

  N/A   -   11.75%  3,369 

Total

     $18,538      $17,530 

 

Summary of Unused Company Credit and Other Debt Facilities (in thousands):

 

  

September 30,

  

December 31,

 
  

2024

  

2023

 

Unused Availability:

        

United States / Canada

 $11,692  $6,525 

South Africa

  -   2,064 

Total Unused Availability

 $11,692  $8,589 

 

Summary of the Company’s Long- term debt (dollars in thousands):

 

  

Interest Rate

  

Balance

  

Interest Rate

  

Balance

 
  

as of

  

as of

  

as of

  

as of

 
  

September 30, 2024

  

September 30, 2024

  

December 31, 2023

  

December 31, 2023

 

USA - Resource Plus Seller Notes

  4.30% $1,707   N/A  $- 

South Africa - Investec Bank Ltd.

  N/A   -   11.75%  310 
      $1,707      $310