XML 22 R11.htm IDEA: XBRL DOCUMENT
v3.24.2.u1

Debt | 6 Months Ended
--- | ---
Jun. 30, 2024
Debt [Abstract] |
DEBT | Note 5. DEBT Total debt outstanding as of June 30, 2024 is $24,939,000 and was $23,310,000 at December 31, 2023. Indebtedness to third parties consists of the following:
|  | June 30, |  |  | December 31, |
|  | 2024 |  |  | 2023 |
Current Credit Facility - Revolver |  | $ | 11,147,000 |  |  | $ | 10,804,000 |
Current Credit Facility - Term Loan |  |  | 5,600,000 |  |  |  | 5,045,000 |
Solar Credit Facility |  |  | 899,000 |  |  |  | 393,000 |
Finance lease obligations |  |  | 1,113,000 |  |  |  | 884,000 |
Loans Payable - financed assets |  |  | 18,000 |  |  |  | 22,000 |
Subtotal |  |  | 18,777,000 |  |  |  | 17,148,000 |
Less: Current portion |  |  | (16,984,000 | ) |  |  | (16,036,000 | )
Long-Term Portion |  | $ | 1,793,000 |  |  | $ | 1,112,000 |
Current Credit Facility The Company has a credit facility (“Current Credit Facility”) with Webster Bank that expires on December 30, 2025. This facility, which was entered into on December 31, 2019, was amended several times (see summary of amendments below), and now provides for a $20,000,000 revolving loan (“Revolving Line of Credit”) and a $5,700,000 term loan (“Term Loan”). The loan is secured by a lien on substantially all of the assets of the Company. As discussed in Note 1, the Company was in compliance with a required covenant as of June 30, 2024. However, there is no assurance that the Company will be able to meet its financial covenants in one of the upcoming fiscal quarters over the next twelve months, therefore, in accordance with the guidance in ASC 470-10-45, related to the classification of callable debt, the entire term loan has been classified as short term as of June 30, 2024. The below table shows the timing of payments due under the Term Loan:
For the year ending |  | Amount |
December 31, 2024 (remainder of year) |  | $ | 407,000 |
December 31, 2025 |  |  | 5,225,000 |
Term Loan payable |  |  | 5,632,000 |
Less: debt issuance costs |  |  | (32,000 | )
Total Term Loan payable, net of debt issuance costs |  |  | 5,600,000 |
Less: Current portion of Term Loan payable |  |  | (5,600,000 | )
Total long-term portion of Term Loan payable |  | $ | - |
Interest expense related to the Current Credit Facility amounted to approximately $327,000 and $372,000 for the three months ended June 30, 2024 and 2023, respectively, and $648,000 and 704,000 for the six months ended June 30, 2024 and 2023, respectively. Interest expense includes the amortization of deferred finance costs of $17,000 and $17,000 for the three months ending June 30, 2024 and 2023, respectively, and $34,000 and $34,000 for the six months ending June 30, 2024 and 2023, respectively. The below summarizes various terms of the Current Credit Facility (all of which are described in full in various SEC filings):
| ● | The Company is required to achieve a defined EBITDA amount at the end of each Fiscal Quarter on a rolling basis. As of June 30, 2024, the Company achieved an EBITDA of $1,775,000 as compared to $740,000 that was required for the cumulative six months period ending June 30, 2024.
| ● | For so long as the Term Loan remains outstanding, if Excess Cash Flow (as defined) is a positive number for any fiscal year the Company shall pay an amount equal to the lesser of (i) twenty-five percent (25%) of the Excess Cash Flow for such fiscal year and (ii) the outstanding principal balance of the term loan. Such payment shall be applied to the outstanding principal balance of the Term Loan, on or prior to the April 15 immediately following such fiscal year. For the fiscal year ended December 31, 2023, based on the calculation there was no Excess Cash Flow payment required.
| ● | Both the Revolving Line of Credit and the Term Loan will bear an interest rate equal to the greater of (i) 3.50% and (ii) a rate per annum equal to the rate per annum published from time to time in the “Money Rates” table of the Wall Street Journal (or such other presentation within The Wall Street Journal as may be adopted hereafter for such information) as the base or prime rate for corporate loans at the nation’s largest commercial bank, less sixty-five hundredths (-0.65%) of one percent per annum. The average interest rate charged was 7.85% and 7.51% for the three months ended June 30, 2024 and 2023, respectively, and 7.85% and 7.27% for the six months ended June 30, 2024 and 2023, respectively.
| ● | The Current Credit Facility limits the amount of capital expenditures and dividends the Company can pay to its stockholders. Substantially all of the Company’s assets are pledged as collateral.
The below summarizes certain historical amendments to the Current Credit Facility
| ● | On August 4, 2023, the Company entered into a Fifth Amendment that waived a default caused by the failure by the Company to meet the required Fixed Charge Coverage Ratio for the fiscal quarter ended March 31, 2023. Additionally, the amendment provided for a revised Fixed Charge Ratio for the fiscal quarters ending June 30, 2023, and September 30, 2023, and increased the amount of purchase money secured debt (such as finance leases) the Company is allowed to have outstanding at any time to $2,000,000. In connection with this amendment, the Company paid an amendment fee of $10,000.
| ● | On November 20, 2023, the Company entered into a Sixth Amendment that waived defaults caused by the Company’s failure to achieve the required Fixed Charge Coverage Ratio of the Fifth Amendment and because we made capital expenditures (as defined) in excess of permitted amounts. This amendment further revised the Fixed Charge Coverage Ratio by requiring it to be calculated on a rolling period basis and not be less than, (a) 1.10x (as calculated on a six-months basis) for the fiscal quarter ending March 31, 2024 (b) 1.20x (as calculated on a nine-months basis) for the fiscal quarter ending June 30, 2024, and (iv) 1.25 (as calculated on a twelve-months basis) for all other fiscal quarters. This amendment also increased the Capital Expenditure limit to $2,500,000 in any fiscal year. In connection with these changes, the Company paid an amendment fee of $20,000.
| ● | On May 31, 2024, the Company entered into a Seventh Amendment that waived the default caused by the Company’s failure to achieve the Fixed Charge Coverage Ratio required by the Sixth Amendment. This amendment further revised the Financial Covenants. For the six months ending June 30, 2024 EBITDA shall not be less than $740,000; for the nine months ending September 30, 2024 EBITDA shall not be less than $1,500,000; for the twelve months ending December 31, 2024 EBITDA shall not be less than $2,800,000. For the rolling twelve-month period ending March 31, 2025, the Company is required to achieve a Fixed Charge Coverage Ratio of 1.05x. Beginning with the rolling twelve-month period ending June 30, 2025 and forward the Company is required to achieve a Fixed Charge Coverage Ratio of 1.25x. All other covenants remain unchanged. Additionally, this amendment increased the Term Loan by approximately $1,000,000 to $5,700,000, with monthly principal installments in the amount of $68,000. In connection with these changes, the Company paid an amendment fee of $20,000.
All amendment fees paid in connection with the Current Credit Facility that are for a future benefit of the Company are included in Deferred Financing Costs, Net, Deposits and Other Assets, in the accompanying consolidated balance sheets and are amortized over the term of the loan. As of June 30, 2024, the amount outstanding under the Company’s Revolving Line of Credit was $11,147,000, leaving $8,853,000 of availability to support the Company’s growth, subject to having the requisite collateral and maintaining compliance with the terms of the Credit Facility. Solar Credit Facility On August 16, 2023, the Company entered into a financing agreement (“Solar Credit Facility”) with Green Bank, a quasi-public agency of the State of Connecticut, for the installation of solar energy systems including replacing the existing roof (“Project”) at its Sterling facility. Advances are made by Green Bank upon its approval of costs incurred on the Project up to $934,000. As of June 30, 2024, cumulative advances totaling $899,000 had been made including the payment of Green Bank’s closing costs of $25,000. Interest accrues at the rate of 5% on advances and is capitalized and added to the outstanding principal of the loan. Upon project completion, the cumulative total of the advances and capitalized interest will convert to a 20-year level payment term loan with interest accruing at the rate of 5.75%. Semi-annual payments are projected to be approximately $41,000 inclusive of interest over the 20-year term. As of June 30, 2024, the amount classified as long-term is approximately $886,000. Interest expense related to the Solar Credit Facility amounted to approximately $17,000 and $0 for the three months ended June 30, 2024 and 2023, respectively and $24,000 and $0 for the six months ended June 30, 2024 and 2023, respectively. Finance Lease Obligations The Company has entered into finance leases for the purchase of additional manufacturing equipment. The obligations for the finance leases totaled $1,113,000 and $884,000 as of June 30, 2024 and December 31, 2023, respectively. The leases have an average imputed interest rate of 7.44% per annum and are payable monthly with the final payments due between September of 2026 and May of 2030.
|  | Three Months Ended |  |  | Six Months Ended |
|  | June 30, |  |  | June 30, |  |  | June 30, |  |  | June 30, |
|  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
Finance Lease cost: |  |  |  |  |  |  |  |  |  |  |  |
Amortization of ROU assets |  | $ | 41,000 |  |  | $ | 12,000 |  |  | $ | 79,000 |  |  | $ | 25,000 |
Interest on lease liabilities |  |  | 17,000 |  |  |  | 10,000 |  |  |  | 33,000 |  |  |  | 16,000 |
Total lease Costs |  | $ | 58,000 |  |  | $ | 22,000 |  |  | $ | 112,000 |  |  | $ | 41,000 |
Other Information: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash paid for amounts included in the measurement lease liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Financing cash flow from finance lease obligations |  | $ | 51,000 |  |  | $ | 26,000 |  |  | $ | 92,000 |  |  | $ | 40,000 |
Supplemental disclosure of non-cash activity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Acquisition of finance lease asset |  | $ | 319,000 |  |  | $ | 683,000 |  |  | $ | 319,000 |  |  | $ | 683,000 |
|  | June 30, |  |  | December 31, |
|  | 2024 |  |  | 2023 |
Weighted Average Remaining Lease Term - in years |  |  | 5.2 |  |  |  | 5.4 |
Weighted Average Discount rate - % |  |  | 7.44 | % |  |  | 7.31 | %
As of June 30, 2024, the aggregate future minimum finance lease payments, including imputed interest are as follows:
For the year ending |  | Amount |
December 31, 2024 (remainder of year) |  | $ | 145,000 |
December 31, 2025 |  |  | 291,000 |
December 31, 2026 |  |  | 266,000 |
December 31, 2027 |  |  | 190,000 |
December 31, 2028 |  |  | 190,000 |
Thereafter |  |  | 264,000 |
Total future minimum finance lease payments |  |  | 1,346,000 |
Less: imputed interest |  |  | (233,000 | )
Less: Current portion |  |  | (215,000 | )
Long-term portion |  | $ | 898,000 |
Loan Payable – Financed Asset The Company financed the purchase of a delivery vehicle in July 2020. The loan obligation totaled $18,000 and $22,000 as of June 30, 2024 and December 31, 2023, respectively. The loan bears no interest and a final payment is due and payable for all unpaid principal on July 20, 2026. Annual maturities of this loan are as follows:
For the year ending |  | Amount |
December 31, 2024 (remainder of year) |  | $ | 5,000 |
December 31, 2025 |  |  | 9,000 |
December 31, 2026 |  |  | 4,000 |
Loans Payable - financed assets |  |  | 18,000 |
Less: Current portion |  |  | (9,000 | )
Long-term portion |  | $ | 9,000 |
Related Party Notes Payable Taglich Brothers, Inc. is a corporation co-founded by two directors of the Company, Michael and Robert Taglich. Taglich Brothers, Inc. has acted as placement agent for various debt and equity financing transactions and has received cash and equity compensation for their services. From 2016 through 2020, the Company entered into various subordinated notes payable and convertible subordinated notes payable (together referred to as “Related Party Notes”) with Michael and Robert Taglich which generated proceeds to the Company totaling $6,550,000. In connection with these notes, Michael and Robert were issued a total of 35,508 shares of common stock and Taglich Brothers Inc. was issued promissory notes totaling $554,000 for placement agency fees The Related Party Notes outstanding as of the notes of June 30, 2024 and December 31, 2023 consist of:
|  | Michael Taglich, |  |  | Robert Taglich, |  |  | Taglich Brothers, |  |  |  |
|  | Chairman |  |  | Director |  |  | Inc. |  |  | Total |
Convertible Subordinated Notes |  | $ | 2,666,000 |  |  | $ | 1,905,000 |  |  | $ | 241,000 |  |  | $ | 4,812,000 |
Subordinated Notes |  |  | 1,000,000 |  |  |  | 350,000 |  |  |  | - |  |  |  | 1,350,000 |
Total |  | $ | 3,666,000 |  |  | $ | 2,255,000 |  |  | $ | 241,000 |  |  | $ | 6,162,000 |
Of the $6,162,000, approximately $2,732,000 bears an annual rate of interest of 6%, $2,080,000 bears an annual rate of 7% and $1,350,000 bears an annual interest rate of 12%. Interest expense for the three months ended June 30, 2024 and 2023 on all related party notes payable was $118,000 and $118,000, respectively, and $236,000 and $236,000 for the six months ended June 30, 2024 and 2023, respectively. Approximately $2,732,000 of the convertible subordinated notes can be converted at the option of the holder into Common Stock of the Company at $15.00 per share, while the remaining $2,080,000 of the convertible subordinated notes can be converted at the option of the holder into common stock of the Company at $9.30 per share. The remaining $1,350,000 is not convertible. There are no principal payments due prior to July 1, 2026. The Related Party Notes are subordinate to outstanding debt pursuant to the Current Credit Facility and mature on July 1, 2026. The Company is allowed, subject to certain limitation, to make principal payments of $250,000 to reduce the principal of the outstanding Related Party Notes. For the three and six months ended June 30, 2024 and 2023, no principal payments have been made on these notes.

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

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://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147481544/470-10-50-6 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147481544/470-10-50-6 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 405 -SubTopic 40 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org/1943274/2147477092/405-40-50-1 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 405 -SubTopic 40 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (a)(3) -Publisher FASB -URI https://asc.fasb.org/1943274/2147477092/405-40-50-1 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 405 -SubTopic 40 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (a)(2) -Publisher FASB -URI https://asc.fasb.org/1943274/2147477092/405-40-50-1 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 405 -SubTopic 40 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (a)(1) -Publisher FASB -URI https://asc.fasb.org/1943274/2147477092/405-40-50-1 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 405 -SubTopic 40 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147477092/405-40-50-1 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1B -Subparagraph (h) -Publisher FASB -URI https://asc.fasb.org/1943274/2147481139/470-20-50-1B Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(c)) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480678/235-10-S99-1 Reference 10: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 470 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/470/tableOfContent Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Topic 835 -SubTopic 30 -Name Accounting Standards Codification -Section 45 -Paragraph 2 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482925/835-30-45-2 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1B -Publisher FASB -URI https://asc.fasb.org/1943274/2147481139/470-20-50-1B Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1B -Subparagraph (g) -Publisher FASB -URI https://asc.fasb.org/1943274/2147481139/470-20-50-1B Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1B -Subparagraph (i) -Publisher FASB -URI https://asc.fasb.org/1943274/2147481139/470-20-50-1B Reference 15: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1C -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147481139/470-20-50-1C Reference 16: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1C -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147481139/470-20-50-1C Reference 17: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1C -Subparagraph (c) -Publisher FASB -URI https://asc.fasb.org/1943274/2147481139/470-20-50-1C Reference 18: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1E -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147481139/470-20-50-1E Reference 19: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1I -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147481139/470-20-50-1I Reference 20: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1I -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147481139/470-20-50-1I Reference 21: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1I -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org/1943274/2147481139/470-20-50-1I + Details
Name: | us-gaap_DebtDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration