Note 8 - Debt

6 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Debt Disclosure [Text Block]

NOTE 8. DEBT

We finance certain amounts owed for annual insurance premiums under financing agreements. As of June 30, 2022, amounts due under insurance premium financing agreements are due in monthly installments of principal and interest through March 2023, at interest rates of 3.5% to 3.9% per year.

We borrow under a factoring agreement with a lender, which provides a $7.0 million credit facility. We may only borrow to the extent we have qualifying accounts receivable as defined in the agreement. The facility had an initial two-year term and automatically renews for successive annual periods, unless proper termination notice is given. The facility term has automatically extended to October 2022. We paid a $0.2 million facility fee upon inception of the agreement which amortized to interest expense on a straight-line basis over the two years ending in October 2021. We incur recurring fees under the agreement, including a funding fee of 0.5% above the prime rate, in no event to be less than 5.5%, on any advances and a service fee on average net funds borrowed. The lender has the right to demand repayment of the advances at any time. The lender has a security interest in personal property assets.

Additional information related to our factoring obligation follows.

	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Average borrowings outstanding (in thousands)	$	3,131		$	1,564		$	2,977		$	1,223
Amortization of debt issuance costs (in thousands)	$	-		$	23		$	-		$	45
Interest paid, as a percentage of average outstanding borrowings		1.5	%		1.6	%		1.4	%		3.4	%
Fees paid, as a percentage of average outstanding borrowings		0.9	%		1.5	%		1.2	%		2.9	%

As of June 30, 2022, we had $1.8 million outstanding under a line of credit with a bank. The borrowing is secured by our cash on deposit with the bank and bears interest at prime (4.8% at June 30, 2022). There are no stipulated repayment terms for the line as long as we maintain sufficient cash collateral. Our borrowings under the line of credit averaged $0.1 million in the three months ended June 30, 2022, and less than $0.1 million for the six months ended June 30, 2022.

Long-term debt consists of the following (in thousands).

	June 30,		December 31,
	2022		2021
Mortgage promissory note - Originally dated July 2020 and modified in December 2021. As modified, interest accrues at an annual rate which is the greater of 7.0% above the lender's prime rate and 10.3% (11.8% at June 30, 2022) payable in monthly installments through December 2023. Net of $17 debt issuance costs at June 30, 2022.	$	1,906	$	2,469
Face amount $2.5 million. Interest accrued at the effective discount rate 11.5%. Secured by certain real property in Wynn, Arkansas.
Equipment note - Dated May 2021. Original principal $46. Due in monthly installments through June 2025.
Interest accrues at the effective discount rate of 3.6% per year.		28		33
Equipment note - Dated December 2019. Original principal $40. Due in monthly installments through December 2024.
Interest accrues at the effective discount rate of 9.3% per year.		22		26
Equipment notes - Initially recorded in November 2018, in an acquisition, at the present value of future payments using a discount rate of 4.8% per year. Due in monthly installments through August 2022.		3		11
Total long term debt, net	$	1,959	$	2,539

Future principal maturities of long-term debt outstanding as of June 30, 2022, follow (in thousands).

2022 (six months ended December 31, 2022)	$	620
2023		1,332
2024		19
2025		5
Principal maturities		1,976
Debt issuance costs		(17	)
Total long term debt, net	$	1,959