Note 9 - Debt

12 Months Ended

Dec. 31, 2022

Notes to Financial Statements

Debt Disclosure [Text Block]

NOTE 9. DEBT

We finance certain amounts owed for annual insurance premiums under financing agreements. As of December 31, 2022, amounts due under insurance premium financing agreements are due in monthly installments of principal and interest through March 31, 2023, at an interest rate of 3.9% per year.

We also borrow under a factoring agreement with a lender (the Lender), which provides a $7.0 million credit facility. We may only borrow to the extent we have qualifying accounts receivable to use as collateral as defined in the agreement. The facility had an initial two-year term and automatically renews for successive annual periods until delivery of a proper termination notice. The facility term automatically extended to October 2023. 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, as well as a service fee on average net funds borrowed. The lender has a security interest in our personal property assets and the right to demand repayment of the advances at any time.

The Lender advanced us $0.9 million effective September 30, 2022 (the Over-advance), pending restructuring of our mortgage promissory note with the Lender. The Over-advance accrued interest at an annual rate which is the greater of 7.0% above the Lender's prime rate (14.5% at December 31 2022). and 10.3% until it was repaid in January 2023. As of December 31, 2022, the Over-advance is classified as long-term debt in our consolidated balance sheet as it was refinanced on a long-term basis in January 2023, as discussed below.

Additional information related to our factoring obligation (exclusive of the Over-advance) follows.

	2022			2021
Average borrowings outstanding (in thousands)	$	3,179		$	1,622
Amortization of debt issuance costs (in thousands)	$	-		$	75
Fees paid, as a percentage of average outstanding borrowings		5.8	%		6.2	%
Interest paid, as a percentage of average outstanding borrowings		7.0	%		6.4	%

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

	December 31,
	2022		2021
Mortgage promissory note - Originally dated July 2020 and modified in December 2021 and January 2023. As modified, interest accrues at an annual rate which is the greater of 7.0% above the Lender's prime rate (14.5% at December 31, 2022) and 10.3%. Payable in monthly installments through January 2025. Face amount $2.5 million. Secured by certain real property in Wynne, Arkansas.	$	2,211	$	2,469
Progress payment agreement - Dated August 2022. Original principal $37. Interest is payable monthly at the rate of 25.2% per year. Due on demand, until a finance lease is executed with the lender before that date for the related equipment.		39		-
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.		24		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.		18		26
Other				11
Total long-term debt, net	$	2,292	$	2,539

In December 2021, we entered into agreements with the Lender to effect a modification of the terms of our mortgage promissory note. This modification involved entering into a new mortgage promissory note in the principal amount of $2.5 million, with terms as indicated in the table above. We received $1.2 million in cash from the lender and the lender applied the remainder of the principal to the $1.3 million principal and interest then outstanding under our old promissory note. We recognized no gain or loss with the modification. At modification, the carrying amount of the new note equaled the total of (i) the $1.3 million carrying amount of the old note prior to modification (ii) the $1.2 million advanced by the lender at modification and (iii) the debt issuance costs associated with the modification. Under the terms of the original note, (i) interest accrued at an annual rate which was the greater of 11.0% above the 1ender’s prime rate and 14.3% and (ii) principal and interest were payable in monthly installments through May 2022 and a final payment of $1.0 million was due in June 2022. This December 2021 note was replaced with a new note in January 2023. 

In January 2023, we entered into agreements with the Lender to effect a modification of the terms of the December 2021 note. This modification involved us entering into a new mortgage promissory note in the principal amount of $2.5 million. We received $0.3 million in cash and the Lender applied the remainder of the new principal to the $1.3 million then outstanding on the December 2021 term note and the $0.9 million Over-advance on the factoring agreement. Under the terms of the January 2023 note, (i) interest accrues at an annual rate which is the greater of 7.0% above the 1ender’s prime rate and 10.3% and (ii) principal and interest are payable in equal monthly installments through January 2025. The new note is secured by a mortgage on our real property in Arkansas. The current portion of long-term debt on the consolidated balance sheet as of  December 31, 2022, reflects the terms of the January 2023 modification.

Future principal maturities of long-term debt outstanding at December 31, 2022, reflecting the January 2023 modification of the mortgage promissory note, follow (in thousands).

2023	$	996
2024		1,194
2025		111
Principal maturities		2,301
Debt issuance costs		(9	)
Total long-term debt, net	$	2,292