LONG-TERM DEBT

There were loans outstanding under the Company's current revolving credit facility (the "Current Credit Facility") of $58,695,000, $40,000,000 and $48,431,000 as of December 31, 2018, March 31, 2018 and December 31, 2017, respectively.

On November 2, 2018, the Company and the lenders under the Current Credit Facility entered into a waiver and amendment (“Amendment No. 5”) of the underlying credit agreement in which the lenders waived certain events of default thereunder, and the parties amended certain provisions thereof. The events of default were based on: (A) the Company’s non-compliance as of September 30, 2018 with financial covenants requiring the Company to maintain: (i) a minimum tangible net worth of at least $170,000,000, and (ii) an interest coverage ratio of not less than 3.50 to 1.00; and (B) the making by the Company of certain payments otherwise permitted under the credit agreement, but which were not permitted due to the existence of the foregoing events of default.

Amendment No. 5 modified the credit agreement by (i) reducing the maximum credit available to the Company under the Current Credit Facility at any one time (the “Committed Amount”) to $100,000,000 until January 31, 2019, and to $50,000,000 from February 1, 2019 until facility expiration; (ii) providing the lenders with a consent right on all acquisitions; (iii) effectively restricting any further repurchases, redemptions or retirements by the Company of the Company’s capital stock; (iv) providing for a borrowing base (the “Borrowing Base”) based on specified percentage amounts of the Company’s domestic accounts receivable and inventory; (v) limiting the aggregate amount that can be used by the Company at any one time for borrowings and letters of credit to the lesser of the Committed Amount and the Borrowing Base; (vi) increasing the marginal per annum interest rate applicable to borrowings from 0.95% to (a) 2.00% from November 1, 2018 through December 31, 2018, (b) 3.00% from January 1, 2019 through January 31, 2019, and (c) 3.50% from February 1, 2019 until expiration; and (vii) reducing the minimum required interest coverage ratio to 1.05 to 1.00 for the fiscal quarter ended December 31, 2018.

Under Amendment No. 5, the lenders received a collateral security interest in all of the Company’s domestic property and assets, including all accounts receivable, inventory, equipment, general intangible assets, and commercial personal property. Further, under Amendment No. 5, the Company agreed to grant the lenders liens against all its domestic real estate, if requested by the lenders at any time after February 1, 2019.

On February 6, 2019, the Company and the lenders under the Current Credit Facility entered into a Waiver Agreement (“Waiver Agreement”) in which the lenders waived events of default that then existed under the Current Credit Facility. The events of default were based on: (A) the Company’s non-compliance as of December 31, 2018 with financial covenants requiring the Company to maintain: (i) a minimum tangible net worth of at least $170,000,000, and (ii) an interest coverage ratio as of that date of not less than 1.05 to 1.00; and (B) the Company’s partial non-compliance with covenants contained in Amendment No. 5 to the Current Credit Facility requiring the provision of certain documents to the lenders and/or the administrative agent within specified timeframes. Under the Waiver Agreement, the Company paid a waiver fee of $225,000, of which the lenders agreed to refund $150,000 if the Current Credit Facility is repaid and terminated on or before February 27, 2019, and $75,000 if the Current Credit Facility is repaid and terminated after February 27, 2019 and on or before March 6, 2019. As part of the Waiver Agreement, the Company agreed to repay and terminate the Current Credit Facility by not later than March 7, 2019 and waived the 30 day cure period that would otherwise apply if the Current Credit Facility is not repaid and terminated by such date.

The Company has experienced events of non-compliance with the financial covenants under the Current Credit Facility for the consecutive quarterly periods ended September 30, 2018 and December 31, 2018. Further, under Amendment No. 5, the Current Credit Facility limits the maximum credit available to the Company to no more than $50,000,000 from February 1, 2019 until its expiration on March 16, 2020. The Company's outstanding loan balance as of January 31, 2019 was $43,195,000. The Current Credit Facility will not likely provide adequate liquidity with which to continue normal operations in fiscal 2020 considering the Company's existing levels of indebtedness and projected new borrowings related to seasonal working capital requirements.

The Company’s management has concluded that it is “probable” (according to the U.S. GAAP definition of the term) that it will replace the Current Credit Facility with a new asset-backed revolving credit facility (the "New ABL Facility") during the fourth quarter of fiscal 2019. On January 28, 2019, the Company signed a non-binding term sheet for the New ABL Facility with a financial institution. The Company’s management has concluded that, when entered into, the New ABL Facility will provide the Company access to adequate funding to re-finance its existing long-term debt as well as provide additional borrowing capacity to address seasonal working capital requirements.

The Company has classified its outstanding loan balance under the Current Credit Facility of $58,695,000 as a current liability as of December 31, 2018 as (i) the Company does not project that it would be in compliance with the financial covenants included in the Current Credit Facility in future quarterly periods through expiration of the underlying credit agreement and (ii) the Company expects to repay all amounts owed under the Current Credit Facility during the quarter ending March 31, 2019. The Company classified $40,000,000 of its outstanding loan balance under its credit facility as long-term as of March 31, 2018 because it believed the criteria relating to the intent and ability to maintain the debt outstanding for greater than one year were met at the time.

The Company leases certain equipment under capital leases which is classified in the accompanying balance sheets as follows (in thousands):



	December 31, 2018		March 31, 2018		December 31, 2017
Current portion of long-term debt	$	132	$	74	$	161
Long-term debt, net of current portion	16		120		138
	$	148	$	194	$	299

The Company also finances certain equipment which is classified in the accompanying balance sheets as follows (in thousands):



	December 31, 2018		March 31, 2018		December 31, 2017
Current portion of long-term debt	$	173	$	154	$	152
Long-term debt, net of current portion	—		108		147
	$	173	$	262	$	299