XML 21 R11.htm IDEA: XBRL DOCUMENT v3.23.3
Debt and Shareholders' Equity
9 Months Ended
Sep. 30, 2023
Debt [Abstract]  
Debt and Shareholders' Equity

4. Debt and Shareholders’ Equity

Long-term debt consists of (i) borrowings under the Company’s revolving loan agreement with HSBC Bank, N.A.(“HSBC”) and (ii) amounts outstanding under the fixed rate mortgage on the Company’s manufacturing and distribution facilities in Rocky Mount, NC and Vancouver, WA. The revolving loan agreement provides for borrowings of up to $65 million at an interest rate of Secured Overnight Financing Rate (“SOFR”) plus 1.75%; interest is payable monthly. The credit facility has an expiration date of May 31, 2026. The Company must pay a facility fee, payable quarterly, in an amount equal to one eighth of one percent (.125%) per annum of the average daily unused portion of the revolving credit line. The facility is intended to provide liquidity for growth, acquisitions, dividends, share repurchases, and other operating activities. Under the revolving loan agreement, the Company is required to maintain specific amounts of funded debt to EBITDA, a fixed charge coverage ratio and must have annual net income greater than $0, measured as of the end of each fiscal year. On November 8, 2022, the revolving loan agreement was amended to increase the ratio of funded debt to EBITDA. The increase was in effect during the four quarters commencing in the third quarter of 2022 and ending with the three months ended June 30, 2023. The increase for those four quarters ranged from a low of 4.75 to 1 to a high of 5.75 to 1. The amendment also modified the interest rate from SOFR +1.75% to range from SOFR +1.60% up to a high of SOFR + 2.35% on a basis that varies quarterly with the funded debt to EBITDA ratio. As of September 30, 2023, the Company was in compliance with the covenants under the revolving loan agreement as then in effect.

As of September 30, 2023 and December 31, 2022, the Company had outstanding borrowings of $33,000,000 and $49,916,000, respectively, under the Company’s revolving loan agreement with HSBC.

The Company’s manufacturing and distribution facilities in Rocky Mount, NC and Vancouver, WA were financed by a fixed rate mortgage with HSBC at a fixed interest rate of 3.8%. The Company entered into the agreement on December 1, 2021. Commencing on January 1, 2022, payments of principal and interest are due monthly, with all amounts outstanding due on maturity on December 1, 2031. As of September 30, 2023 and December 31, 2022, long-term debt related to the mortgage consisted of the following (amounts in ‘000’s):

 

September 30, 2023

 

December 31, 2022

 

 

 

 

 

 

Mortgage payable - HSBC Bank N.A.

$

10,932

 

$

11,233

 

Less debt issuance costs

 

(124

)

 

(134

)

 

10,808

 

 

11,099

 

Less current maturities

 

415

 

 

405

 

Long-term mortgage payable less current maturities

$

10,393

 

$

10,694

 

 

 

 

 

 

During the three and nine months ended September 30, 2023, the Company issued a total of 14,875 and 35,577 shares of common stock and received aggregate proceeds of $237,000 and $526,000 upon exercise of employee stock options. Also, during the three and nine months ended September 30, 2023, the Company issued 2,189 and 11,314 shares of common stock to optionees who had elected a net share settlement of certain of their respective options.