Note 13 - Subsequent Event

6 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Subsequent Events [Text Block]

Note

1

3

- Subsequent Event

s

East West Bank

Revolving

Credit Facility

On

August 10, 2017,

the Company entered into

the

2017

Credit Agreement with East West Bank which provides for a

three

-year

$30

million senior secured revolving credit facility (the "New Credit Facility"). The

2017

Credit Agreement allows the Company to borrow up to

85%

of eligible receivables and up to

85%

of the appraised value of eligible equipment. Under the

2017

Credit Agreement, there are

no

required principal payments until maturity and the Company has the option to pay variable interest rate based on (i)

1

month LIBOR plus a margin of

3.5%

for LIBOR Rate Loans or (ii) interest at the Wall Street Journal prime rate plus a margin of

1.75%.

Interest is calculated monthly and paid in arrears. Additionally, the New Credit Facility is subject to an unused credit line fee of

0.5%

per annum multiplied by the amount by which total availability exceeds the average monthly balance of the New Credit Facility, payable monthly in arrears. The New Credit Facility is collateralized by substantially all of the Company’s assets and subject to financial covenants. The outstanding principal loan balance matures on

August 10, 2020.

Under the terms of the

2017

Credit Agreement, collateral proceeds will be collected in bank-controlled lockbox accounts and credited to the New Credit Facility within

one

business day.

Related to the

2017

Credit Agreement, the Company is subject to the following financial covenants:

(

1

) To maintain a

Fixed Charge Coverage Ratio (“FCCR”) of

not

less than

1.10

to

1.00

at the end of each month, with a build up beginning with

January 1, 2017,

through

December 31, 2017,

upon which the ratio will be measured on a trailing

twelve

-month basis;

 

(

2

) 

In periods when the trailing

12

month FCCR is less than

1.20x,

the Company is required t

o maintain minimum liquidity of

$1,500,000

(including excess availability under the

2017

Credit Agreement and balance sheet cash).

 

On

August 10, 2017,

an initial advance of approximately

$21.7

million

was made under the New Credit Facility to repay in full all obligations outstanding under the Prior Credit Facility including fees and expenses incurred in connection with the termination of the

2014

Credit Agreement. 

As of

August 10, 2017,

the Company was in compliance with the financial covenants related to the

2017

Credit Agreement.