Note 5 - Indebtedness

3 Months Ended

Mar. 31, 2025

Notes to Financial Statements

Long-Term Debt [Text Block]

5. Indebtedness

In 2023, the Company entered into a three-year financing agreement with a financial lending institution for an asset-based line of credit (“Credit Facility”) with a maximum revolving credit of $7,000,000. The borrowing base under the Credit Facility is determined using 85% of eligible domestic and foreign accounts receivable balances, less any other specific reserves. In general terms, ineligible receivables are defined as invoices unpaid over 90 days. The balance outstanding on the Credit Facility is approximately $3,725,000 and $2,127,000 as of March 31, 2025 and December 31, 2024, respectively. The interest rate on the Credit Facility is equal to the greater of 8.0% or the prime rate (as defined by JP Morgan Chase) plus 1.0% (8.5% as of March 31, 2025 and December 31, 2024). The Credit facility is collateralized by the Company’s non-realty assets.

In accordance with ASC 470-10-45-5 Classification of Revolving Credit Agreements Subject to Lock-Box Arrangements and Subjective Acceleration Clauses, borrowings outstanding under the Credit Facility that includes both a subjective acceleration clause and requirement to maintain a lock-box arrangement must be considered short-term obligations. As the Credit Facility includes both provisions, the outstanding balances are classified as current liabilities on the Condensed Consolidated Balance Sheets.

The Credit Facility contains two financial covenants required to be maintained by the Company at the end of each of its fiscal quarters. The Tangible Net Worth covenant requires the Company to maintain tangible net worth not less than $20,000,000. The Working Capital covenant requires the Company to maintain working capital not less than $10,000,000. The Company has met both covenant requirements as of March 31, 2025 and December 31, 2024, respectively.

On January 17, 2025, the Company entered into a three-year equipment loan financing agreement with a lending institution in the amount of $192,000. Monthly payments are fixed at an interest rate of 8.09%. The outstanding balance is approximately $182,000 as of March 31, 2025. Principal maturities of long-term debt related to the financing agreement are approximately: 2025 $44,000; 2026 $63,000; 2027 $69,000; and 2028 $6,000. The current portion of $64,000 is included in other accrued liabilities and the remainder of $118,000 is included in other long-term liabilities as of March 31, 2025.