NOTES PAYABLE AND LONG-TERM DEBT

12 Months Ended

Dec. 31, 2019

NOTES PAYABLE AND LONG-TERM DEBT [Abstract]

NOTES PAYABLE AND LONG-TERM DEBT

7.  NOTES PAYABLE AND LONG-TERM DEBT

As previously disclosed, on October 14, 2019, our management, in consultation with the Audit Committee, determined that Tandy’s previously issued Consolidated Financial Statements as of and for (i) the years ended December 31, 2018 and 2017, (ii) the three and six-month periods ended June 30, 2018, (iii) the three and nine-month periods ended September 30, 2018, and (iv) the three-month period ended March 31, 2019, should no longer be relied upon due to misstatements related to our accounting processes for inventory transactions, and we would restate such financial statements as part of the Restatement Process.  See the Restatement Footnote for further information around the Restatement Process.  As a result, the Company did not timely file with the SEC its Quarterly Reports on Form 10-Q for the periods ended June 30, and September 30, 2019, March 31, June 30, and September 30, 2020, and March 31, 2021, or its Annual Report on Form 10-K for fiscal 2019 and fiscal 2020 (collectively, the “Delinquent Filings”).  Under the terms of the Promissory Note agreements the Company had in place with its primary bank, BOKF, NA d/b/a Bank of Texas (“BOKF”), we were required to provide BOKF quarterly financial statements and compliance certificates.  We were unable to provide these financial statements and compliance certificates for the Delinquent Filings noted above.  In response, on April 2, 2020, BOKF provided notice under the terms of the Promissory Note agreements that such Promissory Notes were cancelled.  As of the date of cancellation, Tandy had no borrowings outstanding under these credit facilities or with any other lending institution.  As of the date of this filing, Tandy has no lines of credit outstanding.

On September 18, 2015, we executed a Promissory Note and Business Loan Agreement with BOKF which provided us with a working capital line of credit facility of up to $6 million which was secured by our inventory.  On August 20, 2018, this line of credit was amended to extend the maturity to September 18, 2020 and to reduce the interest rate by 0.35%, and on September 18, 2019, the maturity date was further extended through September 18, 2021.  The Business Loan Agreement contained covenants that required us to maintain a funded debt to EBITDA ratio of no greater than 1.5 to 1 and a Fixed Charge Coverage Ratio greater than or equal to 1.2 to 1.  Both ratios were calculated quarterly on a trailing four quarter basis.  For the years ended December 31, 2019, 2018 and 2017, there were no amounts drawn on this line of credit.

Also, on September 18, 2015, we executed a Promissory Note and Business Loan Agreement with BOKF which provided us with a line of credit facility of up to $10 million for the purpose of repurchasing shares of our common stock pursuant to our stock repurchase program, announced in August 2015 and subsequently amended, which permitted us to repurchase up to 2.2 million shares of our common stock at prevailing market prices through August 2020.  Subsequently, this line of credit was amended to increase the availability from $10 million to $15 million for the repurchase of shares of our common stock pursuant to our stock repurchase program through the end of the draw down period which was the earlier of August 9, 2020 or the date on which the entire amount was drawn.  In addition, this Promissory Note was amended on August 20, 2018 to reduce the interest rate by 0.35%, and on September 18, 2019, the maturity date was further extended through September 18, 2024.  We were required to make monthly interest-only payments through September 18, 2020.  After this date, the principal balance would have rolled into a 4-year term note with principal and interest paid on a monthly basis with a maturity date of September 18, 2024.  This Promissory Note was secured by a Deed of Trust on the real estate located at 1900 SE Loop 820, Fort Worth, Texas.  There were no amounts drawn on this line of credit during 2017.  During the year ended December 31, 2018, we drew $1.6 million on this line of credit which was used to purchase 243,387 shares of our common stock pursuant to our stock repurchase program. As of December 31, 2018, the outstanding balance on this line of credit was $9.0 million.  During the quarter ended March 31, 2019, we paid off this line of credit with no pre-payment penalties incurred.

Prior to August 20, 2018, amounts drawn under either Promissory Note accrued interest at the London Interbank Offered Rate for U.S. dollars (commonly known as “LIBOR”) plus 1.85% (3.351% as of December 31, 2017).  Beginning August 20, 2018, the notes accrued interest at LIBOR plus 1.5% (4.0% as of December 31, 2018).  Neither line of credit carried commitment fees.

The amounts outstanding under the above agreements consisted of the following:

	December 31,
	2019		2018		2017
Business loan agreement with BOKF – collateralized by real estate; payable as follows:
Line of credit note, as amended, in the maximum principal amount of $15,000,000 with features as more fully described above – interest due monthly at LIBOR plus 1.5%; matures September 18, 2024	$	-	$	8,968,018	$	7,371,730
Line of credit note, as amended, in the maximum principal amount of $6,000,000 with revolving features as more fully described above – interest due monthly at LIBOR plus 1.5%; matures September 18, 2021		-		-		-
	$	-	$	8,968,018	$	7,371,730
Less current maturities		-		519,516		614,311
TOTAL	$	-	$	8,448,502	$	6,757,419

During the second quarter of 2020, the Company borrowed $0.4 million from Banco Santander S.A. under the Institute of Official Credit Guarantee for Small and Medium-sized Enterprises in order to facilitate the continuation of employment and to attenuate the economic effects of the COVID-19 virus.  This loan was provided for by the Spanish government as part of a COVID-19 relief program.  The term of the agreement is five years and the interest rate is fixed at 1.5%.  Based on the terms of the loan agreement, we are required to make monthly interest-only payments for the first two years and monthly principal and interest payments for the remainder of the term of the agreement.