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Note 6 - Notes Payable
 6 Months Ended
Jun. 30, 2025
Notes to Financial Statements  
Debt Disclosure [Text Block]

NOTE 6 – NOTES PAYABLE

 

Notes payable consisted of the following:

 

   

June 30, 2025

    

December 31, 2024

  
   

(Unaudited)

          
                 

Term Loan A

   $ 4,375     $ 5,625  

Term Loan B

     6,500       7,500  

Unamortized debt issuance costs

     (54 )     (75 )

Total

     10,821       13,050  

Current

     (4,500 )     (4,500 )

Long term

   $ 6,321     $ 8,550  

 

Credit Agreements – First Citizens Bank

 

On February 23, 2023, the Company entered into an Amended and Restated Credit Agreement (the “2023 Credit Agreement”) with First Citizens Bank (the “Bank”), amending and restating that certain Credit Agreement, dated September 24, 2019, between the Company and the Bank. Pursuant to the 2023 Credit Agreement, the Bank provided the Company with a term loan for the principal amount of $12,500 (“Term Loan A”), and a revolving line of credit of $3,500 (the “Line of Credit”, and collectively with the Term Loans, the “Loan”). The Company used the proceeds from the Loan to fund the acquisition of MRC and for general working capital purposes.

 

Second Amended and Restated Credit Agreement

 

On October 10, 2023, the Company entered into a Second Amended and Restated Credit Agreement (the “Prior Credit Agreement”) with the Bank, amending and restating the 2023 Credit Agreement between the Company and the Bank. Pursuant to the Prior Credit Agreement, the Bank provided the Company with an additional Term Loan (“Term Loan B”, and together with Term Loan A, the “Term Loans”) for the principal amount of $10,000 and extended the Line of Credit of $3.5 million to December 23, 2024. The Company used the proceeds from Term Loan B to fund the acquisition of the MusclePharm assets and for general working capital purposes.

 

First Amendment to Second Amended and Restated Credit Agreement

 

On December 19, 2024, the Company entered into the First Amendment to the Amended Credit Agreement (the “Amended Prior Credit Agreement”) to extend the Line of Credit to April 30, 2026.

 

Term Loans A and B – Pursuant to the Amended Prior Credit Agreement, the Term Loans accrue interest at a per annum rate equal to the greater of 3.50% or 2.75% above the one-month secured overnight financing rate ("SOFR") published for such day by the Federal Reserve Bank of New York. The Company shall make quarterly payments of principal plus accrued interest on the Term Loans until the principal balances are fully amortized. Quarterly principal payments for Term Loan A and Term Loan B are $625 and $500, respectively. The Company may prepay amounts borrowed under the Term Loans, in whole or in part, with accrued interest to the date of such prepayment on the amount prepaid, by written notice to Bank at least one business day prior to the proposed prepayment. During the first quarter of 2024, the Company made a voluntary prepayment on Term Loan A of $2,500, and as such, Term Loan A will fully amortize in February 2027. Term Loan B will fully amortize in October 2028. 

 

Line of Credit – Also pursuant to the Amended Prior Credit Agreement, outstanding advances under the Line of Credit (“Advances”) will accrue interest at a per annum rate equal to the greater of 3.50% or 2.75% above the one-month SOFR, and the Company will pay the interest on the Advances monthly, with all principal and any accrued interest on outstanding Advances being due and payable in full on the Line of Credit maturity date. The Company may prepay amounts borrowed under the Line of Credit, in whole or in part with accrued interest to the date of such prepayment on the amount prepaid, by written notice to Bank at least one business day prior to the proposed prepayment. 

 

The Amended Prior Credit Agreement contains customary events of default (each an “Event of Default”), which upon the occurrence of an Event of Default, among other things, interest will accrue at the Applicable Rate plus 2% per annum, and the Bank may declare all obligations, with interest thereon, immediately due and payable. The Amended Prior Credit Agreement further contains customary representations and warranties of the Company; customary indemnification provisions whereby the Company will indemnify Bank for certain losses arising out of inaccuracies in, or breaches of, the representations, warranties and covenants of the Company, and certain other matters; and customary affirmative and negative covenants, including covenants to maintain a Fixed Charge Coverage Ratio (as defined in the Amended Prior Credit Agreement) of not less than 1.25 to 1.00 as tested quarterly on a trailing twelve-month basis, a Funded Debt to EBITDA Ratio (as defined in the Amended Prior Credit Agreement) of not more than 2.50 to 1.00 as tested quarterly on a trailing twelve-month basis, and to the extent the Term Loans still have a balance as of June 30, 2025 and a Cash Flow Leverage threshold (as defined in the Amended Prior Credit Agreement) of at least 1.15 is not met, the Company will be required to make a prepayment on the Term Loans equal to 50% of the Excess Cash Flow (as defined in the Amended Prior Credit Agreement). The Company was in compliance with all covenants as of June 30, 2025 and December 31, 2024.

 

The borrowings outstanding on the Term Loans were $10,875 and $13,125 as of June 30, 2025 and December 31, 2024, respectively.

 

There was no outstanding balance on the Line of Credit as of June 30, 2025 and December 31, 2024.

 

Subsequent to the end of the quarter, on August 8, 2025, the Company entered into a Loan and Security and Guarantee Agreement (“Credit Agreement”) with the bank, as further described in Note 10. Subsequent Event to the condensed consolidated financial statements.