Debt |
3 Months Ended |
|---|---|
Mar. 31, 2020 | |
| Debt Disclosure [Abstract] | |
| Debt | Debt Credit Agreement
On February 28, 2020, the Company entered into a Credit Agreement (the “Credit Agreement”), with JPMorgan Chase
Bank, N.A., individually, and as Administrative Agent and Issuing Bank (“JPMorgan Chase” or the “Lender”). The Credit
Agreement provides for senior secured credit facilities (the "Credit Facilities") in the amount of $7,500,000, including a
$2,000,000 revolver (the "Revolver") and $5,500,000 development line of credit (the "Line of Credit"). The Revolver includes
amounts available for letters of credit of up to $1,000,000 and an uncommitted additional amount of $2,500,000. All outstanding
principal and interest on the Revolver are due on February 28, 2022. Principal and interest outstanding on the Line of Credit at
the end of the first year are converted to a term loan payable in 36 monthly payments with a final maturity date of March 31,
2024. Principal amounts on the Line of Credit borrowed during the second year plus interest thereon which are outstanding at the end of the second year are converted to a second term loan payable in 36 monthly payments with a final maturity date of March 31, 2025. Borrowings under the Credit Facilities bear interest at a rate equal to an applicable margin, which is a one-, three- or six-month reserve adjusted Eurocurrency rate plus 2.00% or, at the election of the Company, an alternative base rate, plus 1.00%. The alternative base rate is the greatest of the prime rate, the Federal Reserve Bank of New York rate plus 0.50% and the one-month reserve adjusted Eurocurrency plus 1.00%. Unused portions of the Credit Facilities bear interest at a rate equal to 0.25% per annum. If the current Eurocurrency rate is no longer available or representative, the loan agreement provides a mechanism for replacing that benchmark rate. The Credit Facilities are pre-payable at any time without penalty, other than customary breakage fees, and any voluntary repayments made by the Company would reduce the future required repayment amounts.
The Credit Facilities contain customary events of default, including but not limited to nonpayment; material inaccuracy of
representations and warranties; violations of covenants; certain bankruptcies and liquidations; cross-default to material
indebtedness; certain material judgments; and certain fundamental changes such as a merger or sale of substantially all assets
(as further defined in the Credit Facilities). The Credit Facilities require the Company to comply with customary affirmative,
negative and financial covenants, including minimum interest coverage and maximum net leverage. A breach of any of these
operating or financial covenants would result in a default under the Credit Facilities. If an event of default occurs and is
continuing, the lenders could elect to declare all amounts then outstanding, together with accrued interest, to be immediately
due and payable. The Credit Facilities are collateralized by substantially all of the Company’s assets, including the assets in the
Company’s company-owned or managed clinics. The Company intends to use the Revolver for general working capital needs
and the Line of Credit for acquiring and developing new chiropractic clinics.
On March 18, 2020, the Company drew down $2,000,000 under the Revolver as a precautionary measure in order to further
strengthen its cash position and provide financial flexibility in light of the current uncertainty in the global markets resulting from the COVID-19 outbreak. As of March 31, 2020, the Company was in compliance with all applicable financial and non-financial covenants under the Credit Agreement.
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