Quarterly report pursuant to Section 13 or 15(d)

Notes Payable

Notes Payable
9 Months Ended
Sep. 30, 2018
Debt Disclosure [Abstract]  
Notes Payable

8. Notes Payable


AMR entered into a $10,000,000 loan with Green Bank on November 3, 2015. The term of the loan is twenty-one years. During the first twelve months, only interest was payable and thereafter monthly payments of interest and principal are due. The interest rate adjusts on the first day of each calendar quarter to the greater of six percent (6%) or two percent (2%) per annum above the minimum prime lending rate charged by large U.S. money center commercial banks as published in the Wall Street Journal. The terms of the Loan Agreement contain various affirmative and negative covenants. Among them, AMR must maintain a minimum debt service coverage ratio of 1.25 to 1.0 (beginning with the twelve-month period ending March 31, 2017), a maximum debt-to-net worth ratio of 1.0 to 1.0 and a minimum current ratio of 1.5 to 1.0. AMR was in compliance with all but the minimum debt service coverage ratio covenant as of and for each of the calendar quarters in the period March 31, 2017 through September 30, 2018. AMR has received a waiver for the minimum debt service coverage ratio covenant for each of the aforementioned calendar quarters.


The net proceeds of the loan were used for the construction of the Company’s lead acid recycling operation McCarran, Nevada. Collateral for this loan is AMR’s accounts receivable, goods, equipment, fixtures, inventory, accessions and a certificate of deposit in the amount of $1,000,000.


The loan is guaranteed by the United States Department of Agriculture Rural Development (“USDA”), in the amount of 90% of the principal amount of the loan. The Company paid a guarantee fee to the USDA in the amount of $270,000 at the time of closing and will be required to pay to the USDA an annual fee in the amount of 0.50% of the guaranteed portion of the outstanding principal balance of the loan as of December 31 of each year.


Notes payable is comprised of the following (in thousands):


    September 30,     December 31,  
    2018     2017  
Notes payable, current portion                
Capital equipment leases   $ 32     $ 128  
Green Bank, net of issuance costs     291       277  
Total notes payable, current portion   $ 323     $ 405  
Notes payable, non-current portion                
Capital equipment leases   $ 33     $ 11  
Green Bank, net of issuance costs     8,636       8,828  
Total notes payable, non-current portion   $ 8,669     $ 8,839  


The costs associated with obtaining the Green Bank loan were recorded as a reduction to the carrying amount of the note and are being amortized as interest expense within the condensed consolidated statements of operations over the twenty-one year life of the loan.