The discussion of our business and operations should be read together with the risk factors contained in Item 1A of our Annual Report on Form 10-K for the fiscal year ended October 31, 2021 filed with the SEC, which describe various risks and uncertainties to which we are or may become subject.
−Removed: Further, the current coronavirus (“COVID-19”) pandemic and actions taken to address the pandemic may exacerbate the risks described in our SEC reports.
+Added: Further, the current coronavirus (“COVID-19”) pandemic and actions taken to address the pandemic may exacerbate the risks described in our reports filed with the Securities and Exchange Commission (the “SEC”).
These risks and uncertainties have the potential to affect our business, financial condition, results of operations, cash flows, strategies or prospects in a material and adverse manner.
−Removed: The COVID-19 pandemic has adversely impacted, and poses risks to, our business, the nature and extent of which are highly uncertain and unpredictable.
−Removed: In March 2020, the WHO characterized COVID-19 as a pandemic.
−Removed: This pandemic has resulted in a global health crisis that is adversely affecting broader economies, financial markets, and the business environment worldwide.
−Removed: We are monitoring the global impact of the COVID-19 pandemic and taking steps to mitigate the accompanying impact on our business by working with our employees, customers, suppliers, and other stakeholders.
−Removed: The pandemic is adversely affecting, and is expected to continue to adversely affect, certain elements of our business.
−Removed: Portions of our workforce may be unable to work effectively due to illness and containment measures, including quarantines, illness precautions, travel restrictions, and other restrictions.
−Removed: We experienced volatility in customer demand as their businesses were impacted by the pandemic.
−Removed: If the pandemic continues, recurs, or worsens, we may experience additional adverse impacts on our operational and commercial activities, including rising costs, volatility in customer orders and purchases and declines in our collections of accounts receivable.
−Removed: Furthermore, the pandemic has impacted and may further impact the broader U.S.
−Removed: economy, including negatively impacting economic growth, the proper functioning of financial and capital markets and interest rates, all of which could lead to a decline in our net sales.
−Removed: Due to the speed with which the situation is developing, the breadth of its spread and the range of governmental and community reactions thereto, there is uncertainty around its duration, ultimate impact and the timing of recovery.
−Removed: Therefore, the pandemic could lead to an extended disruption of economic activity and the impact on our stock price, access to capital, consolidated results of operations, financial position and cash flows could be material.
+Added: The acquisition of Microlab will affect both the Company ’
+Added: s liquidity and its capital resources in the near future.
+Added: As of January 31, 2022, we had a total of $13.5 million of cash and cash equivalents.
+Added: On March 1, 2022, we purchased Microlab from Wireless Telecom Group, Inc.
+Added: for $24,250,000, subject to certain post-closing adjustments.
+Added: The Company funded $17 million of the cash purchase price from the funds obtained under the term loan it obtained from Bank of America, N.A.
+Added: (the “Credit Facility Lender”) and paid the remaining amount of the cash purchase price with cash on hand.
+Added: In order to acquire Microlab, we used $7.3 million of our cash on hand to pay a portion of the purchase price, thereby reducing the amount of cash available for future acquisitions, for investments in the expansion of our existing businesses and assets, or as a reserve for unanticipated financial requirements.
+Added: The Company entered into a Loan Agreement to fund its acquisition of Microlab, which may expose the Company and its subsidiaries to additional risks, including risks associated with the inability to repay the loan on a timely basis.
+Added: On February 25, 2022, the Company entered into a Loan Agreement with the Credit Facility Lender, which facility provides the Company with a $3 million revolving credit facility (the “Revolving Credit Facility”) and a $17 million term loan (the “Term Loan”, collectively with the “Revolving Credit Facility”, the “Credit Facility”).
+Added: The Company borrowed the full $17 million amount available under the Term Loan in order to fund the purchase of Microlab.
+Added: The maturity date of the Term Loan is March 1, 2027.
+Added: Borrowings under the Credit Facility are guaranteed by the Company and certain of its subsidiaries and secured by all personal property of the Company and certain of its subsidiaries.
+Added: The Credit Facility requires the maintenance of certain financial covenants, including:
+Added: (i) consolidated debt to EBITDA ratio not to exceed 3.00 to 1.00;
+Added: (ii) consolidated fixed charge coverage ratio of at least 1.25 to 1.00;
+Added: and (iii) consolidated minimum EBITDA of at least $600,000 for the discrete quarter ending January 31, 2022.
+Added: In addition, the Credit Facility contains customary affirmative and negative covenants.
+Added: In the event that the Company is unable to pay its obligations on the Credit Facility on a timely basis, maintain the financial covenants under the Loan Agreement or otherwise defaults on its obligations under the Loan Agreement, the Credit Facility Lender will have a right to foreclose on personal property of the Company and certain of its subsidiaries.
+Added: Global economic conditions and any related impact on our supply chain and the markets where we do business could adversely affect our results of operations.
+Added: The uncertain state of the global economy (including the current conflict between Russia and Ukraine and related economic and other retaliatory measures taken by the United States, European Union and others) continues to impact businesses around the world.
+Added: Deteriorating economic conditions or financial uncertainty in any of the markets in which we sell our products could reduce business confidence and adversely impact spending patterns, and thereby could adversely affect our sales and results of operations.
+Added: In challenging and uncertain economic environments such as the current one, we cannot predict whether or when such circumstances may improve or worsen, or what impact, if any, such circumstances could have on our business, financial condition and results of operations, or on the price of our common stock.
+Added: Recent inflationary pressures have increased the cost of energy and raw materials and may adversely affect our results of operations.
+Added: If inflation continues to rise and further impact the cost of energy and raw materials, we may not be able to offset cost increases to our products through price adjustments without negatively impacting consumer demand, which could adversely affect our sales and results of operations.
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