Business Context and Reporting Period
Company: Nortech Systems Incorporated (NSYS)
Filing Type: Form 8-K (Current Report)
Report Date: February 27, 2026
Event: Entry into a Material Definitive Agreement (Waiver and Amendment No. 4 to Credit Agreement with Bank of America, N.A.).
Key Financial Metrics
The filing text does not provide specific numerical values for revenue, profit, cash flow, margins, or total debt.
Covenant Status: The Company experienced defaults related to the following metrics for the quarter ended December 31, 2025:
- Consolidated Leverage Ratio
- Fixed Charge Coverage Ratio
- Consolidated EBITDA
Liquidity Actions: The Company is actively negotiating a new asset-backed lending facility expected to close in the near term.
Material Changes and Agreement Terms
On February 27, 2026, the Company secured a waiver for the aforementioned covenant defaults. The Waiver and Amendment No. 4 includes the following modifications to the Credit Agreement:
- Revised definitions and updated borrowing base mechanics.
- Revised financial covenants, including new EBITDA thresholds.
- Adjustments to revolving commitment levels.
- An increase in the applicable borrowing rate.
- Updated limitations on foreign subsidiary investments and transfers.
Outlook, Management Commentary, and Risks
Operational Performance: Management reported continued positive benefits to operating performance in the fourth quarter of 2025, stemming from restructuring activities executed in Q4 2024 and Q1 2025.
Future Liquidity: The Company expects to close a new asset-backed lending facility in the near term to replace or supplement current arrangements.
Risks: The necessity of a waiver indicates prior covenant breaches. The increase in borrowing rates and revised covenants may impact future financial flexibility and cost of capital.
Investor Verification Checklist
- Verify the specific terms of the new EBITDA thresholds and borrowing base mechanics in Exhibit 10.1.
- Confirm the timeline and terms of the anticipated new asset-backed lending facility.
- Assess the impact of the increased borrowing rate on future interest expense.
- Review the Company's ability to meet the revised financial covenants in the upcoming quarter.