Southampton-based Environmental Tectonics Corp. (ETC), a software-driven products and services designer and manufacturer, recently closed on the sale and lease back of demonstration equipment to Salt Lake City-based VFI Corporate Finance, a financial services company, for $4 million.
“This financing provides additional working capital over our line of credit with PNC to execute the higher level of orders in our backlog,” Robert L. Laurent, Jr., ETC CEO and president, said.
The company has an approximately $100 million backlog of existing projects.
Under the terms of the agreement, ETC’s assets have been leased back for an initial term of 30 months with net rent expense for the lease totaling approximately $1.75 million annually. The lease includes end of initial term provisions such as purchasing the equipment at a pre-negotiated price, returning the equipment or extending the lease for an additional year.
The assets that were sold had a depreciation expense of approximately $780,000 annually.
In October, the company released its second quarter results. Net income was $1.7 million, a $400,000 loss, while gross profit was $4.2 million, a 83.3 percent increase. Operating expenses were $2.2 million, a 6.1 percent drop.
ETC’s products include environmental testing and simulation systems, disaster management systems, sterilizers, and aircrew training systems.