|3 Months Ended|
Mar. 31, 2023
|Debt Disclosure [Abstract]|
|Long-Term Debt||Long-Term Debt
Long-term debt consisted of the following:
The Company’s banking arrangements include a revolving credit line and equipment loans originally entered into with Silicon Valley Bank (“SVB”). For a full description of these banking arrangements, see Note 10, Long-Term Debt, in the audited consolidated financial statements included in the 2022 Form 10-K. These loans contain customary representations and warranties, reporting covenants, events of default and termination provisions. The affirmative covenants include, among other things, that the Company furnish monthly financial statements, a yearly budget, timely files taxes, maintains good standing and government compliance, maintains liability and other insurance and furnishes audited financial statements no later than the date of delivery to the Board of Directors.
On March 10, 2023, SVB was closed by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation (“FDIC”) as receiver. On March 14, 2023, Silicon Valley Bridge Bank, N.A. (“SVBB”), a new bank that is regulated by the Office of the Comptroller of the Currency, announced that it had assumed all loan positions, including as lender, issuing bank, administrative and any other function that was formerly performed by SVB, and that all commitments to advance under existing credit agreements would be honored in accordance with and pursuant to the terms thereof. On March 27, 2023, First-Citizens Bank & Trust Company (“FCB”) purchased all of the assets and liabilities of SVBB from the FDIC.
The Company and Silicon Valley Bank, a division of FCB (“New SVB”), entered into a letter agreement, dated April 7, 2023, amending the loan agreements to reduce the requirement to maintain 90% of the dollar value of the Company’s operating accounts and depository accounts with New SVB or its affiliates to 50%. This amendment provides the Company greater flexibility to maintain operating cash at other banking institutions to minimize potential disruptions to working capital needs.
In addition, on May 5, 2023, the Company entered into a fifth loan modification agreement with New SVB, which amended the loan agreements to, among other things, (i) update certain of the financial covenants related to
the 2023 fiscal and (ii) establish an inventory appraisal requirement to be conducted within 90 days following the date of such agreement.
The Company amortizes deferred financing costs over the life of the borrowing. As of March 31, 2023 and December 31, 2022, the remaining unamortized balance of deferred financing costs was $0.1 million, respectively for both periods, and was included in Debt — current portion on the balance sheets.
Revolving Credit Line — On February 3, 2023, the Company drew an additional $5.0 million on the revolving credit facility, with a variable interest rate of the greater of 5.75% or Prime plus 2.50% and a term of 22 months due on December 31, 2024. As of March 31, 2023, the Company has $22.0 million on the revolving credit line undrawn after the draw on February 3, 2023.
In April 2023, the Company drew an additional $5.0 million on the revolving credit facility, with a variable interest rate of the greater of 5.75% or Prime plus 2.50% and a term of 22 months due on December 31, 2024. The Company has $17.0 million on the revolving credit line undrawn after the April 2023 draw.
Interest on the outstanding balance of the revolving credit line is payable monthly at an annual rate of the Wall Street Journal Prime Rate plus 0.25% when the Company’s Adjusted Quick Ratio (“AQR”) is less than or equal to 1.50, and plus 0.75% when the Company’s AQR is greater than 1.50. The effective interest rate was 6.2% and 4.6% for the three months ended March 31, 2023 and 2022, respectively. The loan fees were less than $0.1 million as of March 31, 2023.
Equipment Loan — As of March 31, 2023, the remaining equipment loan availability was $10.4 million.
For the three months ended March 31, 2023, $0.7 million in principal payments were paid. As of March 31, 2023, the outstanding balance was $4.6 million. The effective interest rate was 7.9% and 3.2% for the three months ended March 31, 2023 and 2022, respectively.
The future minimum aggregate payments for the above borrowings are as follows as of March 31, 2023:
No definition available.
The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef