|6 Months Ended|
Jun. 30, 2023
|Debt Disclosure [Abstract]|
|Long-Term Debt||Long-Term Debt
Long-term debt consisted of the following:
As of June 30, 2023, the Company’s banking arrangements included a revolving credit line and equipment loans pursuant to the Loan Agreement originally entered into with Silicon Valley Bank (“SVB”). For a full description of these banking arrangements, see Note 9, Long-Term Debt, in the audited consolidated financial statements included in the 2022 Form 10-K. These loans contained customary representations and warranties, reporting covenants, events of default and termination provisions. The affirmative covenants included, among other things, that the Company furnish monthly financial statements, minimum cash balances, quarterly revenues, a yearly budget, timely files taxes, maintain good standing and government compliance, maintain liability and other insurance and furnish audited financial statements no later than the date of delivery to the Board of Directors.
On August 14, 2023, the Company used approximately $22 million of the net proceeds from the Offering of the Initial Notes to repay all outstanding obligations under the Loan Agreement. With the payoff of the debt, the Loan Agreement was terminated and is no longer available to the Company. See Note 17. Subsequent Events, for further information.
The Company amortizes deferred financing costs over the life of the borrowing. As of June 30, 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 — For the three and six months ended June 30, 2023, the Company drew $9.0 million and $14.0 million on the revolving credit facility, respectively, with a variable interest rate of the greater of 5.50% or Prime plus 0.75% and a term of 22 months due on December 31, 2024. As of June 30, 2023, the Company had $13.0 million on the revolving credit line undrawn after the draw on June 29, 2023.
The Company’s draws on the revolving credit facility were as follows: $5.0 million in February 2023, $5.0 million in April 2023, and $4.0 million in June 2023, with a variable interest rate of the greater of 5.50% or Prime Rate plus 0.75% and terms of 22 months, 20 months and 18 months, respectively, all due on December 31, 2024.
Interest on the outstanding balance of the revolving credit line was payable monthly at an annual rate of the greater of (1) the Wall Street Journal Prime Rate plus 0.25% and (2) 5.0% when the Company’s Adjusted Quick Ratio (“AQR”) was at least 1.50 to 1.0, and at an annual rate of the greater of (1) the Wall Street Journal Prime Rate plus 0.75% and (2) 5.50% when the Company did not maintain such AQR. The effective interest rate was 8.0% and 5.2% for the three months ended June 30, 2023 and 2022, respectively. The effective interest rate was 9.7% and 4.9% for the six months ended June 30, 2023 and 2022, respectively. The loan fees were less than $0.1 million as of June 30, 2023.
Equipment Loan — As of June 30, 2023, the remaining equipment loan availability were $9.5 million.
As of June 30, 2023, the outstanding balance was $5.5 million. The effective interest rate was 8.0% and 3.9% for the three months ended June 30, 2023 and 2022, respectively. The effective interest rate was 7.7% and 3.5% for the six months ended June 30, 2023 and 2022, respectively. For the three months and six months ended June 30, 2023, $0.7 million and $1.4 million, respectively, in principal payments were paid.
The future minimum aggregate payments for the above borrowings are as follows as of June 30, 2023:
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