LINE OF CREDIT
|9 Months Ended|
Sep. 30, 2022
|Debt Disclosure [Abstract]|
|LINE OF CREDIT||
NOTE 4 – LINE OF CREDIT
Effective September 30, 2020, the Company entered into a Loan and Security Agreement (the “Loan Agreement”) with Pinnacle Bank (“Pinnacle”). The Loan Agreement was amended by the First Modification to Loan and Security Agreement (the “First Modification”) on October 7, 2020. During 2022, the Company did not draw any advances from the revolving credit facility. At September 30, 2022, there was no balance outstanding under the line of credit and the Company had availability under the line of credit in the amount of $2,920.
The Loan Agreement, as amended, provides for a revolving credit facility under which Pinnacle may make advances to the Company, subject to certain limitations and adjustments, of up to (a) 85% of the aggregate net face amount of the Company’s accounts receivable and other contract rights and receivables, plus (b) the lesser of (i) 35% of the lower of cost or wholesale market value of certain inventory of the Company or (ii) $2,500. In no event shall the aggregate amount of the outstanding advances under the revolving credit facility be greater than $4,000. Interest accrues on the daily balance at a rate of 1.25% above the prime rate, but in no event less than 3.75% per annum. Interest on the portion of the daily balance consisting of advances against inventory accrues interest at a rate of 2.25% above the prime rate, but in no event less than 4.75% per annum.
After being amended by the First Modification, the Loan Agreement’s initial term ended on September 30, 2022. On November 3, 2022, the Company executed the Second Modification to Loan and Security Agreement with Pinnacle for a two-year term with an expiration date of September 30, 2024. Pinnacle may terminate the Loan Agreement, as amended, at any time upon sixty days prior written notice and immediately upon the occurrence of an event of default. Under the Loan Agreement, as amended, the Company granted Pinnacle a security interest in all presently existing and thereafter acquired or arising assets of the Company. The Loan Agreement, as amended, also contains a financial covenant requiring the Company to attain an effective tangible net worth, as defined, which the Company attained as of September 30, 2022.
The Loan Agreement, as amended, obligates the Company to pay Pinnacle a yearly facility fee in an amount equal to 1.125% of the sum of the advance limit.
The entire disclosure for short-term debt.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef