Quarterly report pursuant to Section 13 or 15(d)

Debt Financing

v2.4.0.8
Debt Financing
 9 Months Ended
Jun. 29, 2014
Debt Disclosure [Abstract]  
Debt Financing

Note 5 - Debt Financing

 

Credit Facility – Avidbank

 

On May 22, 2014, the Company amended its revolving credit facility with Avidbank. The new renewable revolving maturity date is May 21, 2016. The facility provides up to $1 million in financing against eligible receivables and subject to meeting certain covenants including an asset coverage ratio test for up to two years. The material terms of the amended revolving credit facility are as follows:

 

  • The interest rate for all advances shall be the greater of 7.0% and the then in effect prime rate plus 2.5%. The additional minimum interest payment requirement per six month period is $10,000.

 

  • Interest shall be paid monthly in arrears.

 

  • The loan period is from May 22nd through May 21st of the following year, beginning with the period of May 22, 2014 through May 21, 2015 and a revolving loan maturity date of May 21, 2016, at which time any outstanding advances, and accrued and unpaid interest thereon, will be due and payable.

 

  • A renewal fee of $5,000 is due on the one year anniversary of the date of the loan agreement.

 

  • The obligations of Optex Systems, Inc. to Avidbank are secured by a first lien on all of its assets (including intellectual property assets should it have any in the future) in favor of Avidbank.

 

  • The facility contains customary events of default. Upon the occurrence of an event of default that remains uncured after any applicable cure period, Avidbank’s commitment to make further advances may terminate, and Avidbank would also be entitled to pursue other remedies against Optex Systems, Inc. and the pledged collateral.

 

  • Pursuant to a guaranty executed by Optex Systems Holdings in favor of Avidbank, Optex Systems Holdings has guaranteed all obligations of Optex Systems, Inc. to Avidbank.

 

As of June 29, 2014, the outstanding balance on the line of credit was $0. For the three and nine months ended June 29, 2014, the total interest expense against the outstanding line of credit balance was $6 thousand and $16 thousand, respectively.  For the three and nine months ended June 30, 2013, the total interest expense against the outstanding line of credit balance was $22 thousand and $28 thousand, respectively. During the three and nine months ended June 29, 2014, Optex Systems separately recognized $13 thousand in interest income related to financing fees on a foreign sale. There was zero in interest income for the three and nine months ended June, 30, 2013.