Debt Financing |
6 Months Ended |
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Mar. 30, 2025 | |
| Debt Disclosure [Abstract] | |
| Debt Financing |
Note 5 - Debt Financing
Credit Facility — Texas Capital Bank
On March 22, 2023, the Company entered into a Business Loan Agreement (the “Loan Agreement”) with Texas Capital Bank (the “Lender”), pursuant to which the Lender will make available to the Company a revolving line of credit in the principal amount of $3 million (the “Texas Capital Facility”).
The commitment period for advances under the Texas Capital Facility is twenty-six months expiring on May 22, 2025. We refer to the expiration of that time period as the “Maturity Date.” Outstanding advances under the Texas Capital Facility will accrue interest at a rate equal to the secured overnight financing rate (SOFR) plus a specified margin, subject to a specified floor interest rate. As of March 30, 2025 the interest rate was 7.07% per annum.
The Loan Agreement contains customary events of default (including a 25% change in ownership) and negative covenants, including but not limited to those governing indebtedness, liens, fundamental changes (including changes in management), investments, and restricted payments (including cash dividends). The Loan Agreement also requires the Company to maintain a fixed charge coverage ratio of at least 1.25:1 and a total leverage ratio of 3.00:1. The Texas Capital Facility is secured by substantially all of the operating assets of the Company as collateral. The Company’s obligations under the Texas Capital Facility are subject to acceleration upon the occurrence of an event of default as defined in the Loan Agreement. The Loan Agreement further provides for a $125 thousand Letter of Credit sublimit. The Company was in compliance with all covenants as of March 30, 2025.
The outstanding balance under the Texas Capital Facility was zero as of March 30, 2025 and $1.0 million as of September 29, 2024.
For the three months and six months ended March 30, 2025, the total interest expense under the above facility was ($1) thousand and $12 thousand, respectively.
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