Quarterly report pursuant to Section 13 or 15(d)

Notes Payable

v3.22.2.2
Notes Payable
9 Months Ended
Sep. 30, 2022
Debt Disclosure [Abstract]  
Notes Payable

Note 12. Notes Payable

Notes payable at September 30, 2022 and December 31, 2021, were comprised of the following (In thousands):

 

 

Interest rate

 

 

September 30, 2022

 

 

December 31, 2021

 

Short-term bank credit

 

 

4.4

%

 

$

1,606

 

 

$

949

 

Financed receivables

 

Greater of prime or 4.5% plus one percent

 

 

 

711

 

 

 

 

Other short-term notes payable

 

 

3.0

%

 

 

462

 

 

 

12

 

Total notes payable

 

 

 

 

 

2,779

 

 

 

961

 

Less: current portion

 

 

 

 

 

(2,430

)

 

 

(961

)

Notes payable - long-term portion

 

 

 

 

$

349

 

 

$

 

Enertec short-term bank credit and secured promissory mote

At September 30, 2022 and December 31, 2021, Enertec had short-term bank credit of $1.6 million and $0.9 million, respectively, that bears interest at 4.35% annually, paid either on a monthly or weekly basis. Further, Enertec has undertaken to comply with certain covenants under its bank loan.

GIGA financed receivables

The Company has a business financing agreement (”Financing Agreement”) with Western Alliance Bank. Under the Financing Agreement, the Company may borrow up to 85% of the amounts of customer invoices issued by the Company, up to a maximum of $2.5 million in aggregate advances outstanding at any time.

Interest accrues on amounts outstanding under the Financing Agreement at an annual rate equal to the greater of prime or 4.5% plus one percent. The Company is required to pay certain fees, including an annual facility fee of $14,700, to be paid in two equal semiannual installments. The Company’s obligations under the Financing Agreement are secured by a security interest in substantially all of the assets of the Company and any domestic subsidiaries, subject to certain customary exceptions. The Financing Agreement has no specified term and may be terminated by either the Company or Western Alliance Bank at any time.

The Financing Agreement contains customary events of default, including, among others: non-payment of principal, interest or other amounts when due; providing false or misleading representations and information; Western Alliance Bank failing to have an enforceable first lien on the collateral; cross-defaults with certain other indebtedness; certain undischarged judgments; bankruptcy, insolvency or inability to pay debts; and a change of control of the Company. Upon the occurrence and during the continuance of an event of default, the interest rate on the outstanding

borrowings increases by 500 basis points and the bank may declare the loans and all other obligations under the Financing Agreement immediately due and payable. Western Alliance Bank waived the potential change in control default in relation to the Acquisition.

At September 30, 2022 and December 31, 2021, the Company’s total outstanding borrowings under the Financing Agreement were $711,000 and $0, respectively, and are included under current liabilities in notes payable on the condensed consolidated balance sheets.