|12 Months Ended|
Dec. 31, 2022
12. Notes Payable
Notes payable are as follows:
On July 21, 2021, the Company, through its subsidiary, Jupiter, entered into a two-year, $10,000 asset- based revolving credit facility with Entrepreneur Growth Capital, LLC, a private lender (the “Revolving Facility”). Borrowings under the Revolving Facility are limited to the available borrowing base, bear interest at Prime plus 3.5% (11.0% at December 31, 2022) with interest payments calculated based on the daily outstanding principal of the loan and payable to the lender monthly. The Revolving Facility is secured by Jupiter’s inventory, accounts receivable and related property. The 2019 Senior Notes and Junior Notes creditors were subordinate in their security interests in Jupiter’s inventory, accounts receivable, and related property; but maintained their priority security interests in other Jupiter collateral. The Revolving Facility had a two-year initial term and will continue for successive one-year terms unless terminated by either party effective at the end of the then-current term. See Note 21 — Subsequent Events included elsewhere in this Annual Report on Form 10-K for information regarding developments that occurred subsequent to December 31, 2022
The Revolving Facility agreement, contains certain financial covenants the Company must meet. On February 28, 2023, the lender issued a waiver of financial covenants letter to the Company waiving the requirement to comply with the debt covenants for the period ended December 31, 2022.
2019 Senior Notes
On November 4, 2019, the Company entered into a private placement of up to $35,000 of senior secured notes from a syndicate consisting of new investors and existing shareholders, including the Company’s former CEO (the “2019 Senior Notes”). Total gross proceeds received in November 2019 were $35,800. All personal property, including inventory and equipment, as well as all proceeds were pledged as security for the Company’s 2019 Senior Notes. During the year ended December 31, 2022, the Company made $33,686 in principal payments on the 2019 Senior Notes.
The 2019 Senior Notes had an original maturity date of 36 months from the closing date and had an interest rate from their date of issue at 8.0% per annum, payable quarterly, with principal due at maturity. On October 24, 2022, the Company entered into the first amendment to the 2019 Senior Notes, which amended the interest rate to Prime plus 8.5%. As of December 31, 2022, the all-inclusive rate for the 2019 Senior Notes was 16.0%. On December 30, 2022, the Company entered into a fourth amendment to the 2019 Senior Notes, which extended the maturity date for the remaining $2,119 in principal to February 28, 2023. See Note 21 — Subsequent Events included elsewhere in this Annual Report on Form 10-K for information regarding developments that occurred subsequent to December 31, 2022.
On November 1, 2019, the previous sellers of Jupiter (the “Jupiter Sellers”) agreed to restructure unsecured obligations incurred in connection with the Jupiter acquisition. Pursuant to a junior secured note purchase agreement, dated November 1, 2019, among Jimmy Jang L.P. (“JJ LP”), Baker Technologies Inc. (“Baker”), Commonwealth Alternative Care, Inc. (“CAC”), Jupiter (together with JJ LP, Baker, CAC, the “Borrowing Entities”), the Company, as guarantor, and the purchasers named on the Schedule of Purchasers attached thereto, the Borrowing Entities agreed to issue to the Purchasers junior secured promissory notes (“Junior Notes”) in the aggregate principal amount of $36,180 in exchange for the release and satisfaction of the obligations of Jupiter and certain of its affiliates to pay, pursuant to an amended and restated agreement and plan of merger dated January 11, 2019 (the “Jupiter Purchase Agreement”), the remainder of the purchase price under the Jupiter Purchase Agreement and to satisfy certain other payment obligations to the Jupiter Sellers. The Junior Notes accrued interest at 8% per annum compounded quarterly and mature on April 1, 2023, with principal due at maturity. Upon repayment of the 2019 Senior Notes, and the Junior Notes that remain outstanding, the Jupiter Sellers would assume the same rights and security as the original financing syndicate until repaid. All personal property, including inventory and equipment, as well as all proceeds were pledged as security for the Company’s Junior Notes. See Note 21 — Subsequent Events included elsewhere in this Annual Report on Form 10-K for information regarding developments that occurred subsequent to December 31, 2022.
Future maturities of all notes payable as of December 31, 2022 are as follows:
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