Debt Financing |
6 Months Ended |
|---|---|
Mar. 29, 2026 | |
| Debt Disclosure [Abstract] | |
| Debt Financing | Note 5 - Debt Financing
Credit Facility — Texas Capital Bank
On March 22, 2023, the Company and Optex Systems, Inc. (collectively, the “Borrowers”) entered into a Business Loan Agreement with Texas Capital Bank (the “Lender”), pursuant to which the Lender makes available to the Borrowers a revolving line of credit in the principal amount of $3 million.
The commitment period for advances under the facility expired on May 22, 2025. Outstanding advances under the facility accrued interest at a rate equal to the secured overnight financing rate (“SOFR”) plus a specified margin, subject to a specified floor interest rate. The related agreement provided for a $125 thousand letter of credit sublimit.
On May 21, 2025, the Company and Optex Systems, Inc. renewed their existing credit facility with the Lender by entering into a new Business Loan Agreement (the “Loan Agreement”), effective May 22, 2025, pursuant to which the Lender will continue to make available 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-four months, expiring on May 22, 2027 (the “Maturity Date”). Outstanding advances under the Texas Capital Facility will accrue interest at a variable rate equal to SOFR plus a specific margin. The interest rate is currently 6.4% per annum.
The Loan Agreement contains customary events of default and negative covenants, including but not limited to those governing capital expenditures (limited to $1 million per year), indebtedness and liens, affiliate transactions, fundamental changes (including change in management), investments, and restricted payments (including dividends). The Loan Agreement also requires the Borrowers 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 Borrowers as collateral. The Borrowers’ 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 $125,000 Letter of Credit sublimit. As of March 29, 2026, the Company is in compliance with all covenants.
There were no borrowings or payments against the line of credit during the three and six months ended March 29, 2026. During the three and six months ended March 29, 2026, the Company paid zero against the outstanding loan balance. The outstanding balance under the Texas Capital Facility was zero as of March 29, 2026 and March 30, 2025.
For the three and six months ended March 29, 2026, the interest expense under the Texas Capital Facility was zero. For the three and six months ended March 30, 2025, the interest expense under the Texas Capital Facility was $1 thousand and $12 thousand, respectively. During the three months ended March 30, 2025, the Company received $1 thousand in an interest expense refund for overcharged interest during the previous period.
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