Revolver

9 Months Ended

Sep. 30, 2020

Line of Credit Facility [Abstract]

Revolver

14. REVOLVER

On November 13, 2018, the Company, Interpace Diagnostics Corporation, and Interpace Diagnostics, LLC entered into the SVB Loan Agreement, which provided for up to $4.0 million of debt financing consisting of a term loan of up to $850,000 and the Revolver based on its outstanding accounts receivable of up to $3.75 million. The ability to use the term loan portion of the SVB Loan Agreement expired in 2019 and the Company terminated the SVB Loan Agreement on January 5, 2021. See Note 19, Subsequent Events.

As a result of the Second Amendment, the borrowing limit of the Revolver prior to termination on January 5, 2021 was (a) the lower of: (i) $4.0 million and (ii) 80% of the Company’s eligible accounts receivable (as adjusted by SVB), reduced by (b) (i) any outstanding advances under the Revolver, of which there were none as of September 30, 2020 and through the date of termination; (ii) the Landlord Letter of Credit, in the maximum amount of $1 million; and (iii) any outstanding term loans, of which there were none due to repayment in 2019. The Revolver had an original maturity date three years from the effective date, or November 13, 2021.

As of July 31, 2020, the Company was in violation of a financial covenant under its SVB Loan Agreement. Additionally, due to the untimely filing of our second quarter Form 10-Q with the SEC, the Company was in default under the SVB Loan Agreement. During September 2020, the Company paid down the outstanding Revolver balance of $3.4 million in full and transferred $0.35 million into a restricted cash money market account with SVB to serve as collateral for the Company’s letters of credit supporting its leased facilities. Prior to September 2020, the collateral for the letters of credit was accounted for as a reduction in the availability under the Revolver. As of September 30, 2020 there was no balance outstanding on the Revolver. SVB agreed to forebear from exercising its rights and remedies with respect to the default on October 19, 2020. 

During October 2020, the Company entered into the Second Amendment with SVB, adding the Company’s subsidiary, IPS as a borrower thereunder and granting SVB a continuing lien upon and security interest in all of the assets of IPS (See Note 19, Subsequent Events). 

Under the terms of the SVB Loan Agreement, the Company was required to maintain at all times an Adjusted Quick Ratio of at least 1.15 to 1.0. SVB waived the Company’s failure to comply with such requirement for the months ended July 31, 2020 and August 31, 2020 and agreed to forebear financial covenant testing while the Revolver was not drawn. With respect to any principal amount that was outstanding under the Revolver, the Second Amendment increased the floating per annum rate of interest to the greater of (A) one percent (1.0%) above the Prime Rate (as defined in the SVB Loan Agreement) and (B) four and one-quarter of one percent (4.25%). Prior to the Second Amendment, such interest accrued at a rate equal to one-half of one percent (0.50%) above the Prime Rate. 

The Company had been in compliance with the terms of the SVB Loan Agreement through the date of termination of the SVB Loan Agreement.