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DEBT OBLIGATIONS
 12 Months Ended
Dec. 31, 2024
Debt Disclosure [Abstract]  
DEBT OBLIGATIONS

NOTE 5 — DEBT OBLIGATIONS

 

On March 8, 2024, the Company entered into a loan and security agreement with a large domestic banking institution, as lender, providing for a $5,000,000 revolving credit facility and a $5,000,000 term loan facility. Borrowings are secured by a first-priority lien on substantially all of the assets of the Company, subject to customary exceptions. The revolving credit facility matures on December 31, 2025 and the term loan matures on December 1, 2028.

 

Borrowings under the revolving credit facility will bear interest at the greater of Prime or 6.50%, payable in arrears on a monthly basis and at maturity. Borrowings under the term loan will bear interest at the greater of Prime minus 0.50% or 6.50% and will be interest-only through December 31, 2025, followed by 24 equal monthly payments of principal plus interest.

 

In connection with our loan financings agreement dated March 8, 2024, the Company issued common stock warrants to the lender. The fair value of each warrant is estimated on the date of the grant using the Black-Scholes option-pricing model. All options and warrants are charged against income at their fair value.  The entire compensation expense of the grant is recognized over the vesting period.

 

The loan and security agreement contains customary affirmative covenants, a financial maintenance covenant that requires the Company to maintain a minimum Adjusted Quick Ratio (defined as the ratio of the Company’s (i) unrestricted and unencumbered cash and cash equivalents maintained with the lender and its affiliates, plus eligible accounts receivable, to (ii) current liabilities) of not less than 1.50 to 1.00 tested on the last day of each month.

 

As of December 31, 2024, there were no outstanding borrowings under the term loan nor the revolving credit facility.

 

On August 1, 2024, the Company renewed its commercial insurance premium finance and security agreement with its insurance provider for the insurance period covering July 1, 2024 through June 30, 2025. As of December 31, 2024, the aggregate principal amount of the note was $271,152. The note bears an annual interest rate of 9.5%. The Company retains the right to terminate the agreement at any time and pay the remaining balance in full along with a minimal penalty.