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v3.26.1

Debt | 6 Months Ended
--- | ---
Jun. 30, 2026
Debt Disclosure [Abstract] |
Debt | 11. Debt
(in thousands) |  | June 30, 2026 |  |  | December 31, 2025 |
Acquisition notes |  | $ | 1,145 |  |  | $ | 2,681 |
Principal amount of term loans and A&R promissory note |  |  | 52,055 |  |  |  | 55,171 |
Accrued exit fee |  |  | 229 |  |  |  | — |
Less: discount and deferred loan costs |  |  | (30,788 | ) |  |  | (35,250 | )
Total debt, net |  |  | 22,641 |  |  |  | 22,602 |
Less: short-term debt |  |  | (22,641 | ) |  |  | (12,681 | )
Long-term debt, net |  | $ | — |  |  | $ | 9,921 |
Acquisition Notes In connection with our acquisition of 100% of the Membership Interests in Alpha Steel in November 2025, we agreed to pay approximately $2.7 million in various installments during 2026, which was evidenced by Acquisition Notes. At June 30, 2026, we had a remaining balance due of approximately $1.1 million, plus accrued interest, which we paid during August 2026. The Acquisition Notes bear interest on any unpaid balance at a rate of 3.64% per annum and are secured by all of Alpha Steel's assets, provided, however, the security interests granted to each of the Selling Members under the Acquisition Notes are subordinate and junior to the security interests in favor of the Lenders under the Credit Agreement described below. The Acquisition Notes were discounted upon issuance at a market-participant discount rate resulting in an effective interest rate of approximately 12% until maturity. Credit Agreement and New Warrants We entered into a Credit Agreement, effective July 2, 2025 (the "Original Credit Agreement:"), with various lenders (the "Lenders") and Acquiom Agency Services LLC, as Administrative Agent. On November 1, 2025 we entered into a First Amendment to Credit Agreement to amend certain of the financial covenants applicable to us and in connection with our agreement to acquire 100% of the membership interests in Alpha Steel. On March 23, 2026, we entered into the Second Amendment pursuant to which: (i) the Lenders provided a waiver relating to our breach of the purchase order covenant for the fiscal quarter ended December 31, 2025; (ii) the Lenders agreed that a purchase order covenant will not apply to us until the fiscal quarter ending March 31, 2027; and (iii) agreed to further amend certain other existing financial covenants under the Credit Agreement, including (a) a required minimum unrestricted cash covenant of $10.0 million as of September 30, 2026 and a minimum revenue covenant of $50.0 million for the quarter ended September 30, 2026. Additionally, in connection with the Second Amendment, we agreed to repay a portion of the principal amount outstanding under the Credit Agreement as follows: (x) $2.5 million of principal was repaid on March 23, 2026; (y) $2.5 million of principal was repaid on May 22, 2026; and (z) $5.0 million of principal will be repaid on September 30, 2026. The amount of each of the foregoing principal repayments is referred to as an "ECF Repayment Amount". The Original Credit Agreement, as amended, is referred to throughout as the "Credit Agreement". As noted above, we were not in compliance with the required minimum cash and direct tracker margin covenants pursuant to the Second Amendment as of June 30, 2026. On August 4, 2026, we entered into the Waiver with the Lenders in which the Lenders waived our noncompliance with these minimum unrestricted cash and minimum direct tracker margin covenants as described above. The waiver covered the periods of noncompliance but did not cover our ability to comply with covenants in future periods. As a result of factors that are outside of our control in terms of timing of customer project activity and resulting revenue and cash flows, there is currently uncertainty as to our ability to fully meet all existing quarterly and annual financial covenants during the twelve-month period following the date of the consolidated financial statements included herein. Accordingly, we have classified all outstanding debt under our Credit Agreement as a current obligation as of June 30, 2026. The Credit Agreement provides for a senior secured term facility of up to $75 million, consisting of (i) Initial Term Loans and First Delayed Draw Term Loans (both as defined in the Credit Agreement) that were funded during 2025 in an aggregate principal amount of $37.5 million, and (ii) up to $37.5 million principal amount of Second Delayed Draw Term Loans (as defined in the Credit Agreement) that may be requested by the Company and approved by the Lenders in their sole discretion (collectively, with the Initial Term Loans and the First Delayed Draw Term Loans, the "Term Loans"). The Term Loans currently outstanding were originally scheduled to mature on July 2, 2029. Upon entering into the Credit Agreement, we also issued warrants (the "New Warrants") to the Lenders for an aggregate 6,836,237 shares of our common stock. The New Warrants are (i) exercisable at any time through July 2, 2035, at an exercise price of $0.01 per share, and (ii) accounted for as a long-term liability, based on terms that could require cash settlement upon the occurrence of a contingent change in control event. In the event of a change of control of the Company, a holder of the New Warrants may, at its option, elect to exercise its New Warrants or exercise a repurchase option that requires the Company to repurchase its New Warrants upon the consummation of the change of control for a cash amount equal to the Black Scholes Value (as defined in the New Warrants). Additionally, the New Warrants provide each holder with a pro rata purchase right (based on the total number of shares of common stock held by a holder and the number of shares issuable upon exercise of the New Warrants) in the event the Company issues any equity securities, convertible securities or rights, options or warrants to purchase equity securities, subject to customary exceptions and conditions. The New Warrants include other customary terms and provisions, including adjustment provisions relating to stock splits, stock dividends, reclassifications and other recapitalization events. Key terms The Term Loans bear interest at 12.00% per annum. A portion of the interest equal to 7.00% per annum is being capitalized and added as paid-in-kind interest and will increase the outstanding principal amount of the Term Loans. The remainder of the interest will be paid in cash at the end of each fiscal quarter. Upon the occurrence and during the continuation of certain events of default under the Credit Agreement ("Events of Default") or upon the election of certain required Lenders during the occurrence and continuation of any Event of Default, the interest rate applicable to the Term Loans will be increased by a 7.00% default interest rate, which would be capitalized and added to the principal amount of the debt. In addition to the required principal payments under the Second Amendment, the Credit Agreement also provides for the mandatory prepayment of the indebtedness and other obligations outstanding under the Credit Agreement and other applicable loan documents upon the occurrence of certain events (including in connection with a change in control of the Company) and upon acceleration following an Event of Default (an "Exit Fee Event"). If an Exit Fee Event occurs, the Company shall pay an exit fee (the "Exit Fee") equal to (x) the aggregate amount of all Term Loans extended by the Lenders under the Credit Agreement, multiplied by (y) the Exit Fee Percentage, minus (z) the amount of interest paid in cash by the Company prior to the Exit Fee Event, where the "Exit Fee Percentage" equals 25% in connection with a change of control transaction, or otherwise equals 50%. As a result of the principal payments required in 2026 under the terms of the Second Amendment, we now estimate an Exit Fee of approximately $2.6 million will be owed upon the originally stated maturity of the debt, in addition to the repayment upon originally stated maturity of any outstanding principal under the Term Loans, plus accrued and unpaid interest. We are accreting each period, as additional interest expense using the interest method, an amount for the expected exit fee obligation that we estimate will be due on July 2, 2029. The amount accrued as of June 30, 2026 for the exit fee obligation is reflected as a component of our total debt balance. The Credit Agreement includes customary repayment and prepayment terms, affirmative and negative covenants and representations and warranties, including restrictions on payment of dividends and other covenants. The Company and certain of its subsidiaries from time-to-time party thereto guarantee the obligations under the Credit Agreement and other Loan Documents. In addition, such obligations are secured by a first priority lien on substantially all tangible and intangible property of the Company and the guarantors and pledges of the equity of certain Company subsidiaries, in each case subject to certain exceptions, limitations and exclusions for the collateral. Financial covenants As amended by the Second Amendment, the Credit Agreement includes the following covenants. • Unrestricted Cash Amount. The Company is required to have unrestricted cash balances as of the last day of the fiscal quarter ending September 30, 2026 equal to the greater of (i) $10.0 million and (ii) $15.0 million minus a remaining ECF Repayment Amount if actually paid by the Company to the Lenders pursuant to the Credit Agreement prior to such date. The Company currently anticipates that this financial covenant will require the Company to have at least $10.0 million of unrestricted cash as of September 30, 2026, and each fiscal quarter thereafter. • Quarterly Revenue. The Company is required to have consolidated quarterly revenue of at least: (i) $50.0 million for the fiscal quarter ending September 30, 2026; and (ii) $75.0 million for the fiscal quarter ending December 31, 2026 and the last day of each fiscal quarter thereafter. • Consolidated EBITDA. For the 12-month period ending December 31, 2026, the Company’s consolidated EBITDA may not be less than $10.0 million, and for the 12-month period ending December 31, 2027 and the last day of each fiscal year thereafter, the Company’s consolidated EBITDA may not be less than $25.0 million. Additionally, the Company’s direct tracker margin must exceed certain thresholds for each fiscal quarter in 2026, and the financial covenants also include a requirement that the amounts due to the Company under new purchase orders must meet certain thresholds beginning with the fiscal quarter ending March 31, 2027. At June 30, 2026, the Company was not in compliance with the required minimum unrestricted cash and direct tracker margin financial covenants under the Credit Agreement. On August 4, 2026, we entered into the Waiver with the Lenders in which the Lenders waived our noncompliance with these minimum unrestricted cash and minimum direct tracker margin covenants. Senior Notes and Original Warrants On December 4, 2024, we entered into a Securities Purchase Agreement (the “Purchase Agreement”) with an institutional investor as the purchaser under the Purchase Agreement (the “Investor”). Pursuant to the Purchase Agreement, we sold, and the Investor purchased, $15.0 million in principal amount of senior secured promissory notes (the “Senior Notes”) and warrants exercisable for 1,750,000 shares of our common stock (the “ Original Warrants”) (the “Offering”). Pursuant to the terms of the Senior Notes, we elected to increase the outstanding principal amount of the Senior Notes by an amount of interest at a rate of 13% per annum ("paid-in-kind" interest) capitalized semiannually on the final business day in June and December of each year. As a result, our outstanding principal balance of the Senior Notes was approximately $16.1 million as of July 2, 2025. The Senior Notes were initially secured by substantially all of our assets. The Original Warrants issued in the Offering were exercised on June 30, 2025 at an exercise price of $0.10 per share, in return for the issuance of 1,750,000 shares of our common stock. We had previously determined liability classification for the Original Warrants was required based on terms that could require cash settlement upon the occurrence of a contingent change in control event. Changes in the number and value of our Original and New Warrants were as follows:
|  | Six months ended June 30, |
|  | 2026 |  |  | 2025 |
|  | Number of warrants |  |  | Value ($000's) |  |  | Number of warrants |  |  | Value ($000's) |
Beginning balance |  |  | 6,836,237 |  |  | $ | 74,515 |  |  |  | 1,750,000 |  |  | $ | 9,520 |
Exercise of Original Warrants |  |  | — |  |  |  | — |  |  |  | (1,750,000 | ) |  |  | (7,752 | )
Change in fair value of warrant liability |  | N/A |  |  |  | (39,855 | ) |  | N/A |  |  |  | (1,768 | )
Ending balance |  |  | 6,836,237 |  |  | $ | 34,660 |  |  |  | — |  |  | $ | — |
Amendment to the Purchase Agreement and Senior Notes In connection with the Credit Agreement, the Investor entered into a Subordination Agreement, dated July 2, 2025 (the “Subordination Agreement”). Pursuant to the Subordination Agreement, the Investor agreed to the subordination of all indebtedness owed by the Company to the Investor, including under the Senior Notes issued by the Company to the Investor on December 4, 2024, to the indebtedness and obligations owed under the Credit Agreement and the other applicable loan documents. Also, in connection with the Credit Agreement and the Subordination Agreement, the Company and Investor entered into an Amended and Restated Promissory Note, dated July 2, 2025 (the “A&R Promissory Note”). The A&R Promissory Note amends and restates the original Senior Notes to remove the seniority terms of those notes, conform the original Senior Notes to the terms of the Credit Agreement and the Subordination Agreement, amend certain prepayment and make-whole terms under the original Senior Notes, delete certain covenants and event of default terms, reduce the interest rate under the original Senior Notes to 5% per annum paid in cash and 7% per annum paid in kind, both on the final business day of June and December in each year, and to delete the financial covenants set forth in the original Senior Notes. As a result of an amendment to the Purchase Agreement entered into on July 2, 2025 (the "Purchase Agreement Amendment"), among other things, the Investor agreed to release all liens and guarantees securing the obligations under the Senior Notes, the Purchase Agreement, and the A&R Promissory Note. The A&R Promissory Note also (i) provides for additional interest to be capitalized and added to the principal amount of the debt at a rate of 5% per annum upon the occurrence and continuation of certain events of default and (ii) was originally scheduled to mature on January 2, 2030. As a result of factors that are outside of our control in terms of timing of customer project activity and resulting revenue and cash flows, there is currently uncertainty as to our ability to fully meet all existing quarterly and annual financial covenants during the twelve-month period following the date of the consolidated financial statements included herein. Accordingly, the outstanding Term Loan and A&R Promissory principal, plus accrued paid-in-kind interest, related unamortized discount and debt issue costs and any applicable Exit Fee, have been classified as a current obligation at June 30, 2026. Interest Total interest expense recognized during the three and six months ended June 30, 2026 was $4.3 million and $8.2 million, respectively. Total interest expense recognized during the three and six months ended June 30, 2025 was $0.7 million and $1.4 million, respectively. The effective interest rate for our long-term debt, including accretion of the exit fee obligation and amortization of the discount and deferred loan costs, is approximately 30%.

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