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Note 5 - Debt
 9 Months Ended
Sep. 30, 2024
Notes to Financial Statements  
Debt Disclosure [Text Block]

NOTE 5.     DEBT

 

The Company’s outstanding debt with Perceptive Credit Holdings IV, LP (“Perceptive”) (as initial lender and administrative agent) (“Perceptive Credit Agreement”) at  September 30, 2024 and December 31, 2023 bears interest at a floating rate based on one-month SOFR, subject to a floor of 5.0%, plus 7.0% (12.2% at September 30, 2024). Included in interest expense for the three and nine months ended September 30, 2024 are $66,000 and $195,000, respectively, of amortization of the debt issuance costs and $159,000 and $473,000, respectively, of amortization of debt discounts. Included in interest expense for the three and nine months ended September 30, 2023 are $61,000 and $149,000, respectively, of amortization of the debt issuance costs and $84,000 and $205,000, respectively, of amortization of the debt discounts, including accretion of the exit fee on the Company’s prior credit agreement.

 

A $7.5 million delayed draw loan is available until December 31, 2024, conditioned upon, among other things, the achievement of a minimum revenue target. 

 

On November 7, 2024, the Company entered into an amendment to the Perceptive Credit Agreement. The amendment reduced the financial covenant trailing twelve-month revenue targets relating to its Advanced Energy segment (tested quarterly), with amended year-end targets of $34.4 million, $37.0 million, $52.4 million and $60.3 million for 2024, 2025, 2026 and 2027, respectively, and a target of $38.3 million for the quarter ended September 30, 2024. The amendment also introduced a maximum operating expense financial covenant, with full year targets of $40.0 million and $45.0 million for 2025 and 2026, respectively. The Perceptive Credit Agreement, as amended, continues to contain customary affirmative and negative covenants, including covenants limiting the ability of the Company and its subsidiaries, among other things, to incur debt, grant liens, make distributions, enter certain restrictive agreements, pay or modify subordinated debt, dispose of assets, make investments and acquisitions, enter into certain transactions with affiliates, and undergo certain fundamental changes, in each case, subject to limitations and exceptions set forth in the Perceptive Credit Agreement. Additionally, the Company must maintain a balance of $3.0 million in cash and cash equivalents during the term of the Perceptive Credit Agreement. As of September 30, 2024, the Company was in compliance with the financial covenants contained within the Perceptive Credit Agreement, as amended. The Company’s continued compliance with covenants is subject to meeting or exceeding forecasted Advanced Energy revenues, as amended, and reducing operating expenses. 

 

In connection with the amendment to the Perceptive Credit Agreement, the Company issued Perceptive 150,000 shares of its common stock. The Company is in the process of determining the proper accounting treatment for the amendment to the Perceptive Credit Agreement, including the issuance of the shares of common stock. 

 

In connection with the Company’s initial loan under the Perceptive Credit Agreement, the Company issued Perceptive warrants to purchase up to 1,250,000 shares of its common stock, with an exercise price of $2.43 per share.

 

The Company’s term loan under the Perceptive Credit Agreement, net consists of the following:

 

  

September 30,

  

December 31,

 

(In thousands)

 

2024

  

2023

 

Term loan

 $37,500  $37,500 

Unamortized debt issuance costs

  (1,045)  (1,240)

Unamortized debt discount

  (2,602)  (3,075)

Term loan, net

 $33,853  $33,185 

 

As of September 30, 2024, principal repayments on the debt are as follows:

 

(In thousands)

    

2024

 $— 

2025

  — 

2026

  — 

2027

  2,216 

2028

  35,284 

Total repayments

 $37,500