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

NOTE 12: DEBT

 

Pursuant to the terms of the loan and security agreement, as amended (the “2019 Loan and Security Agreement”), with Banc of

California (formerly known as Pacific Western Bank) the Company was entitled to request advances on a revolving line of credit of up

to an aggregate principal amount of $30.0 million (as amended from time to time, the “Revolving Line”) at an annual interest rate

equal to the greater of (a) 0.75% above the Prime Rate (as defined in the 2019 Loan and Security Agreement) and (b) 4.25%.

 

On June 21, 2024, the Revolving Line maturity date was extended from June 23, 2024 to July 31, 2024, with all outstanding principal amounts due upon maturity. Pursuant to the terms of the 2019 Loan and Security Agreement, the Company was required to maintain an aggregate balance of unrestricted cash at Banc of California (not including amounts in certain specified accounts) equal to or greater than $10.0 million.

On July 31, 2024, the Company entered into an amended and restated loan and security agreement (the “2024 Loan and Security Agreement”) with Banc of California pursuant to which Banc of California provided the Company with a term loan with a principal amount of $22.5 million (the “2024 Term Loan”). The proceeds from the 2024 Term Loan were used to repay the $22.5 million outstanding principal balance under the Revolving Line, and pursuant to the terms of the 2024 Loan and Security Agreement, the Revolving Line was terminated.

The maturity date under the 2024 Loan and Security Agreement is June 30, 2027 (the “2024 Term Loan Maturity Date”). The Company may prepay all or a portion of the amounts due under the 2024 Term Loan without penalty or premium at any time, provided that if the Company refinances the 2024 Term Loan with borrowings from another lender, the Company is required to pay Banc of California an early termination fee of $100,000. Once repaid, the Company may not reborrow amounts under the 2024 Term Loan.

The 2024 Term Loan bears interest at an annual rate equal to the greater of (i) 1.50% below the Prime Rate (as defined in the 2024 Loan and Security Agreement) then in effect or (ii) 4.50%. As of December 31, 2024, the stated interest rate on the 2024 Term Loan was 6.00% and the effective interest rate was 6.43%.

Upon the earliest to occur of the Term Loan Maturity Date, the date that the Company repays the 2024 Term Loan and elects to terminate the 2024 Term Loan, and the date that the 2024 Term Loan becomes due or Banc of California elects to terminate the 2024 Loan and Security Agreement in connection with an event of default thereunder, the Company is required to pay Banc of California a fee of $225,000.

Under the terms of the 2024 Loan and Security Agreement, the Company granted Banc of California a security interest in a cash security account at Banc of California (the “Cash Security Account”), and Banc of California agreed to terminate all other security interests it has in the Company’s assets. The Company is required to maintain an aggregate unencumbered balance in the Cash Security Account at least equal to the outstanding principal amount of the 2024 Term Loan then outstanding.

The 2024 Loan and Security Agreement includes customary representations, warranties and covenants (affirmative and negative), including restrictions on mergers by the Company with and into other companies, and the incurrence of secured indebtedness, in each case, subject to specified exceptions. Certain of the restrictive covenants, including covenants related to capital expenditures, transactions with affiliates, subordinated debt, inventory and equipment, and encumbrances on the Company’s assets (other than the Cash Security Account) included in the 2019 Loan and Security Agreement were deleted.

 

The 2024 Loan and Security Agreement also includes standard events of default, including in the event of a material adverse change. Upon the occurrence of an event of default, Banc of California may declare all outstanding obligations immediately due and payable, take such other actions as are set forth in the 2024 Loan and Security Agreement and increase the interest rate otherwise applicable to the amount outstanding under the 2024 Loan and Security Agreement by an additional 3.00%.

As of December 31, 2024, $22.5 million in borrowings were outstanding under the 2024 Term Loan and the unamortized debt discount balance was $0.2 million.