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DEBT
 12 Months Ended
Mar. 31, 2025
Debt  
DEBT

8. DEBT

 

Short-Term Borrowings

 

During the year ended March 31, 2025, the Company entered into seven separate business loan and security agreements (the “Term Loans”) with a lender for short-term loans to be provided by the lender, or the lender’s assignees (collectively, the “Lenders”) and mature 30-weeks from the date the amounts are borrowed. No amount of repaid borrowings may be reborrowed. The Company borrowed under seven short-term borrowing arrangements during the year ended March 31, 2025, borrowing a gross amount of $8,658, net of fees of $2,866 which was recorded as a debt discount and is being amortized over the term of the agreement. During the year under March 31, 2025, the Company made total repayments of $5,742. The company amortized $1,801 of the debt discount to interest expense and realized a cancelled debt discount of $179 related as an early payment discount of the notes for the same amount resulting unamortized debt discount balance of $887. As of March 31, 2025, the Company had outstanding borrowings of $2,738 and an unamortized debt discount of $887, resulting in net balance of $1,851.

 

As of March 31, 2025, the Company has outstanding borrowings under four agreements that require weekly payments of principal and interest totaling $53, $34, $71, and $59 which have a remaining term of one week, eight weeks, thirteen weeks, and twenty-seven weeks, respectively. If an event of default, as defined in the agreement, occurs, the Company must make a mandatory prepayment to the Lenders in an amount equal to the sum of (i) all outstanding principal plus accrued and unpaid interest and (ii) a prepayment fee equal to the amount of interest that would be paid through the maturity date (the “Prepayment Fee”) plus (iii) all other obligations that are due and payable, including increased interest of 5.0%.

 

The Company has the right to make a full or partial prepayment of any or all obligations, but is obligated to pay a make-whole payment equal to the Prepayment Fee.

 

Use of proceeds is limited to the repayment of other obligations to one of the Lenders and for general business requirements. The term loans are secured by collateral of the company that consists of all properties, rights and assets of the Company.

 

Trade Finance Facility

 

The Company, through PMA, has a trade finance facility extended on goods for which letters of credit are issued to the Company’s suppliers by a financial institution that matures in June 2025. The trade facility agreement was entered into in June 2022 and subsequently amended since with the most recent amendment in August 2024. As of March 31, 2025 and 2024, the outstanding balance under the trade finance facility was $2,495 and $0, respectively, and the Company had a limit on the trade finance facility of $2,700 and $5,000, respectively. As of March 31, 2025, there were no outstanding pledged letters of credit by HSBC. The Company is permitted to draw on the trade finance facility agreement to the extent that there is a deposit made to a specified account with the financial institution.

 

The trade finance facility, as amended in August 2024, provides for (a) import facilities up to $2,700 and $5,000 as of March 31, 2025 and 2024, respectively, with repayment due 120-days from the draw, and (b) post-shipment buyer loans up to $1,800 and $800 as of March 31, 2025 and 2024, respectively, with repayment due 90-days from the draw. The Company’s ability to draw on the trade finance facility is subject to terms per the agreement, which include verification that the Company received the products from suppliers, among other requirements. The financial institution reserved the right to demand repayment at any time. A commission fee equal to 0.25% and 0.0625% will be charged on the first $50 and balances in excess of $50 respectively, drawn under the trade finance facility.

 

For drawings in Hong Kong dollars, the interest rate equals the Hong Kong Interbank Offered Rate (“HIBOR”) plus 3.0% (6.72% at March 31, 2025), and for drawings in U.S. dollars, the interest rate equals the Secured Overnight Financing Rate (“SOFR”) plus 3.3% (7.71 % at March 31, 2025).

 

As of March 31, 2025, the trade finance facility was secured by a personal guarantee of $4,000 from the chairman of the Company’s board of directors and a requirement for a cash deposit from PMA equal to 50.0% of the limit of the trade finance facility, or $1,350. As of March 31, 2025, the cash deposit associated with the trade finance facility agreement was $1,350 and is recorded as restricted cash on the accompanying consolidated balance sheets.

 

The $2,495 outstanding under the trade finance facility as of March 31, 2025 was repaid in full during June 2025.