NOTE 10 DEBT

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Term Loan Facility

On January 31, 2025, the Company amended its Third Amended and Restated Credit Agreement (“ARCA”). The amendments refinanced the outstanding $40.0 million loan and included the following revisions:

The consideration issued for the maintenance, continuation, and extension of the maturity date of the loan was accounted for as debt issuance costs, which were capitalized as deferred financing costs within long-term debt. These costs are being amortized as interest expense over the term of the debt using the effective interest method.

Following the issuance of convertible notes, on February 21, 2025, the Company voluntarily repaid $20.0 million in principal under the ARCA.

Total interest expense related to the term loan for the three months ended March 31, 2025, was $0.8 million at an effective interest rate of 11.16% and was comprised of $0.8 million related to the interest coupon at the contractual rate of 9.75% and $26 thousand related to the amortization of the debt issuance costs. For the three months ended March 31, 2024, total interest expense related to the term loan was $1.0 million at an effective interest rate equal contractual rate of 9.75%.

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Convertible Senior Unsecured Notes

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On February 11, 2025, the Company issued $110.0 million in aggregate principal amount of 5.25% convertible senior unsecured notes due 2030 (“Convertible Notes”). The net proceeds from the issuance of the Convertible Notes, after deducting offering related costs of $4.2 million and cost of a Capped Call Transaction (defined hereinafter) of $15.1 million, were approximately $90.7 million. The Convertible Notes bear interest at the annual rate of 5.25%, payable semiannually in arrears on August 15 and February 15 of each year, beginning on August 15, 2025, and will mature on August 15, 2030, unless earlier converted, redeemed or repurchased by the Company.

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The Convertible Notes will be convertible into cash, shares of the Company’s common stock or a combination thereof, at the Company’s election. The initial conversion rate is 88.9284 shares of common stock per each $1,000 principal amount of Convertible Notes, which is equivalent to an initial conversion price of approximately $11.25 per share, subject to adjustment pursuant to the terms of the Indenture governing the Convertible Notes (the "Indenture"). The conversion rate may not exceed 115.6069 shares under the terms of the Indenture.

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The Convertible Notes may be converted at any time prior to May 15, 2030 only under the following circumstances:

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On or after May 15, 2030, until the close of business on the second trading day before the maturity date, holders may convert their notes at any time, regardless of prior conditions.

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The Convertible Notes will be redeemable, in whole or in part, at the Company’s option at any time from August 21, 2028, through the 46th trading day prior to maturity, provided that the Company’s common stock has traded at or above 130% of the conversion price for at least 20 trading days within any 30 consecutive trading day period ending on the day before the redemption notice. The redemption price will be equal to 100% of the principal amount of the notes redeemed, plus accrued and unpaid interest up to, but excluding, the redemption date. No sinking fund is provided for the notes.

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If the Company undergoes a “fundamental change”, as defined in the Indenture, and subject to certain conditions and exceptions, holders may require the Company to repurchase all or a portion of their notes for cash at a price equal to 100% of the principal amount, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

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The Indenture contains other customary terms and covenants, including certain events of default.

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The Convertible Notes are accounted for as a single liability in its entirety. No portion of the proceeds was attributed to the conversion option, as the embedded feature did not require bifurcation. In connection with the above-noted transaction, the Company incurred approximately $4.2 million in expenses accounted for as debt issuance costs, which were capitalized as deferred costs within long-term debt. These costs are being amortized as interest expense over the term of the debt using the effective interest method. The total interest expense related to the Convertible Notes for the three months ended March 31, 2025, was $0.9 million at an effective interest rate of 6.33%, and was comprised of $0.8 million related to the contractual interest coupon and $0.1 million related to the amortization of the debt issuance costs.

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As of March 31, 2025, the Convertible Notes had a net carrying amount of $105.9 million and an estimated fair value of $118.4 million. The fair value is based on level 1 quoted prices in active markets for identical securities.

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Capped Call Transactions

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In connection with the offering of the Convertible Notes, the Company used approximately $15.1 million of the net proceeds from the offering of the Convertible Notes to pay the cost of the Capped Call Transactions. The Capped Call Transactions cover, subject to customary anti-dilution adjustments, the aggregate number of shares of common stock that initially underlie the Convertible Notes, and are expected generally to reduce potential dilution to the common stock upon any conversion of the Convertible Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted Convertible Notes, as the case may be, with such reduction and/or offset subject to a cap of $17.30. The Capped Call Transactions are separate transactions entered into by the Company and are not part of the terms of the Convertible Notes.

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As the Capped Call Transactions are freestanding instruments which are both indexed to the issuer’s own stock and classified in stockholders’ equity, the premiums paid in the Capped Call Transactions were classified as a reduction to the additional paid-in capital and will not be remeasured as long as they continue to meet the conditions for equity classification.