Note 5 – Debt

Credit Facility

On July 30, 2024, we entered into the Financing Agreement with SLR. Under the terms of the Financing Agreement, SLR has provided us with a $10 million line of credit commitment. We are permitted to borrow up to 90% of eligible accounts receivable as defined in the Financing Agreement, up to the maximum credit commitment of $10 million. As of March 31, 2026, our accounts receivable, net of allowance for credit losses, totaled $4.3 million of which a substantial portion qualified as eligible under the agreement. As of December 31, 2025, our accounts receivable, net of allowance for credit losses, $5.9 million of which a substantial portion qualified as eligible under the agreement. The outstanding balance under the Financing Agreement at that date was $3.3 million. During the three months ended March 31, 2026, we made payments of $3.3 million towards the Financing Agreement, resulting in an outstanding balance of $0 as of March 31, 2026. We will pay SLR monthly interest at the rate of 1.0% in excess of the Prime Rate but not less than 7%. The Prime Rate was 6.75% as of March 31, 2026 and as of December 31, 2025 . The Financing Agreement has a three-year term. The Financing Agreement contains certain affirmative and negative covenants to which we are also subject to. We agreed to pay SLR an annual facility fee of 0.80% of the maximum credit commitment. We also agreed to pay a minimum utilization amount of the interest rate multiplied by difference between $0.5 million and the average daily outstanding loan during a month. We are obligated to pay SLR a monthly service fee of 0.15% of the average net amount of outstanding loans during each month. If we terminate the Financing Agreement prior to the second anniversary of the effective date, an amount equal to 1.0% of the maximum credit commitment will be due as an early termination payment and if we terminate after the second anniversary of the effective date but prior to the end of the term, an amount equal to 0.25% of the maximum credit commitment will be due. Repayment of the financing agreement will be made through collections from eligible accounts receivable.

Convertible Note

On January 14, 2026, we entered into a securities purchase agreement with a certain investor pursuant to which we issued a subordinated convertible note with an aggregate principal amount of approximately $3.3 million, subject to a 10% original issue discount, resulting in gross proceeds of approximately $3.0 million. The note bears interest at a rate of 8% per annum and mature 12 months from the issuance date. The note is repayable in four equal quarterly installments of approximately $833,333 in principal and $66,667 in interest, commencing March 31, 2026. The note is convertible into shares of our common stock at a conversion price of $3.10 per share, subject to applicable ownership limitations. In connection with the financing, we entered into a subordination agreement with our senior lender and a registration rights agreement with the investor. Debt issuance costs of $267,500 incurred in connection with the convertible note were expensed as incurred. Refer to Note 2 for additional information regarding the Company's accounting policy for the convertible note under the fair value option.

The following table summarizes the change in convertible note fair value for the three months ended March 31, 2026 (in dollars):

The following table presents information about the Company's liabilities measured at fair value on a recurring basis as of March 31, 2026:

There were no transfers between Levels 1, 2, or 3 of the fair value hierarchy during the three months ended March 31, 2026.

The fair value of the convertible note is classified within Level 3 of the fair value hierarchy, as the measurement incorporates significant unobservable inputs. The fair value was determined using a Monte Carlo simulation model incorporating a probability-weighted scenario analysis. Cash settlement amounts, including principal, accrued interest, and make-whole amounts, were discounted using a credit-adjusted yield reflective of the Company's credit profile and market conditions as of the measurement date. The conversion feature was valued based on the lower of the contractual conversion price of $3.10 per share and 93% of the lowest daily volume-weighted average price during the five trading days preceding the conversion date.

The significant unobservable inputs used in the Level 3 fair value measurement of the convertible note are as follows: