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9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| DEBT | NOTE 3 — DEBT Term Loan and Revolving Credit Facility with Western Alliance Bank On March 31, 2025, the Company entered into a Loan and Security Agreement (the “Credit Facility Agreement”) with Western Alliance Bank, an Arizona corporation (the “Lender”). The Credit Facility Agreement provides for borrowings of up to $20.0 million, including (i) a term loan facility, comprising of a $12.0 million term loan advance funded on March 31, 2025, and subsequent term loan advances at the Company’s request through March 31, 2026, with an aggregate principal amount not to exceed $5.0 million (the total $17.0 million borrowed under the term loan facility, the “Term Loan”); and (ii) a revolving line of credit in an aggregate outstanding amount not to exceed $3.0 million (the “Revolving Facility”). The Term Loan and the Revolving Facility have a maturity date of March 31, 2030. In the first quarter of 2026, we drew the remaining $3.6 million from the $5.0 million available as subsequent Term Loan advances, resulting in a total $17.0 million drawn under the Term Loan.
The outstanding Term Loan and the Revolving Facility bear interest on the outstanding daily balance at a floating rate equal to 3.25% above the term SOFR rate, which is defined as the greater of (i) 2.30% and (ii) the 1-month Term SOFR Reference Rate.
Under the Term Loan, the Company was obligated to pay interest-only payments through April 9, 2026. Beginning on April 10, 2026, the Company is obligated to repay the Term Loan in (i) quarterly principal payments in the amount of $213,000 each, plus (ii) monthly payments of accrued interest. The final payment for the Term Loan, due on March 31, 2030, shall include all outstanding principal and accrued and unpaid interest under the Term Loan. Once repaid, the Term Loan may not be reborrowed. The interest on the Revolving Facility is payable monthly with the principal outstanding amount due at maturity. The Company incurred $50,000 in facility fees on the closing date, which were recorded as debt discount. The Company also incurred $443,000 in third-party expenses in connection with the Term Loan, which were recorded as debt issuance costs. Debt discount and debt issuance costs are presented as a direct deduction from the carrying amount of our Term Loan and are amortized to interest expense over the term of the Term Loan on a straight-line basis, which is not materially different from the effective interest method. In the three and nine months ended September 30, 2026, the aggregate amortization of debt discount and debt issuance costs totaled $25,000 and $74,000, respectively. The Credit Facility Agreement is secured by substantially all of our assets and contains certain customary financial covenants, including the requirements that the Company maintain at all times from the closing date through and including the calendar quarter ended June 30, 2026, (a) unrestricted and unencumbered cash held in accounts with the Lender equal to at least $3.0 million measured as of the last day of each calendar month, and (b) a ratio of certain total committed debt to its Annual Recurring Revenue between 0.70 to 0.55, depending on the testing date, measured as of the last day of each calendar quarter. During the period of time commencing on September 30, 2026, and continuing through and including March 31, 2030, the Company shall maintain (a) a ratio of its aggregate funded indebtedness to its adjusted EBITDA for the prior twelve months of no greater than (i) 2.50 to 1.00 for the calendar quarters commencing September 30, 2026 through and including June 30, 2027, and (ii) 2.00 to 1.00 at all times thereafter, in each case measured as of the last day of each calendar quarter, and (b) a Fixed Charge Coverage Ratio of at least 1.50 to 1.00. As of September 30, 2026, we were in compliance with all covenants under the Credit Facility Agreement. On September 18, 2026, the Company entered into a Fourth Loan Modification Agreement with the Lender, which modified the covenant definitions of Adjusted EBITDA and Adjusted EBIDA to permit the add-back of certain litigation expenses, subject to specified caps, and modified the per year limits on permitted stock repurchases. On October 26, 2026, the Company entered into a Fifth Loan Modification Agreement with the Lender, which, among other things, removed the dollar amount limits on permitted stock repurchases, such that repurchases can now be made as long as there is no event of default at the time of, or following, any repurchase, the Company’s liquidity at the time of, or after giving effect to, the repurchase is at least $5.0 million, and the Company has provided certain notices to the Lender. These amendments did not change the principal amount, interest rate, maturity date or repayment terms of the Term Loan or the Revolving Facility. As of September 30, 2026, the outstanding principal balance of our Term Loan totaled $16.6 million and there were no outstanding borrowings under the revolving line of credit. As of September 30, 2026, revolving line of credit available for future draws totaled $3.0 million. As of September 30, 2026, future principal payments of debt based on the principal balance then outstanding are as follows (in thousands):
As of September 30, 2026, the $16,575,000 in future principal payments reconciles to the carrying value on the consolidated balance sheet as follows:
Term Loan with SG Credit Partners On November 30, 2023, the Company entered into a Loan and Security Agreement (the “Loan Agreement”) with SG Credit Partners, Inc., a Delaware corporation. The Loan Agreement provided for a $7.0 million term loan, which was due and payable on the maturity date of November 30, 2026. The interest rate was 6.25% in excess of the base rate, which was defined as the greater of the prime rate and 7.00% per annum. Interest was payable in cash on a monthly basis. On March 31, 2025, the Company paid $7.0 million in outstanding principal, $105,000 in exit fees and $144,000 in prepayment and other fees with the proceeds from the Credit Facility Agreement to repay in full all indebtedness, liabilities and other obligations outstanding under, and terminated, the Loan Agreement. In the nine months ended September 30, 2025, we recognized a $300,000 loss on extinguishment of debt in connection with the termination of the term loan under the Loan Agreement, which included the unamortized portion of related debt discount and debt issuance costs. |
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