Line of Credit and Other Available Sources of Financing

12 Months Ended

Dec. 31, 2024

Line of Credit Facility [Abstract]

Line of Credit and Other Available Sources of Financing

Line of Credit and Other Available Sources of Financing

Line of Credit

On November 12, 2019, the Company entered into a business financing agreement with Western Alliance Bank (Credit Agreement), to establish a formula based revolving credit line.

On December 8, 2023, the Company entered into a fifth amendment to the Credit Agreement. Pursuant to such amendment, the Credit Agreement provides for a revolving credit line of up to $10.0 million subject to the terms and conditions of the agreement, as amended, and extended the maturity date to November 12, 2025. The amendment also modified the interest rate to be calculated at a floating rate per month equal to (a) the greater of (i) 8.25% per year (previously 3.25% per year) or (ii) the Prime Rate published by The Wall Street Journal, or such other rate of interest publicly announced by the Lender as its Prime Rate, plus (b) 1.00% (previously 1.50%), plus an additional 5.00% during any period that an event of default has occurred and is continuing. In addition, the amendment modified certain financial covenants, including (a) the amount of the Borrowers’ cash maintained at Lender (b) revising how quick ratio is calculated for purposes of the quick ratio covenant, and (c) Borrowers’ minimum liquidity requirements.

On November 18, 2024, the Company entered into a sixth amendment to the Credit Agreement. The amendment revised a letter of credit sublimit, under which the lender may issue letters of credit on behalf of the Company up to a maximum of $3.0 million. The issuance or renewal fee for letters of credit is 2.00% per annum of the face amount, with additional fees applicable for amendments, transfers, and cancellations. The amendment further provided that any letter of credit obligations will be treated as advances for purposes of determining availability under the credit limit. On November 21, 2024, a letter of credit for approximately $2.1 million was issued on behalf of the Company. See Note 16, Commitments and Contingencies - Royalties for further information. As of December 31, 2024, the Company had no outstanding debt under this line of credit arrangement.

If the Company draws from the line of credit, the Company’s obligations under the Credit Agreement are secured by a security interest in substantially all of the Company’s current and future personal property assets, including intellectual property. Any borrowings, interest or other fees or obligations that the Company owes will become due and payable on the maturity date. The Credit Agreement includes quick ratio financial covenants. If the Company draws from the line of credit, the Company is also subject to a number of affirmative and restrictive covenants, including covenants regarding delivery of financial statements, the amount of the Company’s cash maintained at Western Alliance Bank, maintenance of inventory, payment of taxes, maintenance of insurance, dispositions of property, business combinations or acquisitions and incurrence of additional indebtedness, among other customary covenants. As the Company had no borrowings under the line of credit as of December 31, 2024, the Company was in compliance with the covenants of this agreement.

Debt Issuance Costs

For the years ended December 31, 2024 and 2023, the Company incurred debt issuance costs of approximately $52,000 and $75,000, respectively, in connection with this line of credit arrangement and had an unamortized balance of approximately $39,000 and $68,000 as of December 31, 2024 and 2023, respectively. For the line of credit arrangement, the Company elected a policy to keep the debt issuance costs as an asset, regardless of whether an amount is drawn. The remaining unamortized deferred asset will be amortized over the remaining life of the line of credit arrangement.

Other Available Sources of Financing

In June 2023, the Company filed a new $125 million registration statement on Form S-3 with the SEC, utilizing a “shelf” registration process. Under this shelf registration process, the Company may sell securities from time to time, including up to $47.8 million pursuant to the At Market Issuance Sales Agreement, dated as of June 12, 2020, with B. Riley FBR, Inc. and Raymond James & Associates, Inc. (ATM Facility). On November 20, 2024, the Company entered into an amendment (the “Amendment”) to the ATM Facility in order to (i) revise the list of sales agents under the program to include Roth Capital Partners, LLC, (ii) remove B. Riley Securities, Inc. (formerly B. Riley FBR, Inc.) as sales agent, (iii) update the provisions regarding notice accordingly, and (iv) make other conforming changes. As a result of the Amendment, Raymond James & Associates, Inc. and Roth Capital Partners , LLC will continue as the sales agents. As of December 31, 2024, approximately $47.8 million remains available under the ATM Facility. The Company’s potential use of the ATM facility is subject to the satisfaction of various conditions in the ATM Facility agreement as well as market conditions. As a result, the Company’s ability to rely on the ATM Facility to raise liquidity is limited.