DEBT, LIQUIDITY & GOING CONCERN

12 Months Ended

Dec. 31, 2024

Debt Disclosure [Abstract]

DEBT, LIQUIDITY & GOING CONCERN

DEBT, LIQUIDITY & GOING CONCERN

On March 6, 2023, the Company entered into the 15th amendment to the loan and security agreement (as amended, the “15th Amendment” to the “Credit Agreement”) with Midtown Madison Management LLC, as agent for various funds of Atalaya Capital Management (the "Lender"). As of September 30, 2024, Atalaya was acquired by Blue Owl Capital Inc. As part of the amendment, the maturity date of the RLOC and the Term Loan was extended to June 4, 2025 and the commitments under the RLOC were reduced to $75 million from $125 million. The interest rate for interest paid-in-kind (“PIK”) on the Term Loan (as defined in the 15th Amendment) is (A) if Liquidity is greater than $25 million, 4.5% or (B) if Liquidity is less than $25 million, 6%.The spread on the RLOC was increased to 8.5% from 7.5%, while the spread on the Term Loan remained at 8.0%. Additionally, effective April 1, 2023, the Secured Overnight Financing Rate (“SOFR”) replaced the London Interbank Offered Rate (“LIBOR”), plus a 0.10% credit adjustment spread, for both the RLOC and the Term Loan’s benchmark rate for interest rate calculations. As of December 31, 2024, the interest rates for the RLOC and Term Loan were 13.1% and 18.6%, respectively, (which includes the 6% interest rate applicable to PIK with respect to the Term Loan).

In connection with the 15th Amendment, the Company repaid $25 million of outstanding principal amount of the Term Loan and issued a warrant to purchase up to 80,000 shares of our common stock at an exercise price of $0.25 per share, which vested on September 6, 2023. On December 5, 2023, the Company issued a warrant to purchase an additional 80,000 shares of its common stock at an exercise price of $0.25 per share which vested on March 5, 2024. In conjunction with the 15th Amendment, the Company incurred a loss on partial extinguishment of debt of $2.4 million during the year ended December 31, 2023. The loss on partial extinguishment of debt is attributed to the derecognition of a proportionate amount of the unamortized debt discount, a result of repaying the $25 million of outstanding principal on the Term Loan.

In addition, the 15th Amendment also updated certain financial covenants each as defined in the 15th Amendment, including the Minimum Adjusted EBITDA levels, Minimum Tangible Net Worth, Minimum Liquidity and compliance with a Total Advance Rate.

On April 24, 2024, the Company entered into the Limited Waiver and 16th Amendment to the Credit Agreement with the Lender (the "16th Amendment"). Pursuant to such 16th Amendment, the Lender granted the Company a waiver of any Specified Defaults (as defined in the 16th Amendment) related to the accounting errors that led to the restatement of the Company’s financial statements for all reporting periods prior to the date of the amendment. In addition, the 16th Amendment also updated certain financial covenants each as defined in the 16th Amendment, including Minimum Adjusted EBITDA (Trailing 3 Months), Minimum Adjusted EBITDA (YTD) and Minimum Tangible Net Worth.

On November 21, 2024, the Company entered into the 17th Amendment to the Credit Agreement with the Lender (the "17th Amendment"). Commitments under the RLOC were increased to $90 million from $75 million to primarily provide funding for leases as well as general corporate needs. Additionally, the Lender may provide up to $10 million (the “Uncommitted Amount”) in Revolving Advances, in excess of the Revolving Loan Commitment, following a request from the Borrowers and subject to the other terms and conditions set forth within the agreement.

A reconciliation of the outstanding principal to the carrying amount of the RLOC is as follows:

	December 31,
	2024		2023
Principal balance	$	82,758	$	60,744
Less: Unamortized issuance costs	(176)		(397)
Total carrying amount	$	82,582	$	60,347

The issuance costs are amortized over the life of the RLOC and included in interest expense and other fees in the consolidated statements of operations and comprehensive loss.

A reconciliation of the outstanding principal to the carrying amount of the Term Loan is as follows:

	December 31,
	2024		2023
Principal balance	$	25,000	$	25,000
PIK	6,780		5,340
Less: Unamortized debt discount and issuance costs	(1,733)		(4,837)
Total carrying amount	$	30,047	$	25,503

Amortization expense related to the Term Loan discount and issuance costs of $3.1 million and $2.8 million was recorded for the years ended December 31, 2024 and 2023, respectively. Amortization of debt discount and issuance costs is included in interest expense and other fees in the consolidated statements of operations and comprehensive loss.

The RLOC and Term Loan are also subject to certain customary representations, affirmative covenants, which consist of maintaining lease performance metrics, financial ratios related to operating results, and lease delinquency ratios, along with customary negative covenants.

As noted above, the RLOC and Term Loan maturity dates were June 4, 2025. Due to the maturity date being less than one year from the balance sheet date of December 31, 2024, debt is classified as a current liability in the consolidated balance sheet as of December 31, 2024.

Liquidity & Going Concern

The Company’s financing generally consists of cash from leases and borrowings under the RLOC, which is fully collateralized by the Company’s assets. As of March 24, 2025, the Company had a combined principal balance outstanding of $108.8 million under the RLOC and term loan, both of which mature within 12 months of the date that these financial statements are issued. Both loans were previously refinanced on March 6, 2023 to extend the maturity date from December 4, 2023 to June 4, 2025.

As of March 24, 2025, the Company had total cash on hand of $14.5 million, including $7.3 million of unrestricted cash. The Company anticipates that it will not have sufficient cash available to repay the loans at maturity and is currently seeking to

refinance the loans prior to maturity in June 2025, which raises substantial doubt about the Company’s ability to continue as a going concern.

Management plans to address this uncertainty by refinancing the loans. No adjustments have been made to the carrying amounts of assets or liabilities, as the Company intends to refinance the loans prior to the maturity on June 4, 2025. However, there can be no assurance that the Company will be able to secure such financing prior to that date or at all.