SUBSEQUENT EVENTS

6 Months Ended

Mar. 31, 2025

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

11. SUBSEQUENT EVENTS

Inducement Equity Grants

On April 25, 2025, the Company announced that Garrett Gafke was appointed as the Company’s Chief Operating Officer. As a material inducement to Mr. Gafke’s employment he was awarded grants outside of the A&R 2020 Plan with a grant date fair value of $4.0 million. The composition of these awards is heavily weighted towards performance vesting with $3.0 million of the at-target value in the form of Performance RSUs and the remaining $1.0 million in the form of RSUs. The awards consist of (i) 360,576 Performance RSUs that vest, if at all, upon the achievement of target-level stock price performance goals of the Company compared to the Russell 2000 (with an additional 360,576 Performance RSUs eligible to vest upon the achievement of above-target level performance), and (ii) 120,192 RSUs that vest in four equal annual installments from the start date. In each case, vesting of the Performance RSUs and RSUs is subject to Mr. Gafke’s continuous employment through the applicable vesting date or earlier vesting due to a change of control and certain termination events.

Amended Credit Agreement

On May 7, 2025, the Company, together with its subsidiaries, A2iA Corp. and ID R&D, Inc., entered into the First Amendment to Loan and Security Agreement (the “Amendment”), amending the Credit Agreement, and as amended by the Amendment (the “Amended Credit Agreement”), by and among the Company and the Bank.

The Amendment provides for, among other things, (i) the establishment of a delayed draw term loan (the “Term Loan”) in an aggregate principal amount of up to $75.0 million that may be drawn prior to February 28, 2026 for the sole purpose of paying amounts outstanding under the 2026 Notes due February 1, 2026 and customary fees and expenses in connection therewith, (ii) a reduction in the aggregate principal amount available under the existing revolving line of credit (the “Revolving Line”) to $25.0 million, (iii) an adjustment of the financial covenants set forth in the Amended Credit Agreement, (iv) an extension of the maturity date of the Revolving Line to May 1, 2030, and (v) an adjustment to the interest rate margins applicable to advances. The Term Loan and the Revolving Line both mature on May 1, 2030. Commencing on April 1, 2026, the Borrower must make amortization payments on any advances under the Term Loan at the percentages set forth in the Amendment.

Borrowings under the Amended Credit Agreement generally bear interest at a variable rate equal to (a) term SOFR plus a specified margin or (b) WSJ prime plus a specified margin, in each case which will be adjusted based on the Company’s net leverage ratio at the time of borrowing. Borrower must also pay the Bank (i) a commitment fee of $0.1 million and (ii) an “Unused Revolving Line Facility Fee” of 0.25% per annum of the average unused portion of the Revolving Line.

The Amended Credit Agreement contains representations, warranties, and negative and affirmative covenants customary for transactions of this type. These include covenants limiting the ability of Borrower, and any of their subsidiaries, subject to certain exceptions and baskets, to, among other things, (i) incur indebtedness, (ii) incur liens on their assets, (iii) enter into any merger or consolidation with, or acquire all or substantially all of the equity or property of, another person, (iv) dispose of any of their business or property, (v) make or permit any payment on subordinated debt, or (vi) pay any dividend, make any other distribution, or redeem any equity.

The Amended Credit Agreement contains customary events of default and also provides that an event of default includes any default resulting in a right by third parties to accelerate maturity of indebtedness in excess of $0.5 million. If any event of default occurs and is not cured within applicable grace periods set forth in the Amended Credit Agreement or waived, all loans and other obligations could become due and immediately payable and the facility could be terminated. In addition, Borrower may be required to deposit cash with the Bank in an amount equal to 105% of any undrawn letters of credit denominated in U.S. Dollars or 115% of any undrawn letters of credit denominated in a foreign currency.