LINE OF CREDIT |
3 Months Ended |
|---|---|
Sep. 30, 2026 | |
| Debt Disclosure [Abstract] | |
| LINE OF CREDIT |
NOTE 7 – LINE OF CREDIT
Gibraltar Business Capital Credit Facility
On July 28, 2023, the Company entered into a Loan and Security Agreement (the “Loan and Security Agreement”) with Gibraltar Business Capital (“GBC”) (the “GBC Credit Facility”). The Loan and Security Agreement provides the Company with a senior secured revolving loan facility for up to $16.0 million (the “Revolving Loan Commitment”). Subject to conditions and terms set forth in the Loan and Security Agreement, the Company may request an increase in the Revolving Loan Commitment from time to time upon not less than 30 days’ notice to GBC which increase may be made at the sole discretion of GBC, as long as: (a) the requested increase is in a minimum amount of $1,000,000, and (b) the total increases do not exceed $5,000,000 and no more than five (5) increases are made. The revolving amount available under the GBC Credit Facility is equal to the lesser of the Revolving Loan Commitment and the borrowing base amount (as defined in the Loan and Security Agreement). The GBC Credit Facility is evidenced by a revolving note, which was initially to mature on July 28, 2025, and has been extended by various amendments to July 31, 2027 (the “Maturity Date”). Outstanding principal under the GBC Credit Facility accrues interest at Secured Overnight Financing Rate (“SOFR”, as defined in the Loan and Security Agreement) plus five and one half of one percent (5.50%) per annum with such interest payment due monthly on the last day of the month. In the event of a default, the amounts due under the Loan and Security Agreement bear interest at a rate per annum equal to three percent (3.0%) above the rate that is otherwise applicable to such amounts. In addition, the Company is required to pay a monthly unused line fee equal to one-half of one percent (0.50%) per annum on the difference between the Revolving Loan Commitment and the average outstanding principal balance of the revolving loan(s) for such month. Concurrently with entering into the Loan and Security Agreement, the Company entered into an Intellectual Property Security Agreement (the “IP Security Agreement”). The loans and other obligations under the GBC Credit Facility are secured by substantially all of the Company’s tangible and intangible assets including, without limitation, intellectual property. As of September 30, 2026, the outstanding balance under the GBC Credit Facility was approximately $6.3 million, with up to $9.7 million available for future borrowings, subject to borrowing base limitations.
On March 31, 2026, the Company notified GBC that it failed to comply with the minimum EBITDA financial covenant for the trailing three-month period ended February 28, 2026 under the GBC Credit Facility, which resulted in an “event of default” under the GBC Credit Facility.
On September 17, 2026 (the “Amendment No. 7 Effective Date”), the Company entered into Amendment No. 7 to the Loan and Security Agreement (the “Seventh Amendment”) with GBC, which amended certain terms of the Loan and Security Agreement, including, among other things, the addition of covenants requiring the Company to complete a sale of equity interests resulting in net proceeds of not less than $4.0 million within 50 days of the Amendment No. 7 Effective Date and provide to GBC certain projections, budgets and compliance reports with respect to the operation of the Company’s business, with certain material deviations from such budgets constituting an immediate event of default. In addition, the Company and GBC agreed to amend the EBITDA minimum financial covenant of the Company in the Loan and Security Agreement within 90 days of the Amendment No. 7 Effective Date. Notwithstanding the Seventh Amendment, the Company remains in default under the Loan and Security Agreement. GBC has allowed the Company to continue to have access to its revolving credit facility under the Loan and Security Agreement, but GBC has reserved its rights to discontinue such access at any time, declare its commitments to the Company terminated and all obligations of the Company under the Loan and Security Agreement immediately due and payable and/or exercise other remedies available to it, which include, among other things, its rights as a secured party under the Loan and Security Agreement, so long as the Company remains in default.
In consideration for the Seventh Amendment, the Company agreed to pay GBC a non-refundable amendment fee of $135,000 in cash, as follows: (i) $45,000 due and payable on September 17, 2026, (ii) $45,000 due and payable on October 17, 2026, and (iii) $45,000 due and payable on November 16, 2026.
|