NOTE 4 – LINE OF CREDIT

Credit Facility

Effective September 30, 2020, the Company entered into a Loan and Security Agreement (the “Loan Agreement”) with Pinnacle Bank (“Pinnacle”). The Loan Agreement, as amended, provides for a revolving credit facility under which Pinnacle may, in its sole discretion upon our request, make advances to the Company up to $7,500, subject to certain limitations and adjustments, of up to (a) 85% of the aggregate net face amount of the Company’s accounts receivable and other contract rights and receivables, plus (b) the lesser of (i) 40% of the aggregate eligible inventory value of eligible inventory or (ii) $4.0 million, plus (c) up to $146 collateralized by certain equipment. Before the Loan Agreement was set to expire in September 2024, the Company and Pinnacle executed an amendment to extend the term of the Loan Agreement until September 30, 2026.

Borrowings based on receivables bears an interest on the daily balance at a rate of 1.25% above the prime rate, but in no event less than 3.75% per annum (9.75% at March 31, 2025 and 9.75% at December 31, 2024). Interest on the portion of the daily balance consisting of advances against inventory accrues interest at a rate of 2.25% above the prime rate, but in no event less than 4.75% per annum (10.75% at March 31, 2025 and 10.75% at December 31, 2024).

During 2023, amendments to the Loan Agreement included, among others, extending the 90-day period on AT&T accounts receivable to 120 days, raising the concentration percentage applicable to certain Tier-1 telecommunication customers from 50% to 75% in the definition of eligible accounts receivable, and increasing the aggregate advance limit under the credit facility from $6,000 to $7,500, for a fee of $23 (1.5% of the $1.5 million increase).

Pinnacle may terminate the Loan Agreement at any time upon ninety days prior written notice and immediately upon the occurrence of an event of default. Under the Loan Agreement, the Company granted Pinnacle a security interest in all presently existing and thereafter acquired or arising assets of the Company. The Loan Agreement also contains a financial covenant requiring the Company to attain an effective tangible net worth, as defined, which the Company attained as of March 31, 2025.

At December 31, 2024, the outstanding balance under the line of credit was $4,797 and the Company had availability under the line of credit in the amount of $654. During the three months ended March 31, 2025, the Company repaid an aggregate of $9 of advances from the credit facility. At March 31, 2025, the outstanding balance under the line of credit was $4,788 and the Company had an amount of $33 available under the line of credit.

The Loan Agreement obligates the Company to pay Pinnacle a yearly facility fee in an amount equal to 1.125% of the sum of the advance limit. The Loan Agreement contains certain affirmative and negative covenants, all of which the Company was in compliance with at March 31, 2025.

The total interest expense, fees, and financing costs incurred under the Loan Agreement for the three-month periods ended March 31, 2025 and 2024 were $161 and $161, respectively. Of these amounts, $1 in 2025 and $1 in 2024 were recorded under general and administrative expenses, while $160 in 2025 and $160 in 2024 were recorded under interest expense and finance costs in the accompanying statements of operations.