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”), which will expire on September 30, 2026. The Loan Agreement, as amended, provides for a revolving credit facility under which Pinnacle may, in its sole discretion upon the Company’s request, make advances to us up to $7,500, subject to certain limitations and adjustments. The Loan Agreement contains certain affirmative and negative covenants. At September 30, 2025, the Company was not in compliance with the affirmative covenant requiring all taxes including unsecured property taxes to be paid in full before becoming delinquent, of which the Company has a delinquent balance of $29. The Company was also not in compliance with the affirmative covenant requiring the Company to attain a minimum Effective Tangible Net Worth greater than $6,000, as the Company attained a Tangible Net Worth of $3,405 after recording an inventory write-down of $1,967 to adjust the book value of its inventory to its net realizable value, and $455 impairment of right-of-use asset and lease deposits. While the Company expects to regain compliance, there is no guarantee that the Company will be able to do so. Further, Pinnacle, as of October 21, 2025, pursuant to the terms of the Loan Agreement, lowered the valuation on certain of the Company’s inventory. As a result of the reduction in the valuation of certain of the Company’s inventory, the Company has an over-advance of $480 at October 21, 2025, and therefore, pursuant to the terms of the Loan Agreement, Pinnacle is permitted take certain actions, including the creation of reserves against amounts that would be available for borrowing or the reduction of its advance rates without declaring an event of default on the facilities, if it determines, in its good faith credit judgment that such reserves are necessary. We are in current discussions with Pinnacle and negotiating with them in good faith on these terms, and expect to come to a mutually agreeable outcome, which, at this time, we believe will provide that Pinnacle will accept certain amounts we expect to receive in purchase orders over the next few months ($325 by December 15, 2025), provided that if such purchase orders are not fulfilled, $325 will be due in December, regardless, and in each case the balance outstanding ($155) will be due by January 15, 2026. While the Company believes it has a good working relationship with Pinnacle, Pinnacle could seek other remedies against the Company pursuant to the Loan Agreement or terminate the Loan Agreement. If the Company is unable to comply with the Loan Agreement, or amendments if applicable, the Company may lose its financing with Pinnacle.

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 (8.5% at September 30, 2025 and 8.75% 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 (9.5% at September 30, 2025 and 9.75% at December 31, 2024).

Pursuant to the Loan Agreement, as amended, the standards of eligible accounts receivable include AT&T accounts receivable up to 120 days of invoice date, and eligible accounts receivable with other customers have up to 90 days of invoice date. Customer accounts with eligible accounts receivable cannot exceed a concentration percentage which is a customer’s total obligations to the Company as a percentage of eligible accounts receivable from all customers. The concentration percentage applicable to certain Tier-1 telecommunications customers is 75% of all eligible accounts receivable, and the concentration percentage applicable to all other customer is 25% of all eligible accounts.

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.

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 nine months ended September 30, 2025, the Company had a net repayment of $145 to the credit facility. At September 30, 2025, the outstanding balance under the line of credit was $4,652, which includes interest, fees and financing costs (see below).

The total interest expense, fees, and financing costs incurred under the Loan Agreement for the three-month periods ended September 30, 2025 and 2024 were $258 and $248, respectively. Of these amounts, $88 in 2025 and $99 in 2024 were recorded under general and administrative expenses, while $170 in 2025 and $149 in 2024 were recorded under interest expense and finance costs in the accompanying statements of operations.

The total interest expense, fees, and financing costs incurred under the Loan Agreement for the nine-month periods ended September 30, 2025 and 2024 were $497 and $588, respectively. Of these amounts, $90 in 2025 and $100 in 2024 were recorded under general and administrative expenses, while $407 in 2025 and $488 in 2024 were recorded under interest expense and finance costs in the accompanying statements of operations.