Quarterly report pursuant to Section 13 or 15(d)

Loans

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Loans
 3 Months Ended
Mar. 31, 2024
Loans [Abstract]  
LOANS

NOTE 4 – LOANS:

 

a. As a result of the COVID pandemic, the US and Israeli governments offered different programs of financial aid. The Company participated in the following program:

 

On July 1, 2020, the Company received Economic Injury Disaster Loan (the “EIDL Loan”) from an American Bank under the Small Business Administration COVID19 Program in the total of $150. The loan bears interest of 3.75% per annum, the loan shall be repaid in 360 equal monthly payments starting January 1, 2023, unless forgiven per program regulations. As of March 31, 2024, the total loan balance outstanding was $148 (including $2 current maturities).

 

b. On December 9, 2020, the Company signed a new loan agreement with an Israeli based financial institution (“Migdalor”) for a loan of up to 20 million NIS (“New Israeli Shekel”) (an amount of $6,000). The Company received $3,000 on December 2020, and additional $2,000 in January 2021. The loan bears interest of 9.6% per annum. The interest shall first be paid in 12 payments starting February 1, 2021. Starting February 1, 2022, the loan principal and interest shall be repaid in 72 equal payments, plus a one-time interest payment after the 36th month.

 

As part of the loan agreement, the Company issued to Migdalor warrants to acquire common stock in the amount of $1,500.

 

In November 2021, the Company received additional funding in the amount of $1,000 from Migdalor. The loan bears interest of 9.6% per annum. Starting February 1, 2022, the loan principal and interest shall be repaid in 72 equal monthly payments, plus a onetime interest payment after the 24th month. The Company increased the value of the warrant issued to Migdalor to $1,800. Upon the consummation of the IPO, the Company converted all the above outstanding warrants issued to Migdalor into the Company’s common stock based on the contractual terms and conditions of the related warrant agreements.

 

The loan covenants (the “covenants”) include a debt to EBITDA minimum ratio or a coverage ratio of the loan by current assets.

 

On December 21, 2022, pursuant to the terms of the loan Agreement, the Company deposited $2 million to a Company-owned interest-bearing bank account, or the “designated account” (as defined in the Agreement), to satisfy the required obligation associated with the loan agreement. An additional $2 million was deposited in the designated account during the year ended December 31, 2023. These balances are included in Restricted cash equivalents in the condensed Consolidated Balance Sheet.

 

In February 2024, the Company performed a partial early repayment of Migdalor Loan in the amount of ILS 2,000,000 (approximately $550,000). In May, the Company signed an amendment agreement with Migdalor, to pay $470 of the one-time interest payment in 12 equal monthly payments bearing 9.6% interest. In addition, the Company will issue Migdalor warrants to acquire common stock for up to $150.

 

As of March 31, 2024, the total loan balance outstanding was $3,459.

 

As of March 31, 2024, future payments are summarized as follows:

 

          New Loan     New Loan  
    EIDL Loan     from December 2020 and January 2021-
In NIS *		     from November 2021- In NIS *  
2024(**)     7       4,023($1,092 )     527($144 )
2025     9       3,069($834 )     704($191 )
2026     9       3,069($834 )     704($191 )
2027     9       3,069($834 )     704($191 )
2028 and thereafter     225       255($69 )     59($16 )
Less- accumulated interest     (111 )     (2,741)($744 )     (711)($193 )
Total     148       10,744($2,919 )     1,987($540 )

 

* The exchange rate used in translation is $1 – 3.681 NIS.
** excluding the three months ended March 31, 2024.

 

c. On January 15, 2024, the Subsidiary entered into a credit agreement with Bank Mizrahi-Tefahot. The Credit Agreement provides for a $1.5 million credit facility available to be used by the Subsidiary (“New Credit Facility”). Under the New Credit Facility, which will be secured by the Subsidiary’s customer receivables, the Subsidiary will pay an annual fixed interest at a Federal SOFR rate plus 5.5% on any amount withdrawn under the New Credit Facility. The New Credit Facility, at an annual fixed interest rate of 1.5% for unused credit amount, expires on December 27, 2024, subject to extension.

 

Under the Credit Agreement, the Company is permitted to draw upon the New Credit Facility for so long as the following conditions continue to be met:  

 

(a) Throughout the duration of the New Credit Facility, the outstanding extended credit under it does not exceed 80% of the aggregate amount of the open customer invoices securing the New Credit Facility;

 

  (b) Customer invoices are payable within 90 days from the date of the Company’s monthly report to the Lender; and

 

(c) No single customer of the Company may account for open customer invoices securing over 30% of the total borrowed amount under the New Credit Facility.

 

The Credit facility will be examined and adjusted up to every three months, and repayment of the Credit facility will be made every three months if the company does not meet the above conditions.

 

As of March 31, 2024, the Subsidiary used $574 of the credit facility.