HARVARD BIOSCIENCE INC Debt Disclosure

10.

Debt

 

As of December 31, 2025 and 2024, the Company’s debt consisted of the following:

 

		December 31,
(in thousands)		2025				2024
Term loan		$	-			$	24,700
Revolving line			-				12,650
Less: unamortized deferred financing costs			-				(394	)
Net carrying amount		$	-			$	36,956
Term A loan
Principal amount		$	10,000			$	-
Deferred financing cost and discount			(708	)			-
Exit fee accretion			10				-
Net carrying amount		$	9,301			$	-
Term B loan
Principal amount		$	22,500			$	-
Deferred financing cost and discount			(1,593	)			-
Exit fee accretion			22				-
Net carrying amount		$	20,928			$	-
Term C Loan
Principal amount		$	7,500			$	-
Deferred financing cost and discount			(531	)			-
Amortization of warrants			(1,329	)			-
Net carrying amount		$	5,640			$	-
Total debt		$	35,870			$	36,956
Long-term debt		$	35,870			$	-
Current portion of long-term debt		$	-			$	36,956

 

The Company maintained a Credit Agreement with Citizens Bank, N.A., Wells Fargo Bank, N.A., and First-Citizens Bank & Trust Company (collectively, the “Former Lenders”), through December 17, 2025. The credit agreement originally provided for a term loan of $40.0 million and a $25.0 million revolving credit facility (including a $10.0 million sub-facility for the issuance of letters of credit and a $10.0 million swingline loan sub facility) (collectively, the “Credit Facility”). The Company’s obligations under the Credit Agreement were secured by substantially all of its assets, including all or a portion of the equity interests in certain of the Company’s domestic and foreign subsidiaries. The Company’s obligations under the Credit Agreement were guaranteed by certain of the Company’s direct, domestic wholly owned subsidiaries; none of the Company’s direct or indirect foreign subsidiaries guaranteed the Company’s obligations under the Credit Agreement. Issuance costs of $2.0 million were amortized over the contractual term to maturity date on a straight-line basis, which approximates the effective interest method. Total revolver borrowing capacity was limited by the consolidated net leverage ratio as defined under the amended Credit Agreement.

 

Borrowings under the Credit Facility, at the option of the Company, bore interest at either (i) a rate per annum based on the Secured Overnight Financing Rate (“SOFR”) for an interest period of one, two, three or six months, plus an applicable interest rate margin determined as provided in the Credit Agreement (a “SOFR Loan”), subject to a floor of 0.50%, or (ii) an alternative base rate plus an applicable interest rate margin, each as determined as provided in the Credit Agreement. The alternative base rate was based on the Citizens Bank prime rate or the federal funds effective rate of the Federal Reserve Bank of New York and was subject to a floor of 1.0%. Pursuant to a March 2025 amendment to the Credit Agreement (the “March 2025 Amendment”), the applicable interest rate margin was increased such that the interest rate was equal to a rate per annum based on the SOFR plus 400 bps effective as of March 10, 2025. There were no prepayment penalties in the event the Company elected to prepay and terminate the Credit Facility prior to its scheduled maturity date, subject to SOFR Loan breakage and redeployment costs in certain circumstances.

 

The term loan required quarterly installment payments of $1.0 million with a balloon payment at maturity on December 22, 2025. Pursuant to the March 2025 Amendment, amortization payments were revised so that a proportionate payment was required to be made on a monthly rather than a quarterly basis.

 

The Credit Agreement included various customary financial covenants and other affirmative and negative covenants binding on the Company. The negative covenants limited the ability of the Company, among other things, to incur debt, permit liens, make investments, sell assets, or pay dividends on its capital stock. The financial covenants included a maximum consolidated net leverage ratio and a minimum consolidated fixed charge coverage ratio. The Credit Agreement also included customary events of default.

 

The March 2025 Amendment provided, among other things, that the Lenders’ commitment under the revolving credit facility would be capped at $12.65 million, which was the amount outstanding thereunder as of the date thereof, and thus the Company was unable to make additional borrowings under the Credit Facility. The March 2025 Amendment also established certain milestones in connection with a refinancing of the Credit Facility (the “Refinancing Milestones”), including, by June 30, 2025, the closing of the Refinancing. The Lenders also agreed not to assert any breaches of the financial covenants included in the Credit Agreement for the first quarter of 2025 provided that the Company continued to comply with its payment obligations, achieved the Refinancing Milestones, maintained minimum liquidity (defined as the sum of (a) unrestricted cash and cash equivalents and (b) the amount by which the aggregate amount committed under the Company’s revolving credit facility exceeded the total amount drawn under the credit facility) of $3.5 million and provided the former administrative agent with certain financial reports.

 

As of June 30, 2025, the Company was not in compliance with the Refinancing Milestones and quarterly financial covenants included in the March 2025 Amendment. On August 8, 2025, the Company entered into an amendment to the Credit Agreement (the “August 2025 Amendment”), pursuant to which the Former Lenders and former administrative agent agreed, subject to the terms contained in the August 2025 Amendment, to waive the events of default due to the Company’s failure to achieve certain Refinancing Milestones and its failure to comply with the consolidated net leverage ratio covenant and the consolidated fixed charge coverage ratio covenant as of the June 30, 2025 test date. Pursuant to the terms of the August 2025 Amendment, the Former Lenders also agreed not to test the net leverage ratio financial covenant and the consolidated fixed charge coverage ratio financial covenant for the fiscal quarter ended September 30, 2025, and to reduce the Company’s covenant to maintain minimum liquidity (defined as the sum of (a) unrestricted cash and (b) the amount by which the aggregate amount committed under the Company’s revolving credit facility exceeds the total amount drawn under the credit facility) of $3.0 million.

 

The August 2025 Amendment also added, as a mandatory prepayment event, the receipt of cash proceeds upon a Refinancing or upon the sale of the equity interests or all or substantially all of the assets of the Company. In addition, pursuant to the terms of the August 2025 Amendment, the applicable interest rate margin was increased such that the interest rate was equal to a rate per annum based on the SOFR plus 700 bps. In connection with the August 2025 Amendment, the Company had agreed to accomplish steps towards the Refinancing or repayment of the Credit Agreement by no later than December 5, 2025.

 

The Company agreed to pay fees of $0.4 million, or 1.00% of the outstanding debt, to the Former Lenders in connection with the August 2025 Amendment, of which 25% was paid upon the signing of the August 2025 Amendment and the remaining 75% was paid upon the Refinancing.

 

On December 17, 2025, the Company entered into a Loan and Security Agreement (the “2025 Loan Agreement”) with certain financial institutions party thereto as lenders (the “Lenders”) and BroadOak Income Fund, L.P., as the administrative agent and collateral agent. The 2025 Loan Agreement provides for the following term loans: (i) a term loan in an aggregate principal amount of $10.0 million (the “Term A Loan”), (ii) a term loan in an aggregate principal amount of $22.5 million (the “Term B Loan”) and (iii) a term loan in an aggregate principal amount of $7.5 million (the “Term C Loan” and, together with the Term A Loan and Term B Loan, the “Term Loans”). The Term A Loan and Term B Loan are senior secured obligations maturing on December 31, 2029 (the “Maturity Date”). Commencing December 31, 2027 (the “Amortization Date”), the Company is required to make quarterly principal amortization payments on the Term A Loan and Term B Loan. The Amortization Date and Maturity Date may be extended by one year if the Company achieves a certain adjusted EBITDA milestone. The Term C Loan is a senior secured convertible term loan maturing on the Maturity Date that is convertible, together with accrued and unpaid interest, into shares of common stock of the Company, $0.01 par value per share (the “Common Stock”) at a conversion price of $1.00 per share from January 2, 2026 until the maturity of the Term Loans. The conversion right may be exercised at the Lenders’ option, or automatically if the share price of the Common Stock exceeds $1.50 per share for thirty consecutive trading days. The Term C Loan may not be prepaid by the Company prior to maturity, except in the event of a repayment in full of all of the Term Loans or a change of control of the Company, in which case the Lenders may elect whether to convert their Term C Loan into Common Stock or to be repaid in full in cash. The proceeds of the Term Loans were used to repay all obligations under the Company’s prior credit facility for which Citizens Bank, N.A. served as former administrative agent, to pay transaction fees and expenses and for working capital and other general corporate purposes.

 

The Term Loans will bear interest at a per annum rate equal to the greater of (i) 12.80% from the date of the 2025 Loan Agreement through the 2025 Loan Agreement’s second anniversary, then 12.50% thereafter and (ii) the prime rate detailed in the 2025 Loan Agreement plus 5.25%. Interest on the Term Loans is payable in cash in arrears on the last calendar day of each month; however, at the Company’s option, interest on the Term C Loan may be payable in kind. If any portion of the Term Loans are prepaid prior to maturity, the Company will be required to pay a prepayment premium in an amount equal to (a) 3.00% of the principal amount of such prepaid Term Loans if such prepayment occurs on or before the first anniversary of the closing of the transaction, (b) 2.00% of the principal amount of such prepaid Term Loans if such prepayment occurs after the first anniversary but on or prior to the second anniversary of the closing of the transaction, (c) 1.00% of the principal amount of such prepaid Term Loans if such prepayment occurs after the second anniversary but on or prior to the third anniversary of the closing of the transaction and (d) 0.00% thereafter. However, no prepayment premium will be payable with respect to any Term A Loan prepaid before March 31, 2027. Additionally, an exit fee of 10.00% will be payable on any Term Loan amounts that are prepaid or repaid, including at maturity, except that no exit fee will be payable with respect to any Term C Loan that convert into Common Stock. With respect to the principal amount of the Term A Loan and the Term B Loan that are outstanding as of the fifteen month anniversary of the closing date, the exit fee percentage shall be reduced by 1.00% for every $2.0 million of the principal amount of Term A Loan that had been repaid or prepaid prior to the fifteen month anniversary of the closing date.

 

The Company’s obligations under the 2025 Loan Agreement are required to be guaranteed by certain of the Company’s domestic subsidiaries. The Company’s obligations under the 2025 Loan Agreement are secured by substantially all of the assets of the Company and each guarantor.

 

The 2025 Loan Agreement includes customary affirmative, negative, and financial covenants binding on the Company and its subsidiaries, including delivery of financial statements and other reports and maintenance of existence. The negative covenants limit the ability of the Company and its subsidiaries, among other things, to incur debt, incur liens, make investments, sell assets and pay dividends on its capital stock. The financial covenants set forth in the 2025 Loan Agreement include a minimum liquidity covenant, which will apply at all times, and a minimum Adjusted EBITDA covenant, which will be tested at the end of each fiscal quarter of the Company. The 2025 Loan Agreement also includes customary events of default.

 

The Company was in compliance with the minimum liquidity requirement and the minimum Adjusted EBITDA covenant, each as defined in the 2025 Loan Agreement, measured on a trailing 12-month basis, of at least $6,000,000 for the fiscal quarter ending December 31, 2025.

 

In connection with the 2025 Loan Agreement, the Company issued detachable warrants to the Lenders and its participants to purchase up to an aggregate 2,000,000 shares of Common Stock at an exercise price equal to $0.50 per share. The warrants are exercisable for a seven-year period beginning December 17, 2025. The warrants may also be exercised on a cashless basis under certain circumstances under the 2025 Loan Agreement.

 

The shares of common stock issuable upon the exercise of such warrants and conversion of the Term C Loan (the “Underlying Shares”) were not initially registered under the Securities Act of 1933, as amended. Within 45 days of the date of the 2025 Loan Agreement, the Company was required to prepare and file with the U.S. Securities and Exchange Commission a registration statement covering the resale of the Underlying Shares. The Company filed this registration statement covering the Underlying Shares on January 30, 2026, and it was declared effective on February 9, 2026.

 

The Company determined that warrants issued in connection with 2025 Loan Agreement met the definition of a freestanding financial instrument and qualified for treatment as permanent equity. Warrants recorded as equity are recorded at the fair market value determined at issuance date and are not remeasured after that. The fair value of these 2,000,000 warrants was $1.4 million and was estimated using the Black-Scholes valuation model with the following assumptions: fair value of the Company’s common stock at issuance of $0.69 per share; four year expected term; 140.4% volatility; 0% dividend rate; and a risk-free interest rate of 3.6%. The Company allocated the value of warrants between the relative fair value of the notes payable without the warrants, and the warrants themselves at the time of issuance. The allocated portion of the warrants was treated as a debt discount and amortized over the term of the note. The amortization of the debt discount is recognized as interest expense.

 

The Company accretes loan exit fees into interest expense over the contractual terms of the 2025 Loan Agreement, to the extent that such amounts are expected to be paid.

 

In connection with the debt refinancing transaction on December 17, 2025 as described above, the Company paid to the Lenders a customary closing fee of $0.8 million. The Company also incurred certain legal costs and other fees; these fees and costs totaling $2.1 million. These fees and costs were deferred on the Company’s balance sheet as a reduction of the carrying value of the Term Loans and will be amortized to interest expense over the contractual terms of the Loan Agreement.

 

The refinancing of our prior credit facility is considered a debt extinguishment and, as such, $0.1 million of net deferred financing costs and fees primarily related to the Prior Credit Facility were expensed in December 2025 and included in Other expense, net in our Consolidated Statement of Operations.

 

For the year ended December 31, 2025 and 2024 contractual interest expense and non-cash interest expense was $3.6 million and $3.2 million and $1.3 million and $0.3 million, respectively.

 

As a result of exploring alternative sources of capital that would allow the Company to refinance the outstanding indebtedness due to the Former Lenders, the Company incurred approximately $1.4 million of legal and professional fees, which is included in Other expense, net on our Consolidated Statement of Operations.

 

The effective interest rate on the Company’s borrowings for years ended December 31, 2025 and 2024 was 13.7% and 8.1%, respectively. The weighted average interest rate as of December 31, 2025 and 2024, net of the effect of the Company’s interest rate swap agreement, was 12.8% and 8.4%, respectively. The carrying value of the debt approximated fair value because the interest rate under the obligation approximates market rates of interest available to the Company for similar instruments.

 

The future maturities of debt outstanding as of December 31, 2025, excluding debt issuance costs, amortization of warrant and exit fee accretion, are as follows:

 

(in thousands)
2026		$	-
2027			1,625
2028			6,500
2029			31,875
2030			-
Thereafter			-
Total		$	40,000