Convertible Line of Credit – Related Party and Supplemental Convertible Lines of Credit – Related Party |
3 Months Ended |
|---|---|
Mar. 31, 2025 | |
| Debt Instrument [Line Items] | |
| Convertible Line of Credit – Related Party and Supplemental Convertible Lines of Credit – Related Party |
9. Convertible Line of Credit – Related Party and Supplemental Convertible Lines of Credit – Related Party
On July 25, 2022, the Company and Richard E. Uihlein (the “Lender”) entered into a Line of Credit Letter Agreement (the “Credit Agreement”), pursuant to which the Lender shall provide the Company a line of credit of up to $60.0 million (the “Line of Credit”) to finance the Company’s working capital needs. The Company may draw upon the Line of Credit through July 31, 2024.
Each advance made pursuant to the Credit Agreement shall be evidenced by an unsecured, convertible promissory note (individually, a “Promissory Note,” and collectively, the “Promissory Notes”), and bear interest at the Applicable Federal Rate for short term loans, plus two (2%) percent. Principal and interest on the Promissory Notes are due on or before January 31, 2026. Only with the consent of the Lender, may the Promissory Notes be prepaid, in whole or in part, at any time without premium or penalty, but with interest on the amount or amounts prepaid.
At the election of Lender, the principal and accrued interest on Promissory Note(s) may be converted into the number of shares of the Company’s Common Stock equal to the amount of principal and accrued interest on such Promissory Note divided by the price equal to the closing price of the Common Stock on the date of such Promissory Note, but in no event less than $3.00 per share.
In connection with the Credit Agreement, the Company agreed to issue the Lender warrants to purchase up to an aggregate of 1,700,000 shares of the Company’s common stock, par value $0.001 per share (collectively, the “Warrants”). Upon execution of the Credit Agreement, the Company issued the Lender a Warrant to purchase up to 500,000 shares of Company’s Common Stock at an exercise price of $5.00 per share, which Warrant is exercisable upon issuance. Further, pursuant to the Credit Agreement, the Company shall issue to the Lender additional Warrants to purchase up to the remaining 1,200,000 shares of the Company’s common stock, ratably, upon borrowings under the Credit Agreement, with exercise prices equal to 150% of the closing price of the Company’s common Stock on the date of the Promissory Note evidencing such draw, but in no event more than $10.00 per share nor less than $3.00 per share. The Warrants expire on July 31, 2029.
The fair value of the 500,000 warrants vested at closing on July 25, 2022 was $738,000 at the date of issuance based on the following assumptions: an expected life of 7 years, volatility of 92%, risk free interest rate of 3.19% and zero dividends. The fair value of the vested warrants was recorded in other assets (non-current) as a deferred financing cost and will be amortized on a straight-line basis from July 25, 2022 through January 31, 2026. Amortization for the three months ended March 31, 2025 and 2024 of $52,000 and $52,000, respectively, was recorded as interest expense.
On December 19, 2022, the Company executed a $10 million Promissory Note under the Line of Credit. The interest rate on this draw is 6.46% (Applicable Federal Rate for short term loans on date of draw of 4.46% plus 2%). The effective interest rate is approximately 7.1%. Accrued interest on this draw was $1,584,000 and $1,399,000 at March 31, 2025 and December 31, 2024, respectively. The principal and accrued interest is convertible at the option of the Lender at $3.00 per share. In accordance with the Credit Agreement, the Company issued the Lender a Warrant to purchase up to 200,000 shares of Company’s Common Stock at an exercise price of $3.00 per share, which Warrant is exercisable upon issuance.
The fair value of the 200,000 warrants vested at closing on December 19, 2022 was $160,780 at the date of issuance based on the following assumptions: an expected life of 7 years, volatility of 91%, risk free interest rate of 4.06% and zero dividends. The proceeds were allocated between the Promissory Note and the warrants issued, and the amount allocated to the warrants was recorded as a debt discount netted against principal to be amortized on a straight-line basis, which is not materially different than the effective interest method, from December 19, 2022 through January 31, 2026. Amortization for the three months ended March 31, 2025 and March 31, 2024 of $13,000 and $13,000, respectively, was recorded as interest expense. The fair value of warrants that vest in the future based on borrowings will be computed when those borrowings occur and amortized over the remaining period through January 31, 2026.
On March 31, 2023, the Company executed an additional $10 million Promissory Note under the Line of Credit. The interest rate on this draw is 6.41% (Applicable Federal Rate for short term loans on date of draw of 4.41% plus 2%). The effective interest rate is approximately 7.1%. Accrued interest on this draw was approximately $1,354,000 and $1,184,000 at March 31, 2025 and December 31, 2024, respectively. The principal and accrued interest is convertible at the option of the Lender at $3.00 per share. In accordance with the Credit Agreement, the Company issued the Lender a Warrant to purchase up to 200,000 shares of Company’s Common Stock at an exercise price of $3.26 per share, which Warrant is exercisable upon issuance. The fair value of the 200,000 warrants vested at closing on March
31, 2023 was $296,680 at the date of issuance based on the following
assumptions: an expected life of 6.33 years, volatility of 88%, risk free
interest rate of 3.94% and zero dividends. The proceeds were allocated between
the Promissory Note and the warrants issued, and the amount allocated to the
warrants was recorded as a debt discount netted against principal amortized on
a straight-line basis, which is not materially different than the effective
interest method, from March 31, 2023 through January 31, 2026. Amortization for
the quarters ended March 31, 2025 and 2024 of $26,000 and $26,000,
respectively, was recorded as interest expense. On June 30, 2023, the Company executed an additional $10 million
Promissory Note under the Line of Credit. The interest rate on this draw is
6.34% (Applicable Federal Rate for short term loans on date of draw of 4.34%
plus 2%). The effective interest rate is approximately 7.1%. Accrued interest on this draw was
approximately $1,170,000 and $995,000 at March 31, 2025 and December 31, 2024,
respectively. The principal and accrued interest is convertible at the option
of the Lender at $3.00 per share. In accordance with the Credit Agreement, the
Company issued the Lender a Warrant to purchase up to 200,000 shares of
Company’s Common Stock at an exercise price of $3.00 per share, which Warrant
is exercisable upon issuance. The fair value of the 200,000 warrants vested at closing on June
30, 2023 was $179,920 at the date of issuance based on the following
assumptions: an expected life of 6.08 years, volatility of 85%, risk free
interest rate of 3.59% and zero dividends. The proceeds were allocated between
the Promissory Note and the warrants issued, and the amount allocated to the
warrants was recorded as a debt discount netted against principal amortized on
a straight-line basis, which is not materially different than the effective
interest method, from June 30, 2023 through January 31, 2026. Amortization for
the quarters ended March 31, 2025 and 2024 of $17,000 and $17,000,
respectively, was recorded as interest expense. On December 29, 2023, the Company executed an additional $10
million Promissory Note under the Line of Credit. The interest rate on this
draw is 7.13% (Applicable Federal Rate for short term loans on date of draw of
5.13% plus 2%). The effective interest rate is approximately 7.5%. Accrued
interest on this draw was approximately $929,000 and $737,000 at March 31, 2025
and December 31, 2024, respectively. The principal and accrued interest is
convertible at the option of the Lender at $3.00 per share. In accordance with
the Credit Agreement, the Company issued the Lender a Warrant to purchase up to
200,000 shares of Company’s Common Stock at an exercise price of $3.00 per
share, which Warrant is exercisable upon issuance. The fair value of the 200,000 warrants vested at closing on
December 31, 2023 was $193,745 at the date of issuance based on the following
assumptions: an expected life of 5.7 years, volatility of 79%, risk free
interest rate of 4.49% and zero dividends. The proceeds were allocated between
the Promissory Note and the warrants issued, and the amount allocated to the
warrants was recorded as a debt discount netted against principal amortized on
a straight-line basis, which is not materially different than the effective
interest method, from December 29, 2023 through January 31, 2026. Amortization
for the quarters ended March 31, 2025 and 2024 of $23,000 and $23,000,
respectively, was recorded as interest expense. On March 29, 2024, the Company executed an additional $10 million
Promissory Note under the Line of Credit. The interest rate on this draw is
6.62% (Applicable Federal Rate for short term loans on date of draw of 4.62%
plus 2%). The effective interest rate is approximately 7.1%. Accrued interest
on this draw was $682,000 and $508,000 at March 31, 2025 and December 31, 2024,
respectively. The principal and accrued interest is convertible at the option
of the Lender at $3.00 per share. In accordance with the Credit Agreement, the
Company issued the Lender a Warrant to purchase up to 200,000 shares of
Company’s Common Stock at an exercise price of $3.59 per share, which Warrant
is exercisable upon issuance. The fair value of the 200,000 warrants vested at closing on March
29, 2024, was $277,389 at the date of issuance based on the following
assumptions: an expected life of 5.33 years, volatility of 75%, risk free
interest rate of 4.19% and zero dividends. The proceeds were allocated between
the Promissory Note and the warrants issued, and the amount allocated to the
warrants was recorded as a debt discount netted against principal amortized on
a straight-line basis, which is not materially different than the effective
interest method, from March 29, 2024 through January 31, 2026. Amortization for
the quarters ended March 31, 2025 and 2024 of $38,000 and $38,000,
respectively, was recorded as interest expense. On
June 28, 2024, the Company executed an additional $10 million Promissory Note
under the Line of Credit. The interest rate on this draw is 7.01% (Applicable
Federal Rate for short term loans on date of draw of 5.01% plus 2%). The
effective interest rate is approximately 7.4%. Accrued interest on this draw
was $508,000 and $336,000 at March 31, 2025 and December 31, 2024,
respectively. The principal and accrued
interest is convertible at the option of the Lender at $3.00 per share. In
accordance with the Credit Agreement, the Company issued the Lender a Warrant
to purchase up to 200,000 shares of Company’s Common Stock at an exercise price
of $3.39 per share, which Warrant is exercisable upon issuance. The fair value of the 200,000 warrants vested at closing on June
28, 2024, was $260,000 at the date of issuance based on the following
assumptions: an expected life of 5.03 years, volatility of 77%, risk free
interest rate of 4.29% and zero dividends. The proceeds were allocated between
the Promissory Note and the warrants issued, and the amount allocated to the
warrants was recorded as a debt discount netted against principal amortized on
a straight-line basis, which is not materially different than the effective
interest method, from June 28, 2024 through January 31, 2026. Amortization for
the quarters ended March 31, 2025 and 2024 of $41,000 and $41,000,
respectively, was recorded as interest expense. On March 29, 2024, the Company and Richard E. Uihlein (the “Lender”) entered into a Supplemental Line of Credit Letter Agreement (the “Supplemental Credit Agreement”), pursuant to which the Lender shall provide the Company a line of credit of up to $10.0 million (the “Supplemental Line of Credit”) to finance the Company’s working capital needs. The Company may draw upon the Supplemental Line of Credit through March 31, 2025. Each
advance made pursuant to the Supplemental Credit Agreement shall be evidenced
by an unsecured, convertible promissory note (individually, a “Promissory
Note,” and collectively, the “Promissory Notes”), and bear interest at the
Applicable Federal Rate for short term loans, plus two (2%) percent. Principal
and interest on the Promissory Notes are due on or before January 31, 2026.
Only with the consent of the Lender, may the Promissory Notes be prepaid, in
whole or in part, at any time without premium or penalty, but with interest on
the amount or amounts prepaid. At
the election of Lender, the principal and accrued interest on Promissory
Note(s) may be converted into the number of shares of the Company’s Common
Stock equal to the amount of principal and accrued interest on such Promissory
Note divided by the price equal to the closing price of the Common Stock on the
date of such Promissory Note, but in no event less than $3.00 per share. In
connection with the Supplemental Credit Agreement, the Company agreed to issue
the Lender warrants to purchase up to an aggregate of 200,000 shares of the
Company’s common stock, par value $0.001 per share (collectively, the
“Warrants”). The Company shall issue to the Lender Warrants ratably, upon
borrowings under the Supplemental Line of Credit, with exercise prices equal to
150% of the closing price of the Company’s common Stock on the date of the
Promissory Note evidencing such draw, but in no event more than $10.00 per
share nor less than $3.00 per share. The Warrants expire on July 31, 2029. On September 30, 2024, the Company executed a $10 million
Promissory Note under the Supplemental Line of Credit. The interest rate on
this draw is 6.13% (Applicable Federal Rate for short term loans on date of
draw of 5.01% plus 2%). The effective interest rate is approximately 6.4%.
Accrued interest on this draw was $310,000 and $154,000 at March 31, 2025 and
December 31, 2024, respectively. The
principal and accrued interest is convertible at the option of the Lender at
$3.00 per share. In accordance with the Credit Agreement, the Company issued
the Lender a Warrant to purchase up to 200,000 shares of Company’s Common Stock
at an exercise price of $4.13 per share, which Warrant is exercisable upon
issuance. The fair value of the 200,000 warrants vested at closing on September
30, 2024, was $307,780 at the date of issuance based on the following assumptions:
an expected life of 4.83 years, volatility of 78%, risk free interest rate of
3.58% and zero dividends. The proceeds were allocated between the Promissory
Note and the warrants issued, and the amount allocated to the warrants was
recorded as a debt discount netted against principal amortized on a
straight-line basis, which is not materially different than the effective
interest method, from October 1, 2024 through January 31, 2026. Amortization
for the quarter ended March 31, 2025 of $58,000 was recorded as interest
expense. On
November 14, 2024, the Company and Richard E. Uihlein (the “Lender”) entered
into an additional Supplemental Line of Credit Letter Agreement (the “November
2024 Supplemental Credit Agreement”), pursuant to which the Lender shall
provide the Company a line of credit of up to $6.0 million (the “November 2024
Supplemental Line of Credit”) to finance the Company’s working capital needs.
The Company may draw upon the November 2024 Supplemental Line of Credit, as amended, through
May 31, 2025. On April 30, 2025, The
Company executed a $6 million promissory note under the November 2024
Supplemental Line of Credit. Each
advance made pursuant to the November 2024 Supplemental Credit Agreement shall
be evidenced by an unsecured, convertible promissory note (individually, a
“Promissory Note,” and collectively, the “Promissory Notes”), and bear interest
at the Applicable Federal Rate for short term loans, plus two (2%) percent.
Principal and interest on the Promissory Notes are due on or before March 31,
2026. Only with the consent of the Lender, may the Promissory Notes be prepaid,
in whole or in part, at any time without premium or penalty, but with interest
on the amount or amounts prepaid. At
the election of Lender, the principal and accrued interest on Promissory
Note(s) may be converted into the number of shares of the Company’s Common
Stock equal to the amount of principal and accrued interest on such Promissory
Note divided by the price equal to the closing price of the Common Stock on the
date of such Promissory Note, but in no event less than $3.00 per share. In connection with the November 2024 Supplemental Credit
Agreement, the Company agreed to issue the Lender warrants to purchase up to an
aggregate of 120,000 shares of the Company’s common stock, par value $0.001 per
share (collectively, the “Warrants”). The Company shall issue to the Lender
Warrants ratably, upon borrowings under the November 2024 Supplemental Line of
Credit, with exercise prices equal to 150% of the closing price of the
Company’s common Stock on the date of the Promissory Note evidencing such draw,
but in no event more than $10.00 per share nor less than $3.00 per share. The
Warrants expire on July 31, 2029. On
March 31, 2025, the Company and Richard E. Uihlein (the “Lender”) entered into
a Supplemental Line of Credit Letter Agreement (the “March 2025 Supplemental
Credit Agreement”), pursuant to which the Lender shall provide the Company a
line of credit of up to $5.0 million (the “March 2025 Supplemental Line of
Credit”) to finance the Company’s working capital needs. The Company may draw
upon the March 2025 Supplemental Line of Credit through September 30, 2025. Each
advance made pursuant to the March 2025 Supplemental Credit Agreement shall be
evidenced by an unsecured, convertible promissory note (individually, a
“Promissory Note,” and collectively, the “Promissory Notes”), and bear interest
at the Applicable Federal Rate for short term loans, plus two (2%) percent.
Principal and interest on the Promissory Notes are due on or before March 31,
2026. Only with the consent of the Lender, may the Promissory Notes be prepaid,
in whole or in part, at any time without premium or penalty, but with interest
on the amount or amounts prepaid. At
the election of Lender, the principal and accrued interest on Promissory
Note(s) may be converted into the number of shares of the Company’s Common
Stock equal to the amount of principal and accrued interest on such Promissory
Note divided by the price equal to the closing price of the Common Stock on the
date of such Promissory Note, but in no event less than $3.00 per share. In
connection with the March 2025 Supplemental Credit Agreement, the Company
agreed to issue the Lender warrants to purchase up to an aggregate of 100,000
shares of the Company’s common stock, par value $0.001 per share (collectively,
the “Warrants”). The Company shall issue
to the Lender Warrants ratably, upon borrowings under the March 2025
Supplemental Line of Credit, with exercise prices equal to 150% of the closing
price of the Company’s common Stock on the date of the Promissory Note
evidencing such draw, but in no event more than $10.00 per share nor less than
$3.00 per share. The Warrants expire on July 31, 2029. The
fair value of warrants that vest in the future based on borrowings will be
computed when those borrowings occur and amortized over the remaining period
through January 31, 2026.
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