Notes Payable to Related Party, net of debt issuance costs |
6 Months Ended |
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Jun. 30, 2025 | |
| Related Party Transactions [Abstract] | |
| Notes Payable to Related Party, net of debt issuance costs | Note 4 – Notes Payable to Related Party, net of debt issuance costs
On April 9, 2024, the Company and the investor entered into an Amendment and Waiver Agreement relating to the Company’s outstanding Bridge Notes. Refer to the Company’s Form 10-K for the year ended December 31, 2024 for additional information regarding the Bridge Notes.
The Company agreed to pay $2.75 million in cash to the holder in repayment of the principal of the Bridge Notes (exclusive of the $275,000 of original issue discount on the Bridge Notes) shortly after the closing by the Company of one or more equity financings with total gross proceeds to the Company of not less than $6,000,000.
On April 26, 2024, the Company repaid $2.75 million of principal on its outstanding Secured Bridge Notes.
Effective April 9, 2024, the holder converted $911,384 (the “Rollover Amount”) which is equal to the (i) unpaid accrued interest on the Bridge Notes plus (ii) the original issue discount (“OID”) on the Bridge Notes, into equity securities of the Company (the “Rollover Securities”).
The Rollover Securities consist of (i) prefunded common stock warrants with a per share exercise price of $0.017 per share (the “Prefunded Warrants”) and (ii) non-prefunded warrants (the “Non-Prefunded Warrants”) with a per share exercise price equal to $6.2934.
The number of Non-Prefunded Warrants was determined by dividing the Rollover Amount by $33.44 (the original exercise price). The number of Non-Prefunded Warrants is equal to the number of Prefunded Warrants (i.e. 100% warrant coverage). The Non-Prefunded Warrants have a price adjustment provision which will adjust the exercise price downward in the event that the Company issues equity securities in the future at an effective per share price below the then current exercise price. The original exercise price of $33.44 has been subsequently adjusted to $6.2934. In order to assure compliance with applicable Nasdaq rules, the Non-Prefunded Warrants shall not be exercisable for six months following the date of issue.
The Company issued to the holder new common stock warrants with a five-year term as a loan extension fee (“Fee Warrants”). The Fee Warrants have a price adjustment provision which will adjust the exercise price downward in the event that the Company issues equity securities in the future at an effective per share price below the then current exercise price. The original exercise price of $33.44 has been subsequently adjusted to $6.2934. In order to assure compliance with applicable Nasdaq rules, the Fee Warrants shall not be exercisable for six months following the date of issue.
The Non-Prefunded Warrants and Fee Warrants had a total valuation of $811,402 and the Prefunded Warrants had a valuation of $732,370. As a result, the Company recorded $911,384 as a non-cash charge in connection with the issuance of warrants related to the Bridge Notes and a change in the fair value of warrants of $632,388 upon payoff of the debt during the three and six months ended June 30, 2024 All warrants were classified as equity as they were indexed to the Company’s shares in accordance with ASC 815-40.
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