Unsecured Promissory Note |
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| Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Unsecured Promissory Note | (7) Unsecured Promissory Note
On December 20, 2024, the Company entered into a note purchase agreement with Streeterville Capital, LLC, a Utah limited liability company (Lender), pursuant to which the Company issued and sold to Lender an unsecured promissory note (Promissory Note) in the amount of $5,480,000. The Promissory Note included an original issue discount of $450,000 and Lender expenses payable by the Company of $30,000. In exchange for the Promissory Note, the Lender paid a purchase price of $5,000,000 in cash. The Promissory Note bears interest at a rate of 9% per annum and matures 18 months after its issuance date.
From time to time, beginning on July 2, 2025, Lender may redeem a portion of the Promissory Note, not to exceed an amount of $550,000 per month. On the 90-day anniversary of the effective date of the Promissory Note, the Company was charged a monitoring fee equal to the outstanding principal balance on such date divided by 0.85 less the outstanding balance on such date. The monitoring fee and interest accrued on the monitoring fee will be forgiven, on a pro rata basis, each time the Company makes a cash payment on the Promissory Note. Subject to the terms and conditions set forth in the Promissory Note, the Company may prepay all or any portion of the outstanding balance of the Promissory Note at any time.
The Promissory Note provides for customary events of default (each, an Event of Default), including, among other things, the event of nonpayment of principal, interest, fees or other amounts, a representation or warranty proving to have been incorrect when made, failure to perform or observe covenants within a specified cure period, a cross-default to certain other indebtedness and material agreements of the Company, and the occurrence of a bankruptcy, insolvency or similar event affecting the Company. Upon the occurrence of an Event of Default that is deemed a “Major Trigger Event” as defined in the Promissory Note, Lender may increase the outstanding balance of the Promissory Note by 15%, and upon the occurrence of an Event of Default that is deemed a “Minor Trigger Event” as defined in the Promissory Note, Lender may increase the outstanding balance of the Promissory Note by 5%. Lender can exercise its right to increase the outstanding balance upon a Major or Minor Trigger Event three times each. Upon the occurrence of an Event of Default, Lender may declare all amounts owed under the Promissory Note immediately due and payable. In addition, upon the occurrence of an Event of Default, upon the election of Lender, interest shall begin accruing on the outstanding balance of the Promissory Note from the date of the Event of Default equal to the lesser of 22% per annum and the maximum rate allowable under law.
In connection with the Promissory Note, the Company incurred $46,277 of debt issuance costs. The debt issuance costs, the debt discount of $450,000 and the expenses payable by the Company of $30,000 have been recorded as a reduction in the carrying amount of the Promissory Note and are being amortized over the term of the Promissory Note using the effective interest rate method. As of June 30, 2025, the collective amount of unamortized debt discount and debt issuance costs were $345,525.
As of June 30, 2025, the outstanding principal balance of the Promissory Note plus accrued interest was $5,747,984.
The following table provides a breakdown of interest expense (income) for the periods presented:
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