Note 13 - Loans Payable |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||
| Notes to Financial Statements | ||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Text Block] |
13. Loans Payable
As of December 31, 2025, loans payable consisted of one equipment loan. The Acquisition Notes, as defined in Note 3, Acquisition of G5 Infrared, were paid in full during the quarter ended December 31, 2025.
Acquisition Notes
On February 18, 2025, in connection with the acquisition of G5 Infrared, we executed and delivered the Acquisition Notes, effective as of the G5 Acquisition Date. The Acquisition Notes accrued interest at the rate between 10-12% per annum (12% as of the date of extinguishment, December 31, 2025), based on the ratio of indebtedness to EBITDA of the Company. We determined the embedded features related to the payment of variable interest and upon an event of default are clearly and closely related to the Acquisition Notes, and are therefore not bifurcated from the Acquisition Notes. The Acquisition Notes would have matured on February 18, 2027, the second anniversary of the issuance date, but were redeemed by the Company on December 31, 2025, prior to the maturity date, at a redemption price equal to the portion of principal so redeemed plus all accrued and unpaid interest thereon. Pursuant to the terms of the Acquisition Notes, since the funds used for redemption were not generated internally by Company operations, the redemption amount was multiplied by 102%. We recorded a loss on extinguishment of debt of $0.5 million during the three months ended December 31, 2025, based on the difference between the carrying value of the debt being extinguished and the redemption amount.
The Acquisition Notes were automatically convertible into shares of Series G Convertible Preferred Stock, which were in turn convertible into shares of Class A Common Stock (as converted, the “Conversion Shares”), if the EBITDA reported by the Company for the calendar year ending December 31, 2025, was less than approximately $4.9 million (the “Automatic Note Conversion”). We determined that the Automatic Note Conversion did not require bifurcation from the Acquisition Notes as the Automatic Note Conversion is (i) indexed to the Company’s own stock, (ii) settled in shares instead of cash, and (iii) only exercisable into a fixed number of shares at a fixed exercise price of $1,000 per share once it is triggered to convert and the conversion price can only be adjusted for standard antidilution provisions. The Acquisition Notes contained other redemption features which the Company determined did not require bifurcation from the Acquisition Notes as these are clearly and closely related to the Acquisition Notes.
Bridge Promissory Note
On August 6, 2024, we entered into the Bridge Note with Lytton-Kambara Foundation (the “Lender” and also the “Class A Purchaser”) pursuant to which the Lender extended a loan to the Company in the principal amount of $3.0 million (the “Loan”). The Loan was subject to an original issue discount of 7%. After deducting the original issue discount, fees paid to our placement agent, and certain expenses, the Company received net proceeds of $2.7 million. The Bridge Note was unsecured, bore interest at the rate of 12.5% per annum and had a 1-year term, maturing on August 6, 2025, at which time the entire principal amount of the Bridge Note and all accrued but unpaid interest would have been due and payable in full.
The Bridge Note and related accrued interest were settled on February 18, 2025, in conjunction with financing for the acquisition of G5 Infrared.
Equipment Loans
In December 2020, ISP Latvia received an equipment loan from a third party (the “2020 Equipment Loan”), which party is also a significant customer. The 2020 Equipment Loan was collateralized by certain equipment. The initial advance under the 2020 Equipment Loan was EUR (or approximately USD $0.3 million), payable in equal installments over 60 months, the proceeds of which were used to make a prepayment to a vendor for equipment to be delivered at a future date. An additional EUR (or approximately USD $0.3 million) was drawn in September 2021, which proceeds were paid to the vendor for the equipment, payable in equal installments over 52 months. The 2020 Equipment Loan was paid in full as of December 31, 2025.
In May 2023, ISP Latvia entered into an equipment loan with a third party financial institution (the “2023 Equipment Loan”). The 2023 Equipment Loan is collateralized by certain equipment. The initial advances under the 2023 Equipment Loan was EUR (or approximately USD $0.3 million), the proceeds of which were used to make a prepayment to a vendor for equipment to be delivered at a future date. The final advance for the final payment to the equipment vendor was EUR (or approximately USD $0.1 million). The 2023 Equipment Loan is payable over 48 months, with monthly installments that began on January 1, 2024. The 2023 Equipment Loan bears interest at the six-month EURIBOR rate, plus 2.84% (4.94% as of December 31, 2025).
Future maturities of loans payable are as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||