Note 7. Notes Payable

Note Payable - Director and Officer Liability Insurance

The Company purchased director and officer liability insurance coverage on September 26, 2024 for $293 thousand. A down payment of $44 thousand was made and the remaining balance of $249 thousand was financed over 10 months through a short-term financing arrangement with its insurance carrier. The interest rate on the loan was 9.99%. Interest expense on this loan was $6 thousand for the years ended  December 31, 2025 and 2024, respectively. The loan balance was paid off in July 2025, such that there is no remaining balance as of December 31, 2025. The loan balance was $177 thousand as of December 31, 2024 and is recorded under short-term notes payable in the consolidated balance sheets.

The Company purchased director and officer liability insurance coverage on October 1, 2025 for $77 thousand. A down payment of $15 thousand was made and the remaining balance of $62 thousand was financed over 3 months through a short-term financing arrangement with its insurance carrier. The interest rate on the loan is 11.34%. Interest expense on this loan was $1 thousand for the year ended December 31, 2025. The loan balance was paid off in December 2025, such that there is no remaining balance as of  December 31, 2025. 

Note Payable Issued for the Cardionomic Asset Acquisition

In connection with the asset acquisition of the CPNS System previously held by Cardionomic, on May 5, 2025, Cardionomix issued a promissory note with a face amount of $1.5 million and stated interest rate of 4% per annum (the "Note Payable"). No interest or principal is payable until the maturity date of the Note Payable, which is three years following the date of issuance. All outstanding principal plus accrued but unpaid interest becomes immediately due and payable upon voluntary or involuntary bankruptcy filings. The Note Payable  may be prepaid by Cardionomix at any time at its own discretion.

The Note Payable was initially measured at its present value of $1.3 million net of a discount of $254 thousand based on an effective interest rate of 10% per annum. The discount is amortized under the effective interest method over the term of the Note Payable.

Interest expense on this note was $84 thousand for the year ended December 31, 2025. The Note Payable and related accrued interest totaled $1.3 million as of  December 31, 2025, which included a principal balance of $1.5 million and accrued interest expense of $39 thousand net of unamortized discounts of $209 thousand. The Note Payable and related accrued interest was recorded under notes payable of variable interest entities on the consolidated balance sheets.

Promissory Notes (Collectively, the “Related Party Notes”)

On May 30, 2024, David A. Jenkins loaned $500,000 to the Company in exchange for a short-term promissory note.

On June 25, 2024, an entity controlled by Mr. Jenkins, FatBoy Capital L.P., loaned $150,000 to the Company in exchange for a short-term promissory note.

On July 1, 2024 and July 18, 2024, the Company entered into two short-term promissory notes with FatBoy Capital L.P., wherein the entity loaned $250,000 and $100,000, respectively, to the Company in exchange for the short-term promissory notes.

On July 25, 2024, the Company entered into a short-term promissory note with a Trust, Jenkins Family Charitable Institute, of which Mr. Jenkins’ adult daughter is the trustee, wherein the Trust loaned $500,000 to the Company in exchange for the short-term promissory note.

All of these short-term promissory notes (the “Related Party Notes”) had a maturity date of August 30, 2024 and interest of 8% per annum.

On August 23, 2024, the Company entered into the first amendment of the Related Party Notes, which extended the maturity date to January 31, 2026 and increased the interest rate to 12% per annum after August 31, 2024. All other terms and conditions remained substantially unchanged. As part of the amendment, the Company paid down all accrued interest to date of $21 thousand. The amendment was accounted for as a debt modification in accordance with ASC 470-50, Debt Modifications and Extinguishment (“ASC 470-50”). Since the modified terms and conditions were not substantially different from the prior terms and conditions, the Company accounted for the debt modification as a continuation of the original debt instrument. The Company further concluded that the debt modification did not result in any adjustments to the carrying value of the Related Party Notes.

On December 31, 2025, the Company entered into the second amendment of the Related Party Notes, which extended the maturity date of the notes payable to the Jenkins Family Charitable Institute to January 31, 2028, and the notes payable to FatBoy Capital, L.P. and Mr. Jenkins to January 31, 2029. As part of the second amendment, the Company issued 170,000 Series M Warrants to FatBoy Capital L.P. and Mr. Jenkins, respectively, and transferred the Perikard membership interests to Mr. Jenkins for de minimis proceeds. All other terms and conditions remained unchanged. The second amendment was accounted for as a debt extinguishment since the amended terms and conditions were substantially different from prior terms and conditions. In accordance with ASC 470-50, the Company derecognized the net carrying amount of the original Related Party Notes and recorded the amended Related Party Notes at fair value. Since the fair value of the amended Related Party Notes of $1.7 million was greater than the principal balance of $1.5 million, the Company recognized a premium of $0.2 million as of December 31, 2025. The difference between the reacquisition price, which is the sum of the fair values of the amended Related Party Notes, Perikard membership interests, and Series M Warrants, and the net carrying amount of the original Related Party Notes of $0.6 million was recorded as loss on debt extinguishment in the consolidated statements of operations. See Note 11, Equity Offerings, and Note 14, Asset Acquisitions, for additional information on the Series M Warrants issued and the Perikard patents transferred in connection with the debt extinguishment, respectively. 

The Related Party Notes, including all principal and interest, accelerate and become immediately due and payable upon the occurrence of certain customary events of default, including failure to pay amounts owed when due, material breach of the Company’s representations or warranties (unless waived by the holders of the Related Party Notes or cured within 10 days following notice), certain events involving the discontinuation of the Company’s business and/or certain types of proceedings involving insolvency, bankruptcy, receivership and the like.

Interest expense on the Related Party Notes was $180 thousand and $81 thousand for the years ended December 31, 2025 and 2024, respectively. The Related Party Notes totaled $1.7 million as of  December 31, 2025, of which $248 thousand related to unamortized premiums that arose from the debt extinguishment of the original Related Party Notes. The Related Party Notes totaled $1.6 million as of  December 31, 2024, of which $61 thousand related to accrued interest. The Related Party Notes, including any accrued interest and unamortized premiums, are recorded under the notes payable due to related parties on the consolidated balance sheets.

Notes Payable Issued by KardioNav

On July 11, 2025, two short-term promissory notes with a face amount of $150 thousand each were issued by KardioNav to the Company's Chief Executive Officer and Lifestim, Inc., a company controlled by the Company's Chief Executive Officer. The promissory notes have a maturity date of July 11, 2026, and interest rates of 4.2% per annum, payable upon maturity (the "Notes Payable").

The Notes Payable, including all principal and interest, accelerate and become immediately due and payable upon the occurrence of certain customary events of default, including failure to pay amounts owed when due, material breach of the Company’s representations or warranties (unless waived by the holders or cured within 10 days following notice), certain events involving the discontinuation of the Company’s business and/or certain types of proceedings involving insolvency, bankruptcy, receivership and the like.

Interest expense on this note was $6 thousand for the year ended December 31, 2025. The Notes Payable and related accrued interest totaled $306 thousand as of  December 31, 2025, which included a principal balance of $300 thousand and accrued interest of $6 thousand. The Notes Payable and related accrued interest are recorded under short-term notes payable of variable interest entities due to related parties on the consolidated balance sheets.

Convertible Notes Payable 

On December 26, 2025, the Company issued an unsecured convertible note payable with a principal amount of $102 thousand and a discount of $2 thousand to Boot Capital LLC for cash proceeds of $100 thousand. The Company further issued an unsecured convertible note payable with a principal amount of $204 thousand and a discount of $4 thousand to Vanquish Funding Group Inc. for cash proceeds of $200 thousand. The convertible notes payable have a maturity date of September 30, 2026 and stated interest rate of 10% per annum, which shall be payable when the principal amount is due. Any principal amount or interest that is not paid when due shall bear the default interest of 22% per annum. Changes in fair value of convertible notes payable along with interest expense are recorded under change in fair value of convertible notes payable in the consolidated statements of operations. The Company incurred debt issuance costs of $7 thousand that were expensed in accordance with the fair value option during the twelve month period ended December 31, 2025.

The outstanding balance is convertible, in whole or in part, at any time, during the period beginning on the date that is 180 days after the issuance date and ending on the later of (i) the maturity date or (ii) the date of payment of the Default Amount (as defined below). The number of shares to be issued is based on the conversion amount (i.e., the total amount of principal, accrued but unpaid interest, default interest, and other payable amounts to be converted) divided by the conversion price, which equals 75% of the average of the lowest three volume weighted average prices for the Company’s shares of common stock during the 10 trading day period ending on the conversion date. The conversion right is subject to a beneficial ownership limitation of 4.99% of the Company’s outstanding common stock.

The Company has the right to prepay the outstanding balance of the convertible notes payable, which is defined as the sum of the outstanding principal amount, accrued and unpaid interest, default interest, and any other amounts due and payable, with three days’ prior written notice. If the Company pays within 90 days of the issuance date, the Company must pay 120% of the outstanding balance. If the Company pays within 90 to 180 days after the issuance date, the Company must pay 125% of the outstanding balance.

The convertible notes payable are immediately due and payable upon an event of default, including the Company’s failure to pay the principal amount or interest when due, failure to issue shares upon conversion, breach of covenants, bankruptcy or insolvency proceedings, delisting of its common stock, failure to comply with reporting requirements under the Securities Exchange Act, liquidation, cessation of operations, financial statement restatement, and cross-default. Upon an event of default, the Company shall pay 150% of the outstanding principal, accrued and unpaid interest, default interest, and any other amounts due and payable (“Default Amount”). If the event of default relates to the Company’s failure to issue shares of common stock upon conversion, the Company shall pay twice the Default Amount.

Future maturities for long-term debts as of  December 31, 2025 were as follows (in thousands):