Convertible Notes Payable – Related Party |
12 Months Ended |
|---|---|
Dec. 31, 2025 | |
| Convertible Notes Payable – Related Party [Member] | |
| Convertible Notes Payable – Related Party [Abstract] | |
| Convertible Notes Payable – Related Party | 5. Convertible
Notes Payable – Related Party On April 16, 2021, the
Company and Richard E. Uihlein entered into a debt financing arrangement
whereby Mr. Uihlein loaned $10,000,000 to Company. In consideration for the
loan, the Company issued a convertible promissory note (the “April 2021 Note”)
in the principal amount of ten million dollars. The April 2021 Note had
an original maturity date of April 16, 2025, is prepayable at the option of the
Company in whole or in part at any time and is convertible into the Company’s
common stock at a conversion price equal to $5.00 per share at the option of
the noteholder. The April 2021 Note bears interest at the rate of two percent
(2%) per annum, compounded annually with an effective interest rate of
approximately 3%. For the years ended December 31, 2025 and 2024, approximately
$216,000 and $212,000, respectively, of interest expense was accrued and
included with the principal in the financial statements. The April 2021 Note also
includes a contingent interest component that requires the Company to pay
additional interest at a rate of two and one-half percent (2.5%) per quarter
(10% per annum) (the “Additional Interest”) beginning on the date of issuance of
this Note and ending on the maturity date, provided however, that such payment
is only required if and only if the noteholder elects to convert the entire
balance of the April 2021 Note into the Company’s common stock on or prior to
maturity. As the contingent event is not based on creditworthiness, such
feature is not clearly and closely related to the host instrument and
accordingly must be bifurcated and recognized as a derivative liability and a
debt discount on the April 2021 Note at its inception. The fair value of the
contingent interest derivative liability was $420,000 at note inception (April
16, 2021). The fair value of the contingent interest derivative liability was $1,680,000
and $47,000 and December 31, 2025 and 2024, respectively, and is recognized as
a derivative liability in the consolidated balance sheet. The change in the
fair value of the derivative liability for the years ended December 31, 2024
and 2023 of ($1,633,000) and ($384,000), respectively, was charged to other
expense/(income) for the years ended December 31, 2025 and 2024. The
amortization of the original $420,000 debt discount of $31,000 and $105,000 was
recorded as additional interest expense for the years ended December 31, 2025
and 2024, respectively. On May 14, 2024, Mr.
Uihlein, as holder of the April 2021 Note irrevocably elected to convert the
entire principal amount of such note, plus accrued and unpaid interest, into
shares of common stock of the Company at a price of $5.00 per share, effective
as of April 16, 2025, which is the maturity date of the April 2021 Note. In
connection with entering into the March 2025 Supplemental Line of Credit (see Note
10), the Company agreed to extend the maturity date of the Convertible
Promissory Note dated April 2021 from April 16, 2025 to September 30, 2025.
Additionally, in connection with entering into the July 2025 Supplemental Line
of Credit (see Note 10), the Company agreed to extend the maturity date of the
Convertible Promissory Note dated April 2021 from September 30, 2025 to
September 30, 2026. Finally, in connection with entering into the December 2025
Supplemental Line of Credit (see Note 10), the Company agreed to extend the
maturity date of the Convertible Promissory Note dated April 2021 from
September 30, 2026 to June 30, 2027. The April 2021 Note will remain
outstanding and accrue interest until maturity, and no shares of common stock
will be issued as a result of this election until June 30, 2027. On September 17, 2021,
the Company and Mr. Uihlein entered into a loan agreement in the aggregate of
$20,000,000 (the “Loan Agreement”) to be funded in two closings and evidenced
by two separate unsecured convertible promissory notes. The first of the two
promissory notes was also executed and delivered on September 17, 2021, (the
“September 2021 Note”) to evidence the first loan in the principal amount of
$10,000,000. The second closing under the Loan Agreement for the remaining
$10,000,000 occurred on December 20, 2021. The September 2021 Note
had an original maturity date of September 17, 2025, which was also extended to
June 30, 2027, is prepayable at the option of the Company in whole or in part
at any time and is convertible into the Company’s common stock at a conversion
price equal to $8.64 per share at the option of the noteholder. The September
2021 Note bears interest at the rate of two percent (2%) per annum, compounded
annually with an effective interest rate of approximately 3%. For the years
ended December 31, 2025 and 2024, approximately $215,000 and $210,000,
respectively, of interest expense was accrued and included with the principal
in the financial statements. The September 2021 Note
also includes a contingent interest component that requires the Company to pay
additional interest at a rate of two and one-half percent (2.5%) per quarter
(10% per annum) (the “Additional Interest”) beginning on the date of issuance
of this Note and ending on the maturity date, provided however, that such
payment is only required if and only if the noteholder elects to convert the
entire balance of the September 2021 Note into the Company’s common stock on or
prior to maturity. As the contingent event is not based on creditworthiness,
such feature is not clearly and closely related to the host instrument and
accordingly must be bifurcated and recognized as a derivative liability and a
debt discount on the September Note at its inception. The fair value of the
contingent interest derivative liability was $433,000 at note inception
(September 17, 2021). The fair value of the contingent interest derivative
liability was $924,000 and $94,000 and December 31, 2025 and 2024,
respectively, and is recognized as a derivative liability in the consolidated
balance sheet. The change in the fair value of the derivative liability for the
years ended December 31, 2025 and 2024 of ($830,000) and ($75,000),
respectively, was recorded to other expense/(income) for the years ended
December 31, 2025 and 2024. The amortization of the original $433,000 debt
discount of $77,000 and $108,000 was recorded as additional interest expense
for the years ended December 31, 2025 and 2024, respectively. On December 20, 2021,
the second of the two promissory notes under the Loan Agreement was executed
and delivered, (the “December 2021 Note”) to evidence the second loan in the
principal amount of $10,000,000. The December 2021 Note had an original
maturity date of December 20, 2025, which was also extended to June 30, 2027, is
prepayable at the option of the Company in whole or in part at any time and is
convertible into the Company’s common stock at a conversion price equal to
$5.43 per share at the option of the noteholder. The December Note bears
interest at the rate of two percent (2%) per annum, compounded annually with an
effective interest rate of approximately 3%. For the years ended December 31,
2025 and 2024, approximately $213,000 and $209,000, respectively, of interest
expense was accrued and included with the principal in the financial
statements. The December 2021 Note
also includes a contingent interest component that requires the Company to pay
additional interest at a rate of two and one-half percent (2.5%) per quarter
(10% per annum) (the “Additional Interest”) beginning on the date of issuance
of this Note and ending on the maturity date, provided however, that such
payment is only required if and only if the noteholder elects to convert the
entire balance of the December 2021 Note into the Company’s common stock on or
prior to maturity. As the contingent event is not based on creditworthiness,
such feature is not clearly and closely related to the host instrument and
accordingly must be bifurcated and recognized as a derivative liability and a
debt discount on the December Note at its inception. The fair value of the
contingent interest derivative liability was $415,000 at note inception
(December 20, 2021). The fair value of the contingent interest derivative
liability was $1,358,000 and $275,000 at December 31, 2025 and 2024,
respectively, and is recognized as a derivative liability in the consolidated
balance sheet. The change in the fair value of the derivative liability for the
years ended December 31, 2025 and 2024 of ($1,083,000) and ($129,000),
respectively was recorded to other expense/(income) for the years ended
December 31, 2025 and 2024. The amortization of the original $415,000 debt
discount of $101,000 and $104,000 was recorded as additional interest expense
for the years ended December 31, 2025 and 2024, respectively. The Company’s contractual
cash obligations related to the outstanding convertible notes payable is a
repayment of the repayment of the September 2021 Note of the $10,000,000 plus
accrued interest on June 30, 2027 and a repayment of the December 2021 Note of
the $10,000,000 plus accrued interest on June 30, 2027, unless converted at the
option of the noteholder.
|