v3.26.1
NOTES PAYABLE
 3 Months Ended
Mar. 31, 2026
Debt Disclosure [Abstract]  
NOTES PAYABLE

NOTE 7 - NOTES PAYABLE

 

The following table provides a summary of the Company’s outstanding debt as of March 31, 2026:

 

   Principal balance   Accrued interest   Net debt balance 
2023 Notes  $216,000   $29,849   $245,849 
Total  $216,000   $29,849   $245,849 

 

 

The following table provides a summary of the Company’s outstanding debt as of December 31, 2025:

 

   Principal balance   Accrued interest   Net debt balance 
2023 Notes  $216,000   $26,761   $242,761 
Financed insurance   63,947    -    63,947 
Total  $279,947   $26,761   $306,708 

 

Interest expense

 

The interest expense recognized for financed insurance was $834 and $909 for the three months ended March 31, 2026 and 2025, respectively. Interest expense recognized for the 2023 Notes was $3,089 and $2,947 for the three months ended March 31, 2026 and 2025, respectively.

 

2023 Notes

 

In October 2023, the Company entered into a Securities Purchase Agreement (“SPA”) for an aggregate financing of $1.8 million with investors, including $0.2 million with a board member. At the first closing under the SPA, which occurred on October 25, 2023, the Company issued to the investors (i) senior secured convertible promissory notes in the aggregate principal amount of $612,000 for an aggregate purchase price of $566,667 and (ii) warrants to purchase 83,714 shares of the Company’s common stock, par value $0.0001 per share in the aggregate. At the second closing under the SPA, which occurred on November 29, 2023, the Company issued to the investors referenced above, (i) additional notes in the aggregate principal amount of $1,224,000 for an aggregate purchase price of $1,133,333 and (i) additional warrants to purchase 167,427 shares of the common stock in the aggregate.

 

The warrants have an exercise price of $23.5125, the same as the conversion price, and are exercisable for five years following the issuance date. The warrants were equity classified as they are indexed to the Company’s stock and only settleable in shares. The warrants were initially measured at fair value using a Black-Scholes valuation model and were allocated along with the 2023 Notes using the relative fair value method. The original debt discount, debt issuance costs, and value associated with the warrants were fully amortized to interest expense as of March 31, 2026.

 

During 2024, the Company converted 49,702 shares of common stock with a conversion value of $1.2 million related to the 2023 Notes. In addition, in connection with the SPA, the Company incurred a $1.0 million waiver fee as a result of the 2024 February Warrant Inducement (see Note 8) to pay down $0.5 million of the 2023 Notes and incurred $0.5 million in transaction costs recorded as such in the consolidated statement of stockholders’ equity. As of March 31, 2026, the remaining $0.2 million of the 2023 Notes relates to senior secured convertible promissory notes held by a Company board member (see Note 10).

 

Financed Insurance Premiums

 

In June 2025, the Company renewed and financed its directors’ and officers’ liability insurance in the amount of $0.2 million. Monthly payments were scheduled from July 2025 through March 2026 and were fully paid as of March 31, 2026.