CONVERTIBLE NOTES |
3 Months Ended | ||
|---|---|---|---|
Mar. 31, 2026 | |||
| Convertible Notes Payable [Abstract] | |||
| CONVERTIBLE NOTES |
On November 14, 2025, the Company entered into a Secured Promissory Note (the ”Original Note”) with Oramed in the principal amount of $3.0 million.
In February and March 2026, the Company entered into additional Secured Promissory Notes (the “Additional Notes”) with Oramed, pursuant to which the Company issued non-convertible secured promissory notes in the aggregate principal amount of $1.025 million. The Additional Notes are secured by a lien on the Company’s cash, accrue interest at a rate of 24% per annum, and mature on the earlier of August 12, 2026, or the failure to obtain shareholder approval of the transactions contemplated by the Securities Purchase Agreement and the SPA.
On March 25, 2026, the Company, Oramed and Creative Value Capital ("CVC") entered into a new agreement pursuant to which the Company issued convertible notes (the "New Notes") and freestanding warrants to Oramed and CVC. Under the terms of the Original Note, if a subsequent financing involving convertible notes was consummated, the Original Note, including accrued and unpaid interest, would automatically convert into the New Notes upon consummation of such financing. In addition, under the terms of the Additional Notes, Oramed had the option to convert the Additional Notes into the New Notes. As such, the Company issued the New Notes in an aggregate principal amount of $10 million and 1,851,851 freestanding warrants with an exercise price of $5.4 per share. In addition, pursuant to the terms of the agreement, the Company may issue up to an additional $10 million principal amount of New Notes, convertible on substantially the same terms as the existing New Notes, upon the achievement of certain specified milestones. Net cash proceeds received by the Company were approximately $5.4 million after giving effect to the exchange of the Original Note and the Additional Notes into the New Notes. The New Notes provide for a secured term loan in an aggregate principal amount of $10.0 million. The loan bears interest at the rate of 8% per annum and matures on March 25, 2029. The New Notes are convertible into 1,851,851 Ordinary Shares at a conversion price of $5.4 per share. The New Notes are secured by a lien on the Company’s cash and contain customary representations, covenants, and events of default. As of March 31, 2026, the Company was in compliant with all covenants.
The Company concluded that the warrants and the New Notes were freestanding financial instruments. The warrants were classified as liabilities, measured at fair value through earnings as the warrants are not indexed to the Company's own stock. The Company also concluded that the conversion feature met the definition of a derivative and should be bifurcated from the debt host liability. As such, the Company recognized the warrants and the embedded derivative liability at fair value, with the remaining proceeds allocated to the debt host. The debt host was subsequently measured using the effective interest method. The Company derecognized the Original Note and the Additional Notes in connection with the exchange of such notes for the New Notes. The carrying amounts of the warrants, embedded derivative and the debt host, as of March 31, 2026 were $2,848, $3,197 and $4,079, respectively.
For the three months ended March 31, 2026, the Company recognized total interest expense of $940 thousand related to the Original Note, the Additional Notes, and the New Notes. |