Notes Payable |
6 Months Ended | ||
|---|---|---|---|
Jun. 30, 2026 | |||
| Debt Disclosure [Abstract] | |||
| Notes Payable |
Security Purchase Agreement
On March 10, 2022, the Company issued a promissory note (“Note 1”) to Streeterville Capital, LLC with an initial principal balance of $5.4 million and a stated interest rate of 7%. In January 2023, the Company amended Note 1 to waive the noteholder’s redemption rights through March 31, 2023 in exchange for a 3.75% fee on the outstanding principal, which was recorded as additional debt issuance costs and increased the total indebtedness. In August 2023, the Company entered into a Forbearance Agreement, as amended, which extended the maturity date of Note 1 to September 10, 2024 and granted Streeterville a first-priority security interest in substantially all of the Company’s assets.
During 2024, the Company reduced the outstanding principal of Note 1 through debt-to-equity exchanges to $0.5 million and recorded the reversal of previously recognized interest accretion and the write-off of unamortized debt issuance costs. Although Note 1 matured on September 10, 2024, repayment was restricted while Series A preferred stock was outstanding, which was fully redeemed on January 3, 2025. In March 2025, the Company exchanged the remaining $0.5 million principal balance for shares of common stock, resulting in full extinguishment of Note 1. The Company recognized approximately $8 thousand of interest expense for the three and six months ended June 30, 2025.
Note Purchase Agreement
On April 6, 2026, the Company entered into a Note Purchase Agreement (the “Purchase Agreement”) with Streeterville Capital, LLC (the “Investor”). Pursuant to the Purchase Agreement, the Company issued and sold to the Investor a Secured Promissory Note (the “Note”) in the original principal amount of $3.2 million for cash proceeds of $3.0 million (reflecting an original issue discount and legal fees of $0.2 million). The Company also paid transaction costs associated with this Note of $0.2 million. Beginning six months after funding, the Investor may require cash redemptions of up to $0.3 million per calendar month and may require additional limited redemptions if the Company’s common stock trades at a price that is at least 10% greater than the Nasdaq minimum price up to amount equal to 5% of the cumulative daily dollar trading volume.
The Note contains a most favored nation provision pursuant to which, so long as the Note remains outstanding, if the Company issues debt securities containing economic terms that are more favorable than those provided under the Note, the holder may elect to have such more favorable terms incorporated into the Note. The Company is also required to notify the holder of any such issuance.
The Note further provides the holder with a participation right, exercisable until the Note has been repaid in full, to purchase up to 10% of the securities issued in future debt or equity financings on substantially the same terms and conditions offered to other investors. If the Company fails to comply with the participation right, the holder's sole remedy is liquidated damages equal to 20% of the amount the holder would have been entitled to invest pursuant to the participation right. A breach of the participation right does not constitute an event of default under the Note.
The Note bears interest at 7% per annum, compounded daily, matures 24 months after issuance, and includes a monitoring fee provision after 90 days (automatically increases the Outstanding Balance by approximately 17.65%) which is expected to be recorded Q3’26. The agreement includes certain customary and noncustomary trigger events and defaults which, if triggered, could result in an additional 5% or 15% added to the principal balance. The Note is secured by a first-priority security interest in all of the Company’s assets and intellectual property pursuant to a Security Agreement and an Intellectual Property Security Agreement, each dated as of April 6, 2026. The Company recognized $99 thousand of interest expense for the three months ended June 30, 2026.
Short-Term Note Purchase Agreement
On June 25, 2026, the Company issued and sold to the Investor a note payable with a stated principal amount of $0.4 million and received net cash proceeds of $0.3 million, reflecting an original issue discount and transaction costs of $36 thousand, which are presented as deductions from the note and amortized to interest expense using the effective-interest method. The note is non-interest bearing and matures on August 27, 2026. The Company is required to make weekly payments of $8 thousand and remit accounts-receivable collections to the lender within three trading days. The note is secured by the Company's accounts receivable and related proceeds. The Company recognized no interest expense associated with this note for the three months ended June 30, 2026. |