Unsecured Promissory Note |
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| Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Unsecured Promissory Note | (7) Unsecured Promissory Note
On December 20, 2024, the Company entered into a note purchase agreement (2024 Note Purchase Agreement) with Streeterville Capital, LLC, a Utah limited liability company (Lender), pursuant to which the Company issued and sold to Lender an unsecured promissory note (2024 Note) in the amount of $5,480,000. The 2024 Note included an original issue discount of $450,000 and Lender expenses payable by the Company of $30,000. In exchange for the 2024 Note, the Lender paid a purchase price of $5,000,000 in cash. The 2024 Note bore interest at a rate of 9% per annum and had a maturity of 18 months after its issuance date.
From time to time, beginning on July 2, 2025, Lender could redeem a portion of the 2024 Note. Pursuant to the terms of the 2024 Note, the Company was charged a monitoring fee equal to the outstanding principal balance on the 90-day anniversary of the effective date of the 2024 Note divided by 0.85 less the outstanding balance on such date. Subject to the terms and conditions set forth in the 2024 Note, the Company could prepay all or any portion of the outstanding balance of the 2024 Note at any time. The Company entered into several exchange agreements with Lender to exchange a total of $6,983,947 of principal, monitoring fee and interest for shares of common stock, and the 2024 Note was extinguished in February 2026. In connection with the exchange agreements, the Company recorded the pro rata portion of the monitoring fee as well as accrued interest on the pro rata portion of the monitoring fee. As of the date the 2024 Note was extinguished, the full monitoring fee of $989,309 had been recognized as a loss on debt extinguishment within interest and other income (expense), net and the interest expense on the monitoring fee was $79,977.
In connection with the 2024 Note, the Company incurred $46,277 of debt issuance costs. The debt issuance costs, the debt discount of $450,000 and the expenses payable by the Company of $30,000 have been recorded as a reduction in the carrying amount of the 2024 Note and were amortized over the term of the 2024 Note using the effective interest rate method. The Company wrote-off the debt issuance costs and debt discount over the life of the 2024 Note in connection with the debt extinguishments described above and recognized as a loss on debt extinguishment within interest and other income (expense), net of $153,423. As of June 30, 2026, the aggregate amount of unamortized debt discount and debt issuance costs was $0.
As of June 30, 2026 and December 31, 2025, the outstanding balances relating to the 2024 Note were as follows:
On November 7, 2025, the Company entered into a note purchase agreement (2025 Note Purchase Agreement) with Avondale Capital, LLC, a Utah limited liability company (Avondale), pursuant to which the Company issued and sold to Avondale an unsecured promissory note in the amount of $6,570,000 (2025 Note). The principal amount includes an original issue discount of $540,000 and expenses payable by the Company of $30,000. In exchange for the 2025 Note, Avondale paid a purchase price of $6,000,000 in cash. The 2025 Note bears interest at a rate of 9% per annum and matures 18 months after its issuance date.
From time to time, beginning on May 7, 2026, Avondale may redeem a portion of the 2025 Note, not to exceed an amount of $660,000 per month. The Company was charged a monitoring fee equal to the outstanding balance on the 90-day anniversary of the effective date of the 2025 Note divided by 0.85 less the outstanding balance on such date. The monitoring fee and interest accrued on the monitoring fee will be forgiven, on a pro rata basis, each time the Company makes a cash payment. Subject to the terms and conditions set forth in the 2025 Note, the Company may prepay all or any portion of the outstanding balance of the 2025 Note at any time. As of June 30, 2026, the Company has entered into several exchange agreements with Avondale to exchange a total of $1,320,000 of principal for shares of common stock and aggregate cash payments of $660,000, thereby extinguishing a portion of the 2025 Note. In connection with the exchange agreements for common stock, the Company recorded the pro rata portion of the monitoring fee as well as accrued interest on the pro rata portion of the monitoring fee. As of June 30, 2026, the pro rata portion of the monitoring fee of $96,475 had been recognized as a loss on debt extinguishment within interest and other income (expense), net and the interest expense on the pro rata portion of the monitoring fee was $3,511. As the redemptions are outside of the control of the Company, the Company has recorded the gross amount of the expected fiscal year 2026 Avondale redemptions within current note payable on the consolidated balance sheet.
The 2025 Note provides for customary events of default (each as defined in the 2025 Note, an Event of Default), including, among other things, the event of nonpayment of principal, interest, fees or other amounts, a representation or warranty proving to have been incorrect when made, failure to perform or observe covenants within a specified cure period, a cross-default to certain other indebtedness and material agreements of the Company, and the occurrence of a bankruptcy, insolvency or similar event affecting the Company. Upon the occurrence of an Event of Default that is deemed a “Major Trigger Event” as defined in the promissory note, Avondale may increase the outstanding balance of the 2025 Note by 15%, and upon the occurrence of an Event of Default that is deemed a “Minor Trigger Event” as defined in the 2025 Note, Avondale may increase the outstanding balance of the 2025 Note by 5%. Avondale can exercise its right to increase the outstanding balance upon a Major or Minor Trigger Event three times each. Upon the occurrence of an Event of Default, Avondale may declare all amounts owed under the 2025 Note immediately due and payable. In addition, upon the occurrence of an Event of Default, upon the election of Avondale, interest shall begin accruing on the outstanding balance of the 2025 Note from the date of the Event of Default equal to the lesser of 22% per annum and the maximum rate allowable under law.
The debt discount of $540,000 and the expenses payable by the Company of $30,000 have been recorded as a reduction in the carrying amount of the 2025 Note and are being amortized over the term of the 2025 Note using the effective interest rate method. The Company wrote-off a pro-rate portion of the debt issuance costs and debt discount in connection with the debt extinguishments described above and recognized as a loss on debt extinguishment within interest and other income (expense), net of $55,644. As of June 30, 2026, the aggregate amount of unamortized debt discount and debt issuance costs was $279,182.
As of June 30, 2026 and December 31, 2025 the outstanding balances relating to the 2025 Note were as follows:
The following table provides a breakdown of interest expense (income) for the periods presented:
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