v3.26.1
Note 8 - Convertible Notes, Embedded Derivatives and Pre-Funded Warrants
 6 Months Ended
Jun. 30, 2026
Notes to Financial Statements  
Debt Disclosure [Text Block]

8. Convertible Notes, Embedded Derivatives and Pre-Funded Warrants

 

During the six months ended June 30, 2026, the Company issued four convertible debentures and one pre-funded warrant to YA II PN, Ltd. The following tables summarize the contractual terms and reconcile the related debt host, embedded conversion derivative liability, accrued interest payable, pre-funded warrant proceeds and APIC allocation to the balance sheet, statement of operations, statement of cash flows and shareholders’ equity presentation.

 

Convertible debenture terms

  

January Debenture

    

February Debenture

    

March Debenture

    

April Debenture

  

Issue date

  

Jan. 26, 2026

    

Feb. 19, 2026

    

Mar. 10, 2026

    

Apr. 28, 2026

  

Principal amount

   $600,000     $750,000     $3,000,000     $700,000  

Maturity

  

Jan. 26, 2027

    

Feb. 19, 2027

    

Mar. 10, 2027

    

Apr. 28, 2027

  

Interest rate

  

12%; 18% upon event of default

    

12%; 18% upon event of default

    

12%; 18% upon event of default

    

12%; 18% upon event of default

  

Fixed conversion price (ceiling)

   $18.75     $18.75     $18.75     $18.75  

Variable conversion price

  

85% of lowest daily VWAP over 7 trading days, subject to floor

    

Same

    

Same

    

Same

  

Floor price

   $1.42     $1.45     $1.39     $1.28  

 

Convertible debt, warrant and related financial statement presentation reconciliation (USD in thousands)

  

Amount, KUSD

  

Gross convertible notes payable

     5,050  

Unamortized debt discount

     (1,237 )

Convertible notes payable, net of discount

     3,813  

Embedded conversion derivative liability

     1,236  
Convertible notes payable, net, as presented on the condensed consolidated balance sheet     5,049  

Accrued interest payable

     189  

Pre-funded warrant - additional paid-in capital, at the corrected allocation

     1,964  

Six months ended June 30, 2026:

        
Gain on change in fair value of embedded conversion derivatives     462  

Coupon interest expense

     (189 )

Amortization of debt discount

     (424 )

Total interest expense

     (614 )

 

The embedded conversion features were bifurcated and recognized as derivative liabilities measured at fair value. Changes in fair value are recognized in earnings. Debt discount is amortized to interest expense over the expected term of the convertible debentures. The balance sheet presents the convertible debt host, net of unamortized discount, together with the bifurcated embedded conversion derivative liabilities in a single caption, convertible notes payable, net. Accrued interest payable is presented separately because it represents separately accrued contractual coupon interest. Cash proceeds from convertible debentures and pre-funded warrants are presented as financing cash inflows, the pre-funded warrant APIC allocation is presented within shareholders’ equity, and the embedded conversion derivative liabilities and convertible debt host are presented in a single balance sheet caption, with the components disclosed in the table above.