Debt |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||
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| Debt | 7. Debt Debt consists of:
March 2025 Note On March 13, 2025, the Company issued the March 2025 Note for $33,100,000 to Avondale pursuant to a Securities Purchase Agreement (“Purchase Agreement”) dated January 31, 2025. Certain terms of the March 2025 Note were approved at the Company’s annual meeting of stockholders on March 11, 2025. The net proceeds from the March 2025 Note were used to repay the Company’s unsecured convertible promissory note issued on December 22, 2022 (the “December 2022 Note”). The March 2025 Note bore interest at the plus 3% (subject to a floor of 9.5%), was originally scheduled to mature on July 1, 2026, but was amended on March 16, 2026 to extend the maturity to December 31, 2026, and was convertible into common stock. On March 16, 2026, the Company repaid $17,000,000 of outstanding principal and accrued interest under the March 2025 Note using proceeds from the issuance of the March 2026 Note. The Company accounted for this pay down as a partial extinguishment under ASC 470. As a result, the Company recognized a $285,600 gain on partial extinguishment in the unaudited condensed consolidated statement of operations during the three and nine months ended June 30, 2026. During the nine months ended June 30, 2026, Avondale converted $16,771,352 of outstanding principal and accrued interest on the March 2025 Note into 39,404,455 shares of the Company’s common stock, fully extinguishing the March 2025 Note. As a result, the Company recognized a $1,329,048 and $1,043,448 loss on extinguishment in the unaudited condensed consolidated statement of operations during the three and nine months ended June 30, 2026, respectively. The Company elected to account for the March 2025 Note at fair value (Note 4) and was not required to bifurcate the conversion option as a derivative and as a result the debt issuance costs were expensed upon election to fair value and accounted for as interest. March 2026 Note On March 16, 2026, the Company entered into a note purchase agreement with Atlas, pursuant to which the Company issued the March 2026 Note, an unsecured promissory note with an original principal balance of $18,360,000 at an original issue discount of $1,360,000, resulting in gross proceeds of $17,000,000. The proceeds were used solely to partially repay $17,000,000 of outstanding principal and accrued interest under the Company’s March 2025 Note. The March 2026 Note bears interest at the , as published in The Wall Street Journal, plus 3%, subject to a minimum rate of 9.5%, and matures 15 months from issuance. Interest is calculated on the basis of a 360‑day year and is compounded daily. Beginning on the anniversary of issuance, Atlas has the right to redeem up to $3,000,000 of the outstanding balance under the March 2026 Note per calendar quarter. All cash payments made by the Company under the March 2026 Note, including prepayments, redemptions, or repayment at maturity, are subject to a 7.5% exit fee. The March 2026 Note is unsecured and contains customary representations and warranties, affirmative and negative covenants, and provisions governing Trigger Events, events of default, and remedies. Trigger Events include, among other things, failure to make payments when due, insolvency or bankruptcy‑related events, the occurrence of certain fundamental transactions without Atlas’ consent, covenant breaches, and material misrepresentations. Upon the occurrence of certain Trigger Events, Atlas has the right to increase the outstanding balance of the March 2026 Note, subject to contractual limitations, and if a Trigger Event is not cured within specified time periods, it may result in an event of default. Upon an event of default, Atlas has the right to accelerate the outstanding balance, apply default interest of up to 22% per annum, and pursue available remedies. The Company elected to account for the March 2026 Note at fair value (Note 4). Debt issuance costs were written off upon election of the fair value option and recognized as interest expense. The maturity date of the March 2026 Note is June 16, 2027, as such the entire June 30, 2026 balance is classified in current liabilities. |
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