Senior Secured Note

In December 2025, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with High Trail ("Note Holder") pursuant to which PMI agreed to issue and sell the Senior Secured Note and warrants to purchase shares of our common stock (the "HT Warrants"). An initial $15.0 million aggregate principal amount of Senior Secured Note was issued at the initial closing on December 26, 2025, with a maturity date of December 26, 2028. PMI received proceeds of $13.5 million, net of an original issue discount of $1.5 million, or 10%, and also incurred debt issuance costs of $1.5 million. The terms of the Senior Secured Note provide, among other things, for the following:

The Company issued 140,187 HT Warrants to High Trail and 14,019 common stock warrants to the Placement Agent (the "PA Warrants," and, together with the HT Warrants, the "Warrants"). The Warrants have an exercise price of $133.75 per share and a term of 5 years. Due to certain ratchet provisions in the warrant agreements, the Warrants are classified as liabilities under ASC 815-40. The fair value of the PA Warrants of $0.8 million is recorded as debt issuance costs. Part of the proceeds of the note were allocated to the fair value of the HT Warrants at issuance amounting to $8.1 million. 

Upon issuance, the Company elected to account for the Senior Secured Note under the fair value option. The primary reason for electing the fair value option is for simplification and cost-benefit considerations of accounting for the Senior Secured Note at fair value in its entirety versus bifurcation of the embedded features. Under the fair value election, debt issuance costs are expensed as incurred, and the debt liability is subsequently valued at fair market value during each reporting period until settlement. The fair value of the Senior Secured Note at issuance and as of December 31, 2025, amounted to $5.4 million, each. The change in fair value for the year ended December 31, 2025, was $0.012 million and was charged to earnings. Debt issuance costs of $2.3 million were expensed during the year ended December 31, 2025, and reported in financing charges in the condensed consolidated statements of operations and comprehensive loss. The fair value of the Senior Secured Note as of  June 30, 2026, was $0.567 million. The change in fair value, the loss on settlement of debt, and the loss on warrant exchange for the three and six months ended June 30, 2026, was $2.74 million, ($3.19) million and ($0.51) million, and $5.74, $($9.28) million and ($0.51) million, respectively and was charged to earnings. 

On May 5, 2026, the Company entered into a Warrant Issuance and Exchange Agreement wherein the existing HT Warrants were surrendered and exchanged for new warrants to purchase 200,000 shares of Common Stock at an exercise price of $17.50 per share, subject to certain adjustments as provided in the warrant agreement. The new warrants have a term of 5 years. As a result of the warrant exchange, the fair value of the warrant liability at the exchange date of $894 was extinguished and credited to additional paid in capital. The new warrants were fair valued at the issuance date and the incremental value of $505 was expensed as loss on warrant exchange and credited to additional paid in capital. The Company evaluated the new warrants and determined that these are equity-classified instruments.

In connection with the May 2026 Offering (see Note 9), certain adjustment provisions in the PA warrants were triggered, resulting in the placement agent owning an aggregate of 163,755 warrants with an exercise price of $11.45. At June 30, 2026, the fair value of the PA warrants amounted to $1.08 million. For the three and six months ended June 30, 2026, $0.65 million and $0.28 million of change in fair value in the PA warrants was charged to earnings, respectively.

Convertible Notes

Between May and September 2023, the Company issued $4.2 million of unsecured 6% convertible notes due two years from issuance (the "2023 Convertible Notes"). The 2023 Convertible Notes were originally set to automatically convert into common stock at a fixed price upon maturity or before a public listing. In 2025, the Company amended $4.1 million of the 2023 Convertible Notes to extend maturity and revise the conversion terms so that the notes would convert at 50% (or 23%, after taking into account the Company's 2025 1 for 2.2 forward stock split, or 1,150%, after taking into account the Company's 50 for 1 reverse stock split) of the lowest price paid by investors in a future initial public offering ("IPO") or financing. Because the revised conversion terms created embedded derivative features under accounting rules, the Company recorded a $3.1 million derivative liability and corresponding debt discount, which was fully amortized to interest expense by September 2025. In September 2025, approximately $4.1 million in principal and $0.5 million in accrued interest converted into about 0.1 million shares of common stock. The remaining balance of $0.1 million was repaid in cash. Amortization expense for the three and six months ended June 30, 2025, was $0.4 million and $0.7 million, respectively.

Between April 2024 and May 2025, the Company issued an additional $5.7 million of unsecured 6% convertible notes under a 2024 Convertible Note Agreement (the "2024 Convertible Notes," and, together with the 2023 Convertible Notes, the "Convertible Notes"). The 2024 Convertible Notes matured after six months or upon an IPO and converted automatically into securities issued in an IPO or other financing at discounted conversion prices tied to future investor pricing. The Company determined that these conversion features also qualified as embedded derivatives, recording a $1.8 million derivative liability and related debt discount. In September 2025, the full $5.7 million principal plus accrued interest converted into roughly 6.5 million shares of common stock. A separate $7.0 million convertible note equally held by Nexus Science Foundation Inc. and Another Dimension Foundation, each of which received approximately 0.1 million shares upon conversion in September 2025. Amortization expense for the three and six months ended June 30, 2025, was $0.4 million and $0.7 million, respectively.

In March, 2026, the Company entered into unsecured promissory notes with Fannet Technologies, Inc. (“Fannet Note”) and Anchor Investment, LLC (“Anchor Note”) in principal amounts of $0.1 million and $0.2 million, respectively. The Fannet Note provided for a fixed contractual return of $10,000. Upon failure to repay any amounts due on or before the maturity date (including any approved extension), such amounts accrued default interest at a rate of 2.0% per month (24% per annum), or the maximum rate permitted by applicable law, whichever was lower, until paid in full. The Anchor Note provided for a fixed contractual return of $22,000, which represented the minimum return payable and remains due regardless of any prepayment. Each note matured 30 days after the date funds were received by the Company, subject to extension with the applicable lender’s written consent. Both notes were unsecured and ranked pari passu in right of payment with all other unsubordinated, unsecured indebtedness of the Company. Each note required mandatory prepayment upon the consummation by the Company or any subsidiary of an equity or equity-linked financing yielding aggregate gross proceeds to the Company of at least $5,000,000. The Company could prepay either note at any time, in whole or in part, without premium or penalty. In connection with the May 2026 Offering, in May 2026 the company applied net proceeds to extinguish both the Fannet Note and Anchor Note, resulting in the complete satisfaction and discharge of all obligations thereunder.

In April 2026, the Company entered into a securities purchase agreement with Quick Capital, LLC (“Quick Capital”), pursuant to which the Company issued a convertible promissory note in the principal face amount of $0.6 million (the “Quick Capital Note”) and 80,128 shares of common stock as origination shares. The Quick Capital Note was issued with an original issue discount of $55,556, resulting in aggregate funded proceeds to the Company of $500,000, less $10,000 in buyer expenses. The Quick Capital Note bore a one-time interest charge of 12% applied on the date of issuance and matured nine months from issuance. Repayment was due in six equal monthly installments of $103,704, commencing on July 1, 2026. Upon the occurrence of an event of default, the Quick Capital Note accrued interest at a rate equal to the lesser of 20% per annum or the maximum rate permitted by law, and became immediately due and payable in an amount equal to 150% of the then-outstanding principal, plus accrued interest and other amounts owed, subject to a cumulative maximum of 200% of such amounts. During any continuation of an event of default, Quick Capital could elect to convert all or any portion of the outstanding principal and interest into shares of common stock at a conversion price equal to 75% of the lowest trading price of the common stock for the ten trading days prior to conversion, subject to a 4.99% beneficial ownership limitation. In connection with the May 2026 Offering, in May 2026 the company applied net proceeds to extinguish the Quick Capital Note, resulting in the complete satisfaction and discharge of all obligations thereunder.