Note 9 - Notes Payable

12 Months Ended

Dec. 31, 2024

Notes to Financial Statements

Debt Disclosure [Text Block]

Note 9. Notes Payable

Note Payable - Director & Officer Liability Insurance

The Company purchased director and officer liability insurance coverage on October 16, 2023 for $447 thousand. A down payment of $157 thousand was made and the remaining balance of $290 thousand was financed over 8 months through a short-term financing arrangement with its insurance carrier. The interest rate on the loan was 8.99%. Interest expense on this loan was $4 thousand and $6 thousand for the years ended December 31, 2024 and 2023, respectively. The loan balance was $184 thousand as of December 31, 2023. The loan balance was paid off in May 2024, such that there is no remaining balance as of December 31, 2024.

The Company purchased director and officer liability insurance coverage on September 26, 2024 for $293 thousand. A down payment of $44 thousand was made and the remaining balance of $249 thousand was financed over 10 months through a short-term financing arrangement with its insurance carrier. The interest rate on the loan is 9.99%. Interest expense on this loan was $6 thousand for the year ended December 31, 2024. The loan balance was $177 thousand as of December 31, 2024.

Promissory Notes (collectively, the “Related Party Notes”)

On May 30, 2024, David A. Jenkins loaned $500,000 to the Company in exchange for a short-term promissory note.

On June 25, 2024, an entity controlled by Mr. Jenkins loaned $150,000 to the Company in exchange for a short-term promissory note.

On July 1, 2024 and July 18, 2024, the Company entered into two short-term promissory notes with an affiliate of Mr. Jenkins, wherein the affiliate loaned $250,000 and $100,000, respectively, to the Company in exchange for the short-term promissory notes.

On July 25, 2024, the Company entered into a short-term promissory note with a Trust, of which Mr. Jenkins’ adult daughter is the trustee, wherein the Trust loaned $500,000 to the Company in exchange for the short-term promissory note.

All of these short-term promissory notes (the “Related Party Notes”) had a maturity date of August 30, 2024 and interest at 8% per annum.

On August 23, 2024, the Company entered in the first amendment of the Related Party Notes, which extended the maturity date to January 31, 2026 and increased the interest rate to 12% per annum after August 31, 2024. All other terms and conditions remained substantially unchanged. As part of the amendment, the Company paid down all accrued interest to date of $21 thousand. The amendment was accounted for as a debt modification in accordance with ASC 470-50, Debt Modifications and Extinguishment (“ASC 470-50”). Since the modified terms and conditions were not substantially different from the prior terms and conditions, the Company accounted for the debt modification as a continuation of the original debt instrument. The Company further concluded that the debt modification did not result in any adjustments to the carrying value of the Related Party Notes.

The Related Party Notes, including all principal and interest, accelerate and become immediately due and payable upon the occurrence of certain customary events of default, including failure to pay amounts owed when due, material breach of the Company’s representations or warranties (unless waived by the holders of the Related Party Notes or cured within 10 days following notice), certain events involving the discontinuation of the Company’s business and/or certain types of proceedings involving insolvency, bankruptcy, receivership and the like.

Interest expense on the Related Party Notes was $81 thousand for the year ended December 31, 2024. The Related Party Notes and related accrued interest totaled $1.6 million as of  December 31, 2024, $61 thousand of which related to accrued interest and was recorded under interest payable due to related parties on the consolidated balance sheets. The principal balance of $1.5 million of the Related Party Notes is recorded under notes payable due to related parties on the consolidated balance sheets.

See Note 19, Related Parties for additional details.