Debt

6 Months Ended

Jun. 30, 2023

Debt Disclosure [Abstract]

Debt

Debt

The following table summarizes the outstanding promissory notes as of June 30, 2023 and December 31, 2022 (dollars in thousands):

		June 30, 2023				December 31, 2022
	Interest Rate	Principal Amount		Carrying Amount		Principal Amount		Carrying Amount
YA II PN Convertible Debenture	8.0%	$	250	$	256	$	4,442	$	3,928
YA II PN Convertible Debenture first amendment	8.0%	1,400		1,429		—		—
YA II PN Convertible Debenture second amendment	8.0%	750		762		—		—
YA II PN Convertible Debenture third amendment	8.0%	4,130		3,765		—		—
Tillou promissory note	22.0%	2,000		2,123		2,000		2,021
Therese promissory note	22.0%	1,200		1,215		—		—
Commercial Insurance Premium Finance	6%	142		142		992		992
SBA PPP due April 10, 2025	1.0%	172		172		219		219
Other lending agreements	0.1%-11.8%	7,292		7,292		6,561		6,561
Total		$	17,336	17,156		$	14,214	13,721
Less: Current portion				(15,336)				(11,764)
Long-term Note, less current portion				$	1,820			$	1,957

The weighted average interest rate for these borrowings is 9.6% and 8.1% as of June 30, 2023 and December 31, 2022, respectively.

The Company breached at least two covenants, including making timely SEC filings and a minimum stock purchase from the Company’s officers or directors. Yorkville has not asserted either breach and has since extended additional loan amounts to the Company.

New debt transactions executed by the Company during the six months ended June 30, 2023 are as follows:

(a) YA II PN Convertible Debenture

On March 30, 2023, the Company entered into the first Amendment to the SDPA. YA II PN purchased an additional debenture with substantially the same terms in the principal amount of $1.4 million. The Company also entered the first amendment to the option agreement as a condition precedent to the purchase of $1.4 million of convertible securities under the SDPA, The Company and Timios have granted YA II PN an option, exercisable after May 30, 2023, to purchase from the Company an amount of shares of common stock of Timios representing seventy percent (70%) of the then issued and outstanding Timios Common Stock on a Fully-Diluted Basis at the time the Call Right is effected or seventy percent (70%) of the then issued and outstanding Fiducia Common Stock on a Fully-Diluted Basis at the time the Call Right is effected. Pursuant to the Amended Option Agreement, if YA II PN exercises the Call Right, the aggregate purchase price shall be $2.5 million.

On April 17, 2023, the Company entered into the second amendment to the SDPA and option agreement. YA II PN purchased an additional debenture with substantially the same terms in the principal amount of $0.8 million. The Company also entered the second amendment to the option agreement as a condition precedent to the purchase of $0.8 million of convertible securities under the SDPA. Tthe Company and Timios have granted YA II PN an option (the “Call Right”), exercisable after May 30, 2023, to purchase (a) from the Company an amount of shares of common stock of Timios representing one hundred percent (100%) of the then issued and outstanding common stock of Timios on a Fully-Diluted Basis (as defined therein) at the time the Call Right is effected, or (b) from Timios one hundred percent (100%) of the then issued and outstanding common stock of Fiducia on a Fully-Diluted Basis at the time the Call Right is effected. Pursuant to the Amended Option Agreement, if YA II PN exercises the Call Right, the aggregate purchase price shall be $3.5 million.

On May 1, 2023, the Company entered into the third amendment to the SDPA. YA II PN purchased an additional debenture with substantially the same terms in the principal amount of $4.1 million for a purchase price of $3.5 million,

with the subsequent amendments, the maturity date is extended to November 1, 2023

The Company recognized interest expense related to the YA II PN convertible debenture of $0.5 million and $0.8 million, including of debt discount amortization for the three months and six months ended June 30, 2023, respectively. During the six months ended June 30, 2023, the Company repaid $4.2 million of principal and interest using the proceeds from SEPA.

(b) Tillou promissory note due on demand after 4/20/2023

Refer to Note 11 for further discussion of this related party transaction.

(c) Therese promissory note due on 6/6/2023

Refer to Note 11 for further discussion of this related party transaction.

The Company also entered other short term and long term borrowing agreements. These instruments provide working capital for the operations through the combination of accounts receivable factoring, line of credits, vendor financing programs and other secured asset-based lending arrangements. The total unused line of credit is $0.9 million and $0.4 million as of June 30, 2023 and December 31, 2022, respectively.