Convertible Notes Payable

6 Months Ended

Jun. 30, 2025

Convertible Notes Payable

Convertible Notes Payable

7. Convertible Notes Payable

On June 25, 2025, the Company filed a Current Report on Form 8-K disclosing several material events. On June 20, 2025, the Company entered into a Note Purchase Agreement with First Finance Ltd., pursuant to which First Finance Ltd. purchased $3,000,000 aggregate principal amount of convertible notes in a private placement exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended. The convertible notes accrue interest at 10% per annum and are mandatorily convertible into shares of newly designated Class B Convertible Preferred Stock upon the issuance of Class A Redeemable Preferred Stock as a dividend to common stockholders (which occurred July 18, 2025 – see Note 13). The Class B Convertible Preferred Stock is further convertible into common stock at a conversion price of the lower of: (i) the closing price (as reflected on Nasdaq.com); or (ii) the average closing price of the Common Stock (as reflected on Nasdaq.com) for the five trading days immediately preceding June 20, 2025 (subject to adjustment for stock splits, dividends, and similar events). First Finance Ltd. is also granted an option to purchase up to an additional $2,000,000 of Class B Convertible Preferred Stock. The proceeds from the convertible notes are restricted to a specified disbursement schedule.

In accordance with the note provisions, interest expense was computed for the days the note was in place during the end of June. This interest was added to the loan balance as of June 30, 2025 in the amount of $8, resulting in a total note payable balance of $3,008 being reported on the balance sheet

For additional details, refer to the Company's Current Report on Form 8-K filed with the SEC on June 25, 2025, including the Certificates of Designation attached as Exhibits 3.1 and 3.2, the Note Purchase Agreement attached as Exhibit 10.1, and the Convertible Note attached as Exhibit 10.2 thereto.

Composition of Notes Payable

Description	Interest Rate		Maturity Date	June 30, 2025		December 31, 2024
Convertible Note	10	%	June 30, 2025	$	3,008	$	—
Total Notes Payable				$	3,008	$	—

Schedule of Future Maturities of Notes Payable

Year ending December, 31	Amount
Remainder of 2025	$	3,008
Total	$	3,008