Related Party Note Payable

3 Months Ended

Mar. 31, 2025

Related Party Note Payable

Related Party Note Payable

9. Related Party Note Payable

On August 15, 2024, and as amended on September 27, 2024 and January 15, 2025, the Company entered into an unsecured Delayed Draw Term Note (the “Note”) with Air T Inc. (Air T) pursuant to which Air T has agreed to advance from time to time until August 15, 2026, but not on a revolving basis, up to $3.75 million to fund the Company’s operations. The Note remains scheduled to mature, and all principal and accrued but unpaid interest will become due on August 15, 2029, subject to Air T’s right to demand payment on or after February 15, 2026. Air T Inc. beneficially owns greater than 10% of our outstanding Common Stock and is a member of a group of stockholders that collectively owns approximately 40% of our outstanding common stock. Amounts outstanding under the Note bear interest at a fixed rate of 8.0%, which may be increased by 3.0% upon certain events of default, and the interest accrued and deferred until the maturity date. As of March 31, 2025 and December 31, 2024, the Company had $3,350,000 and $3,500,000, respectively, principal outstanding under the Note. Interest expense incurred during the three months ended March 31, 2025 and 2024 was $73,000 and $0, respectively, which is included in noncash paid in-kind interest expense on the condensed consolidated statement of cash flows. The Note is included total current liabilities on the condensed consolidated balance sheet as of March 31, 2025.