Quarterly report pursuant to Section 13 or 15(d)

Notes Payable

v3.24.3
Notes Payable
 3 Months Ended
Sep. 30, 2024
Notes Payable [Abstract]  
Notes Payable

Note 9. Notes Payable

 

Convertible Senior Notes due 2027

 

The following table summarizes convertible debt as of September 30, 2024 (in thousands):

 

    Maturity
Date		   Stated
Interest
Rate		     Conversion
Price		     Face
Value		     Remaining
Debt
(Discount)		     Fair
Value of
Embedded
Derivatives		     Carrying
Value		  
Long Term convertible notes payable                                        
6.0% convertible senior notes   06/15/2027     6.00 %   $ 4.71     $ 44,000     $ (1,947 )   $          1     $ 42,054  
Ending Balance as of September 30, 2024                       $ 44,000     $ (1,947 )   $ 1     $ 42,054  

 

The following table summarizes convertible debt as of June 30, 2024 (in thousands):

 

    Maturity
Date		   Stated
Interest
Rate		     Conversion
Price		     Face
Value		     Remaining
Debt
(Discount)		     Fair
Value of
Embedded
Derivatives		     Carrying
Value		  
Long Term convertible notes payable                                        
6.0% convertible senior notes   06/15/2027     6.00 %   $ 4.71     $ 44,000     $ (2,114 )   $          1     $ 41,887  
Ending Balance as of June 30, 2024                       $ 44,000     $ (2,114 )   $ 1     $ 41,887  

 

Interest expense on the Notes during the three months ended September 30, 2024 included contractual interest of $660 thousand and debt discount amortization of $167 thousand.

 

GDSI Acquisition Promissory Note

 

The Company issued a secured promissory note (the “Promissory Note”) in the original principal amount of $4.0 million to the Sellers’ representative in connection with the Company’s acquisition of GDSI in January 2023. The Sellers’ representative is a current employee of the Company. The Promissory Note does not bear interest, is subject to partial prepayment (reduction of the outstanding principal amount down to $1.3 million) on the second anniversary of the Closing Date, and is payable in full on the third anniversary of the Closing Date. The Purchaser can reduce the principal amount of the Promissory Note to satisfy the Sellers’ indemnification obligations under the Purchase Agreement, and (ii) if GDSI’s President is terminated for cause or due to disability or resigns without good reason prior to maturity the Promissory Note will be cancelled in its entirety. The Promissory Note is secured by certain of the Purchaser’s and GDSI’s assets. In the event of certain events of default, including failure to pay amounts due under the Promissory Note and certain bankruptcy events, the outstanding principal amount of the Promissory Note will become immediately due. The Promissory Note will be recognized on a straight line basis over the term of the Promissory Note as compensation expense. The Company recorded compensation expense totaling $333 thousand for the three months ended September 30, 2024 and $333 thousand for the three months ended September 30, 2023, in “General and administrative expenses” in the Condensed Consolidated Statements of Operations with the associated liability included in “Notes payable” in the Condensed Consolidated Balance Sheets.

 

Short Term Note

 

In June 2024, the Company issued a secured note (the “Customer Note”) in the original principal amount of $8.0 million issued by the Company to a key customer and is included in “Notes payable” in the Condensed Consolidated Balance Sheets. The Customer Note does not bear interest and is subject to periodic repayment against sales made to the customer. The Customer Note is secured by certain of the Company’s assets. Pursuant to the sales agreement with this key customer, the Company agreed to sell products up to $21.0 million at an agreed upon price per unit. It also contains an option for the customer to buy additional products at a reduced price per unit. During the three months ended September 30, 2024, the Company recognized $4.1 million of revenue from this sales agreement which was applied against the Customer Note.