Borrowings |
3 Months Ended |
|---|---|
Mar. 31, 2026 | |
| Debt Disclosure [Abstract] | |
| Borrowings | Borrowings DV Convertible Note
In connection with the acquisition of certain assets (the "EOS Acquired Assets") from EOS Technologies Holdings Inc (f/k/a Data Vault Holdings Inc.) ("EOS Holdings"), which closed on December 31, 2024 (the "EOS" Asset Acquisition"), the Company issued a convertible note to EOS Holdings in the principal amount of $10.0 million due on the third anniversary of the closing on December 31, 2027 (the "EOS Convertible Note"). The Company agreed to pay interest to EOS Holdings on the aggregate unconverted and then outstanding principal amount of the note at the rate of five and twelve hundredths percent (5.12%) per annum, accruing from the closing.
The EOS Convertible Note could be converted at EOS Holdings' option, partially or entirely, into shares of common stock, any time after the maturity date until the EOS Convertible Note is fully paid off. The EOS Convertible Note uses a conversion price equaling to seventy-five percent (75%) of the average VWAP (as defined in the EOS Convertible Note) during the ten (10) consecutive trading days ending on the trading day that is immediately prior to the conversion date subject to a floor price of $1.116 per share. At EOS Holding’s sole discretion, upon a change of control (as defined in the EOS Convertible Note), the Company shall (i) cause any successor entity to assume in writing all of the obligations of the Company under the EOS Convertible Note, (ii) pay or cause to be paid to EOS Holdings the outstanding balance under the EOS Convertible Note in cash, or (iii) pay, at the closing of such change of control, in full satisfaction of the Company’s obligations under the EOS Convertible Note, an amount in cash or equivalent common stock to the amount EOS Holdings would have been paid if it had converted the outstanding balance under the EOS Convertible Note into shares of common stock immediately prior to such closing, at the conversion price.
When the Company entered into capital raising or financing transactions, including the issuance by the Company of shares of common stock or common stock equivalents (as defined in the EOS Convertible Note) for cash consideration, indebtedness or a combination of units thereof (each, a “Subsequent Financing”), then the Company was required first to pay to EOS Holdings at least 10% of the gross proceeds of such Subsequent Financing to redeem all or a portion of the EOS Convertible Note, plus accrued but unpaid interest, plus liquidated damages, if any, and any other amounts then owing to EOS Holdings.
On February 14, 2025, the Company paid a portion of principal and interest of $0.4 million, net, as a result of the February 2025 Public Offering (defined below in Note 6). For the three months ended March 31, 2026, the Company
paid an aggregate of $3.9 million in cash resulting in the EOS Convertible Note being paid in full. The ending balance and fair value as of December 31, 2025 was $3.9 million.
In January 2026, the Company fully repaid the outstanding balance of the EOS Convertible Note. The repayment satisfied the remaining principal and any accrued interest outstanding under the note as of the repayment date. Following the payoff, the EOS Convertible Note was extinguished and no further amounts remain outstanding under the agreement.
The Company elected the fair value method for the EOS Convertible Note at issuance of $10.0 million as of December 31, 2025 due to the embedded derivatives identified within the agreement requiring recurring fair value measurements. The note is valued using level 3 inputs. See Note 5, Fair Value Measurements for further information on inputs.
CSI Convertible Notes
As of December 31, 2025, the Company's outstanding debt included two convertible notes issued in connection with the acquisition of CSI which closed on May 20, 2025. Interest on the First Convertible Note and principal on the Second Convertible Note was accrued at the rate of five percent (5%) per annum. Interest began accruing from the six-month anniversary of the closing on the First Convertible Note and from the nine-month anniversary of the closing on the Second Convertible Note on the principal balance no less frequently than quarterly per calendar quarter. The payment of the accrued interest shall occur on the last business day of each calendar quarter.
On March 18, 2026, the Company entered into the settlement agreement with the holders of the First Convertible Note to settle the debt including accrued interest in the aggregate amount of $5.2 million. As of March 31, 2026, the Company has paid $2.0 million of the principal in payments scheduled in the settlement agreement to occur in March 2026 and is required per the settlement agreement to pay the remaining $3.2 million in principal and accrued interest in scheduled payments to occur in April 2026 and May 2026. The balance is included in Short-term promissory notes on the condensed consolidated balance sheet as of March 31, 2026. The Company recorded a debt extinguishment expense of $1.7 million for the three months ended March 31, 2026 equal to the difference of the settlement amount due and the carrying value of the First Convertible Note at the settlement date. The extinguishment expense is recorded on the condensed consolidated statement of operations for the three months ended March 31, 2026.
The Second Convertible Note can be converted, partially or entirely, into shares of common stock, any time after the nine-month anniversary of the closing until the Second Convertible Note is fully paid off. The Second Convertible Note use a conversion price equaling to the average VWAP during the thirty (30) consecutive trading days ending on the trading day that is immediately prior to the conversion date subject to a floor price of $1.40 per share and ceiling price of $2.50 per share (the “Conversion Price”). The entire outstanding principal and accrued interest shall automatically be converted into shares of common stock on the maturity date at the Conversion Price.
The CSI Convertible Notes carrying value at March 31, 2026 was $6.5 million, net of a discount of $1.7 million. Discount accretion expense was $0.6 million for the three months ended March 31, 2026.
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