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Notes held for investment

12 Months Ended

Dec. 31, 2024

Notes held for investment

Notes held for investment

8. Notes held for investment

Notes receivable consist of the following for the periods presented:


		December 31,				December 31,
		2024				2023
Senior secured promissory notes		$	1,000		$	1,000
Secured convertible promissory notes			5,100			4,372
Total notes held for investment		$	6,100		$	5,372

In June 2022, the Company loaned Mellitus an aggregate of $1,000 through the purchase of two senior secured promissory notes that bear interest at a rate of 5% per annum, and mature in three years unless accelerated due to an event of default as provided in the notes. Repayment of notes is secured by a first priority interest in all of Mellitus’ assets.

In December 2022, the Company entered into a senior convertible promissory note (also referred as debt security) arrangement with Monarch, providing Monarch with up to $5,000 in available funding, of which $5,000, in principal was drawn as of December 31, 2024. The Monarch debt security accrues interest at 10% per annum, payable monthly, and the principal balance was originally due December 6, 2024, with such due date extended to January 17, 2025 (refer to note 20 for additional information). The note along with up to $100 of transaction expenses is due and payable on the occurrence of an event of default or change of control unless accelerated due to the conversion into preferred stock prior thereto at the option of the Company. The Company has the option to extend the maturity date for two consecutive one-year terms. The Monarch debt security can be converted into Monarch’s shares at the Company’s option upon (a) an equity financing at Monarch, (b) upon a change of control at Monarch, or (c) at the Company’s option at any time prior to the maturity date. If converted upon a change of control, the Company has the right to receive a cash payment equal to the balance of the Monarch debt security or the amount payable upon conversion into Monarch’s shares. The Monarch debt security is redeemable at any time at Monarch’s option or automatically upon an event of default (as defined in the note).

The Company made an irrevocable election to account for the Debt Securities using the fair value option under ASC 825 – Financial Instruments (“ASC 825”) and will measure the fair value of the Debt Securities in accordance with ASC 820. The Company made the fair value option election to present the Debt Securities in its entirety at fair value, which it

believes to be preferable to recognizing the host instrument at fair value under ASC 320 and potentially separately recognizing certain embedded features as bifurcated derivatives under ASC 815. As of December 31, 2024, the Company assessed and estimated the fair value of the Debt Security of Monarch to be $5,000 and Mellitus senior secured promissory notes to be $1,000. As of December 31, 2023, the Company estimated the fair value of the Monarch debt security to be $4,372.

The Company recognizes interest income on the Monarch debt security, which is included in interest and dividend income in the statements of income. Accrued interest on the Monarch convertible promissory note was included in prepaid and other current assets. For the year ended December 31, 2024 and 2023, the Company recognized $483 and $449, respectively, of interest income from Monarch debt security. The Company recognizes changes in fair value of the notes in the statements of income separately from the interest income. For the year ended December 31, 2024 and 2023, the Company recorded a change in fair value of $128 and $307, respectively, for the Monarch debt security.