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Note 8 - Convertible Promissory Note
 3 Months Ended
Mar. 31, 2025
Notes to Financial Statements  
Debt Disclosure [Text Block]

NOTE 8: CONVERTIBLE PROMISSORY NOTE 

 

On December 20, 2024, the Company issued a convertible promissory note of $2,400 and warrants to purchase up to 800,000 shares of common stock at an exercise price of $4.00 per share (“Convertible Promissory Note Warrants”). The note included a discount of $360, and the Company received gross proceeds of $2,040. The note is convertible at $3.00 per share, subject to adjustments (“Conversion Option”). The principal amount of $2,400 was scheduled to mature and become due and payable on December 20, 2025. The Company bifurcated the Conversion Option and accounted for it as a derivative liability due to the conversion feature not being clearly and closely related to the economic characteristics of the host contract.

 

On February 13, 2025, the convertible promissory note was converted to 800,000 shares of common stock at the conversion price of $3.00 per share. The derivative liability was recorded at its estimated fair value prior to its derecognition upon conversion of the associated convertible promissory notes, resulting in a loss of $9,369. The derecognition of the Conversion Option and host contract on February 13, 2025, and the corresponding issuance of 800,000 shares of common stock at a fair value of $12,368 resulted in an additional loss of $1,353 on the consolidated statement of operations for the three months ended March 31, 2025. The Company incurred $29 in transaction costs relating to the exercise of the conversion option.

 

The following table summarizes the amortized cost portion of the convertible promissory note:

 

Balance at December 31, 2023$- 
Convertible promissory note proceeds, net of transaction costs 1,955 
Allocation to warrants, net of transaction costs (636)
Allocation to Conversion Option, at fair value including transaction costs (655)
Interest and accretion 30 
Balance at December 31, 2024$694 
Interest and accretion 126 
Settlement via conversion (820)
Total$- 

 

The following table summarizes the fair value changes of the Conversion Option:

 

Balance at December 31, 2023$- 
Allocation to Conversion Option, at fair value 671 
Change in derivative fair value 156 
Balance at December 31, 2024$827 
Change in derivative fair value 9,369 
Settlement via conversion (10,196)
Total$-