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Convertible Notes and Notes Payable
 3 Months Ended
Mar. 31, 2025
Debt Disclosure [Abstract]  
Convertible Notes and Notes Payable

Note 6. Convertible Notes and Notes Payable

September 2024 Note Payable

 

In November 2024, the Company assumed a promissory note issued by Peak Bio in September 2024 in the amount of $0.3 million (the “September 2024 Note”) to its former California landlord. Due to the short-term nature of the September 2024 Note, the Company concluded that its carrying value approximated its fair value as of the Closing on November 14, 2024. The note bears no interest and is payable over twenty equal monthly installments beginning on November 1, 2024 and expiring on June 1, 2026.

 

The Company began making monthly payments subsequent to the acquisition of Peak Bio. As of March 31, 2025 and December 31, 2024, the outstanding balance on the September 2024 Note was $0.2 million and $0.3 million, respectively.

 

November 2023 Note Payable

 

In November 2024, the Company assumed a promissory note issued by Peak Bio in November 2023 in the amount of $0.4 million (the “November 2023 Note”) bearing interest at 6% per annum with a maturity date of December 31, 2024. Due to the short-term nature of the November 2023 Note, the Company concluded that its carrying value approximated its fair value as of the Closing on November 14, 2024.

 

As of December 31, 2024, the principal balance of $0.4 million plus accrued interest of less than $0.1 million was due for payment in order to settle the November 2023 Note obligation. On February 28, 2025, the Company signed a Settlement Agreement and Release in the amount of $325,000 for full satisfaction of the outstanding principal and accrued interest owed on the November 2023 Notes. The payment of $325,000 was made on March 6, 2025.

 

The Company recognized interest expense of $0 for the three months ended March 31, 2025 and a gain on debt extinguishment of less than $0.1 million during the three months ended March 31, 2025.

 

April 2023 Convertible Notes

 

In November 2024, the Company assumed convertible promissory notes issued by Peak Bio in April 2023 in the principal amount of a total of $0.7 million (the “April 2023 Convertible Notes”). Due to the short-term nature of the April 2023 Convertible Notes, the Company concluded that its carrying value approximated its fair value as of the Closing on November 14, 2024. The April 2023 Convertible Notes bear interest at a default rate of 10% per annum and were originally due in October 2023. The April 2023 Convertible Notes permitted the holder to convert the outstanding principal and accrued interest at any time at a price of $0.001 per ordinary share of the Company, after giving effect to the Exchange Ratio. As of March 31, 2025, the outstanding balance of $0.7 million was in default.

 

As of March 31, 2025 and December 31, 2024, accrued interest on the April 2023 Notes of less than $0.1 million is presented within accrued expenses in the condensed consolidated balance sheets. The Company recognized interest expense of less than $0.1 million during the three months ended March 31, 2025.

 

Refer to Note 12 for notes payable, related party and convertible notes, related party.