Annual report [Section 13 and 15(d), not S-K Item 405]

Debt

v3.25.1
Debt
 12 Months Ended
Dec. 31, 2024
Debt Disclosure [Abstract]  
Debt Debt
Long-term debt consisted of the following at the dates indicated (amount in thousands):
December 31,
2024		 December 31,
2023
3.75% Small Business Administration installment loan due May 2050
 $ 109  $ 117 
Convertible note payable, less unamortized costs $29
 8,471  3,372 
Promissory note 226  — 
Revolving credit line 197  — 
Director and Officer (D&O) insurance policy promissory note1
135 179
Executive and Officer (E&O) insurance policy promissory note2
338  215 
Total debt 9,476  3,883 
Long-term debt, current portion (4,389) (416)
Long-term debt, net of current portion $ 5,087  $ 3,467 
(1) The 2024 D&O note carries a 7.35% interest rate and is payable quarterly with the last quarterly payment due in July 2025. The 2023 D&O note carried a 6.85% interest rate and final payment was made in April 2024.
(2) The October 2024 E&O note carries 13.5% interest rate and is payable monthly with the last monthly payment being due in August 2025. The October 2023 E&O note carried a 13.5% interest rate and final payment was made in August 2024.
Debt maturities and principal amortization of our consolidated existing debt as of December 31, 2024 for the next five years and thereafter are as follows (in thousands):
Calendar Year Amount
2025 $ 4,389 
2026 5,000 
2027 — 
2028 — 
2029 — 
Thereafter 87
Total $ 9,476 

Promissory Note
In connection with the acquisition of My Home Group (“MHG”) in November 2024, the Company assumed a promissory note with a principal balance of $0.2 million, bearing an interest rate of 8.5% per annum. The note is payable in 20 equal installments of $13,413, with the final payment due on April 5, 2026.
Revolving Credit Line
In connection with the acquisition of MHG in November 2024, the Company assumed a revolving credit line with an outstanding balance of $0.2 million, bearing an interest rate of 12% per annum. The final payment is due on June 30, 2026.
Convertible Note Payable
In September 2024, the Company sold and issued senior secured convertible promissory notes in aggregate principal amount of $5.0 million (the "2024 Notes") to an existing shareholder, who beneficially owns more than 5% of Fathom's common stock, and the chairman of the Company's Board of Directors in a private placement (the "2024 Offering"). The cash proceeds to the Company from the issuance of the 2024 Note were $4.9 million after deducting the 2024 Offering expense.
Interest on the 2024 Notes will be paid quarterly commencing on September 25, 2024, in cash on the principal amount at a rate which fluctuates every calendar month and is equal to (i) the monthly average Secured Overnight Financing Rate (SOFR) plus (ii) 4% per annum, subject to certain adjustments and a minimum rate of 8%. The 2024 Notes have a conversion price of $4.25 per share of common stock, representing an initial conversion premium of approximately 85% above the last reported sale price of Fathom's common stock on September 26, 2024. The 2024 Notes will mature on October 1, 2026, unless repurchased or converted in accordance with their terms prior to such date. The 2024 Notes may not be converted by either purchaser into shares of common stock if such conversion would result in the purchaser and its affiliates owning an aggregate of in excess of 19.99% of the then-outstanding shares of the Company’s common stock.
On April 13, 2023, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with an accredited investor (the “Holder”) and issued a Senior Secured Convertible Promissory Note in the principal amount of $3.5 million (the “2023 Note”), in a private placement (combined with the 2024 Offering, the “Offerings”). The Company paid a placement agent fee in the amount of $175,000 in connection with the Offering. The cash proceeds disbursed to the Company from the issuance of the Note were $3.3 million, after deducting the placement agent fee and approximately $25,000 in purchaser expenses.
The Company shall pay interest to the 2023 Holder quarterly in cash on the principal amount of this Note at a rate which fluctuates every calendar month, and is equal to (i) the monthly average Secured Overnight Financing Rate (SOFR) plus (ii) 5%, per annum (which interest rate may be increased as provided by the Purchase Agreement); provided, however, that in no event will the rate of interest for any month be less than 8% per annum. Interest shall be due and payable on the last calendar day of each quarter and on the maturity date, April 12, 2025 (the “Fixed Interest Payment Date”); provided, however, notwithstanding anything to the contrary provided in the Purchase Agreement or the Note, interest accrued but not yet paid will be due and payable upon any conversion, prepayment, and/or acceleration whether as a result of an Event of Default, as defined, or otherwise with respect to the principal amount being so converted, prepaid and/or accelerated.
In connection with the Offerings, the Company also entered into Security Agreements pursuant to which the 2023 Note and the 2024 Note are secured by all the Company’s existing and future assets.

All or any portion of the principal amount of the 2023 Note, plus accrued and unpaid interest and any late charges thereon, is convertible at any time, in whole or in part, at the Investor’s option, into shares of the Company’s common stock at an initial fixed conversion price of $6.00 per share, subject to certain customary adjustments. The 2023 Note imposes penalties on the Company for any failure to timely deliver any shares of the Company’s common stock issuable upon conversion. The 2023 Note may not be converted by the Investor into shares of common stock if such conversion would result in the Investor and its affiliates owning an aggregate of in excess of 4.99% of the then-outstanding shares of the Company’s common stock, provided that upon 61 days’ notice, such ownership limitation may be adjusted by the Investor, but in any case, to no greater than 9.99%.