Quarterly report [Sections 13 or 15(d)]

Debt

v3.25.1
Debt
 3 Months Ended
Mar. 31, 2025
Debt Disclosure [Abstract]  
Debt Debt
Total debt consisted of the following (amounts in thousands):
March 31, 2025 December 31, 2024
3.75% Small Business Administration installment loan due May 2050
 $ 108  $ 109 
Convertible note payable, less unamortized costs of $29
 8,496  8,471 
Promissory note payable 164  226 
Short term debt 192  197 
Director and officer (D&O) insurance policy promissory note1
68  135 
Executive and officer (E&O) insurance policy promissory note2
216  338 
Total debt 9,244  9,476 
Long-term debt, current portion (4,158) (4,389)
Long-term debt, net of current portion $ 5,086  $ 5,087 
(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.
(2) The 2024 E&O note carries a 13.5% interest rate and is payable monthly with the last monthly payment being due in August 2025.
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 annual interest rate of 8.5%. The note is payable in 20 equal monthly installments of $13,413, with the final payment due on April 5, 2026.
Revolving Credit Line
In connection with the acquisition of MHG, the Company assumed a revolving credit line with an outstanding balance of $0.2 million, bearing an annual interest rate of 12%. 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.
Beginning on September 25, 2024, quarterly interest payments are to be paid in cash on the principal amount at a fluctuating rate 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 issuance of the 2023 Note. The cash proceeds to the Company from the issuance of the 2023 Note were $3.3 million, after deducting the placement agent fee and approximately $25,000 in purchaser expenses.
The 2023 Note bears interest at a fluctuating rate equal to (i) the monthly average 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 is 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 payable upon any conversion, prepayment, and/or acceleration whether as a result of an Event of Default, as defined in the terms of the 2023 Note, 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 existing and future assets of the Company.
At any time, the Holder may convert any portion of the principal amount of the 2023 Note, plus accrued and unpaid interest and any late charges thereon, 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 Holder is not permitted to convert the 2023 Note into shares of common stock if such conversion would result in the Holder 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 Holder, but in any case, to no greater than 9.99%.