SUBORDINATED PROMISSORY NOTES - RELATED PARTY |
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||
SUBORDINATED PROMISSORY NOTES - RELATED PARTY [Abstract] | |||||||||||||||||||||||||||||||||||||||||||
SUBORDINATED PROMISSORY NOTES - RELATED PARTY |
Aves
Labs, Inc., a wholly-owned subsidiary of the Company, is the obligor on a fixed 0.5% subordinated promissory note in the
amount of $1,850 (the “ICT Subordinated Promissory Note”) issued to the former owner of ImmunoChemistry Technologies, LLC
(“ICT”), in connection with a business combination whereby the Company acquired all of the membership interests of ICT. The ICT Subordinated Promissory Note is payable in sixteen scheduled quarterly installments of principal
and interest beginning March 4, 2021, matures on December 4, 2024, and may be prepaid, in whole or in part, without premium or
penalty.
The
ICT Subordinated Promissory Note is subordinate to and junior in right of payment for principal interest premiums and other amounts payable to Santander and First Merchants.
As of March 31, 2024, the amount outstanding under the ICT Subordinated Promissory Note was $165, net
of a $28 discount, which is included in the current portion of subordinated promissory notes.
As of September
30, 2023, the amount outstanding under the ICT Subordinated Promissory Note was $312, of which $288 is included in the current portion of subordinated promissory notes and $24 is included in the long-term portion of subordinated promissory notes.
Janel Group is the obligor on four fixed 4% subordinated
promissory notes totaling $6,000 in the aggregate (together, the “ELFS Subordinated Promissory Notes”), payable to certain former
shareholders of ELFS, in connection with the Company’s business combination whereby it acquired all the membership interest of ELFS and its related subsidiaries. All of the ELFS Subordinated Promissory Notes are guaranteed by the
Company and are subordinate to and junior in right of payment for principal, interest, premiums and other amounts payable to the Santander Facility and the First Merchants Credit Facility. The ELFS Subordinated Promissory Notes are payable
in twelve equal consecutive quarterly
installments of principal together with accrued interest. Beginning October 15, 2021 and on the same day of the next eight
consecutive calendar quarters, thereafter payment of accrued interest and unpaid interest is due to the former shareholders. Beginning October 15, 2023, and on the same day of the next twelve consecutive calendar quarters thereafter payment of principal together with accrued interest and unpaid interest is due to the former shareholders. In June 2022,
the principal amount of the ELFS Subordinated Promissory Notes was adjusted to $5,100 due to a revised working capital adjustment
of $900.
On December 1, 2023, in connection with the Purchase Agreement Amendment among Janel Group and the ELFS Sellers, the Company extended the ELFS
Subordinated Promissory Notes maturity by two years and restored the working capital adjustment (as defined in the Purchase
Agreement) by $900 which increased the principal amount of the ELFS Subordinated Promissory Notes to $6,000. The Company evaluated the accounting treatment related to the amendment and determined the agreements are substantially different and
extinguished the original subordinated promissory notes and recorded the amended subordinated promissory notes at fair value of $4,654.
As a result, the Company recorded a debt discount of approximately $921 and a $21 gain on extinguishment.
As of March 31,
2024, the gross amount outstanding under the ELFS Subordinated Promissory Notes was $5,282, ($4,409 net of $873 unamortized
discount), of which $1,174 was included in the current portion of subordinated promissory notes and $3,235 was included in the long-term portion of subordinated promissory notes.
As of September
30, 2023, the amount outstanding under the ELFS Subordinated Promissory Notes was $5,100, of which $1,700
was included in the current portion of subordinated promissory notes and $3,400 was included in the long-term
portion of subordinated promissory notes.
The table below sets forth the total Long-term portion of
subordinated promissory notes (in thousands):
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