FIREFLY NEUROSCIENCE, INC. Debt Disclosure
NOTE 9: CONVERTIBLE PROMISSORY NOTE
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”) (Note 12.b). The note includes 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”). If the Company fails to secure $5,000 in financing within five months, the conversion price adjusts to 90% of the lowest daily VWAP during the five trading days before the conversion notice, with a minimum floor price of $0.48 per share. In the event of default, the conversion price adjusts to the lesser of (i) the then applicable conversion price and (ii) 85% of the lowest daily VWAP during the ten trading days before the conversion notice. If the Company enters into an agreement for a change of control, the holder of the convertible promissory note has the right to require prepayment of an amount equal to 115% of the outstanding principal amount (“Change of Control Prepayment Option”). The principal amount of $2,400 will 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.
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 |
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2024 | Apr 3, 2025 | Showing above |
| 2023 | Mar 20, 2024 | |
About Debt Disclosures
Debt disclosures detail a company's borrowing structure — the types of instruments, interest rates, maturity schedule, and covenant restrictions that define its financial obligations and flexibility. This section is essential for assessing refinancing risk, interest rate exposure, and the margin of safety against financial distress.
Key signals: the maturity schedule reveals concentration risk — large maturities within 1-2 years during tight credit markets can force dilutive refinancing or asset sales. Compare the fair value of debt against carrying amount to gauge whether the market views the company's credit risk differently than the balance sheet suggests. Watch covenant compliance disclosures for tightening cushions, especially leverage and interest coverage ratios. Variable-rate debt exposure quantifies sensitivity to interest rate changes. Secured versus unsecured mix affects recovery rates and future borrowing capacity. Compare net debt-to-EBITDA against industry peers and covenant limits to assess financial health.