SAB Biotherapeutics, Inc. Debt Disclosure

(9) Notes Payable

8% Unsecured Convertible Note

Pursuant to the fourth amendment to the Company’s lease with Sanford Health, the Company and Sanford Health agreed to a period of abated rent (the “Abated Rent”) from October 1, 2022 to September 30, 2023. In exchange for the Abated Rent, effective as of October 1, 2022, the Company issued to Sanford Health an 8% unsecured, convertible promissory note (the “8% Unsecured Convertible Note”).

Pursuant to the 8% Unsecured Convertible Note, the Company shall pay the sum of approximately $542 thousand (the “Principal”) plus accrued and unpaid interest thereon on September 30, 2024 (the “Maturity Date”). Simple interest shall accrue on the outstanding Principal from and after the date of the 8% Unsecured Convertible Note and shall be payable on the Maturity Date.

The Company repaid the Principal of $542 thousand and total accrued interest of $87 thousand during the year ended December 31, 2024.

Insurance Financing Note

The Company obtained financing for certain Director & Officer liability insurance policy premiums. For the year ended December 31, 2024, the agreement assigns AFCO Direct as the lender a first priority lien on and security interest in the financed policies and any additional premium required in the financed policies including (a) all returned or unearned premiums, (b) all additional cash contributions or collateral amounts assessed by the insurance companies in relation to the financed policies and financed by Lender, (c) any credits generated by the financed policies, (d) dividend payments, and (e) loss payments which reduce unearned premiums. If any circumstances exist in which premiums related to any Financed Policy could become fully earned in the event of loss, Lender shall be named a loss-payee with respect to such policy.

For the year ended December 31, 2023, the Company entered into a similar agreement with First Insurance Funding. This agreement also assigned First Insurance Funding a first priority lien on the security interest in the financed policies and associated rights.

The total premiums, taxes, and fees financed under the current insurance financing agreement are approximately $516 thousand, for AFCO Direct with an annual interest rate of 7.37%. In consideration of the premium payment by the AFCO Direct to the insurance companies or the Agent or Broker (as defined in the agreement with the lender), the Company unconditionally promises to pay the lender the amount financed plus interest and other charges permitted under the agreement. At December 31, 2024, and 2023, the Company recognized approximately $276 thousand and $509 thousand, respectively, as an insurance financing note payable in our consolidated balance sheets. The Company incurred $17 thousand and $22 thousand of interest expense related to the insurance financing note for the years ended December 31, 2024 and 2023, respectively. Our current insurance financing agreement is being repaid through installment payments, with the final payment scheduled for September 22, 2025.

During the year ended December 31, 2024, the Company also made payments on a prior insurance financing agreement, which had an original principal balance of $765 thousand with an annual interest rate of 7.96%. This prior agreement was fully repaid, with the final installment made on September 22, 2024.