8-K: Fathom Holdings Amends Debt with Bed Bath & Beyond

Fathom Holdings Inc. has amended and restated its subordinated secured promissory note with Bed Bath & Beyond, Inc., increasing the principal amount and modifying terms related to senior debt.

Summary

• Fathom Holdings Inc. (the Company) has amended and restated its subordinated secured promissory note with Bed Bath & Beyond, Inc. (Holder).
• The principal amount has been increased by $1,000,000 to a total of $3,036,350.39, which includes $36,350.39 in accrued interest as of May 29, 2026.
• The Amended and Restated Note is due on April 1, 2027.
• The company also entered into a Limited Waiver and Omnibus Amendment with holders of its Senior Secured Convertible Promissory Notes.
• This waiver addresses the company's failure to timely file its Q1 2026 Form 10-Q, which constituted an Event of Default.
• The waiver is in effect until October 1, 2026, subject to certain conditions.
• Key amendments to the Senior Secured Convertible Promissory Notes include an increase in the minimum interest rate floor to 10% and a default rate of 18% if the Q1 2026 Form 10-Q is not filed by the waiver expiration date.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this filing negatively due to the company's failure to meet regulatory filing deadlines, resulting in default events and unfavorable amendments to its debt agreements.

Positives

• Secured an additional $1,000,000 in funding through the amended promissory note.
• Obtained a waiver for existing defaults related to late filings from senior debt holders, providing a grace period until October 1, 2026.
• The company's Material Subsidiaries (E4:9 Holdings LLC, IntelliAgent, LLC, Fathom Realty Holdings LLC, Verus Holdings Inc.) have reaffirmed their obligations under the Security Agreement and Subsidiary Guarantee.

Negatives

• The company failed to file its Q1 2026 Form 10-Q on time, triggering events of default under its senior secured convertible promissory notes.
• The interest rate on the Senior Secured Convertible Promissory Notes will increase to a default rate of 18% if the Q1 2026 Form 10-Q is not filed by October 1, 2026.
• The minimum interest rate floor on the Senior Secured Convertible Promissory Notes has been increased from 8% to 10%.

Risks

• Failure to file the Q1 2026 Form 10-Q by October 1, 2026, will result in the automatic termination of the waiver and the potential acceleration of repayment for the Senior Secured Convertible Promissory Notes.
• A 'Failed Change of Control Event' during the waiver period could also lead to the termination of the waiver and potential acceleration of debt repayment if the Q1 2026 Form 10-Q remains unfiled.
• The subordinated nature of the Bed Bath & Beyond note means it is subordinate to existing senior debt, impacting recovery in a liquidation scenario.
• The company is subject to various covenants and restrictions under the debt agreements, including limitations on incurring additional indebtedness and liens.

Future Outlook

The company must file its Q1 2026 Form 10-Q by October 1, 2026, to maintain the waiver on its senior debt defaults. Failure to do so will result in the waiver's termination and potential acceleration of debt. The company also has a 14-day period post-closing to establish a blocked deposit account for the additional principal amount.

Management Comments

• The company has requested, and Holder has agreed to make, an additional loan of $1,000,000 to the Company (the Additional Principal Amount), and the Company and Holder desire to amend and restate and replace the Original Note and re-evidence the obligations thereunder to reflect the amount outstanding on the Amendment Issue Date and the Additional Principal Amount.
• The Company has failed to timely file with the Securities and Exchange Commission (the Commission) its Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2026 (the Q1 Form 10-Q), as required under Section 13(a) of the Exchange Act, which failure constituted an Event of Default under Section 6(a)(viii) of the Notes (the Existing Filing Default).

Industry Context

StockSavvy.ai notes that this filing highlights the ongoing challenges many companies face in meeting regulatory filing deadlines, particularly in the current economic climate. The need to amend debt agreements and secure waivers underscores the importance of maintaining strong relationships with lenders and proactively addressing compliance issues.

Corporate Governance

Legal Proceedings

• The company has experienced events of default under its Senior Secured Convertible Promissory Notes due to the failure to file its Q1 2026 Form 10-Q.
• The waiver agreement addresses these defaults, but failure to cure by October 1, 2026, could lead to acceleration of debt and further legal action by noteholders.

Related Party Transactions

• Amendment and restatement of a subordinated secured promissory note with Bed Bath & Beyond, Inc., where Marcus Lemonis is listed as Executive Chairman and Chief Executive Officer.
• Limited Waiver and Omnibus Amendment to Senior Secured Convertible Promissory Notes, involving Scott Flanders, Chairman of the Board, was approved by independent directors.

Stakeholder Impact

• Shareholders: Potential negative impact due to increased debt costs (default rate on senior notes) and the risk of accelerated debt repayment if filing deadlines are missed, which could lead to financial distress.
• Creditors (Senior Lenders): Initially impacted by the default, but the waiver provides a temporary reprieve. However, the risk of non-payment remains if the company cannot cure the default.
• Creditors (Bed Bath & Beyond): The terms of their subordinated note have been amended, increasing the principal amount, but their position remains subordinate to senior debt.
• Management: Faces significant pressure to meet the October 1, 2026, filing deadline to avoid severe consequences.

Next Steps

• Fathom Holdings Inc. must file its Q1 2026 Form 10-Q by October 1, 2026, to avoid termination of the waiver and potential acceleration of senior debt.
• Within 14 days of the Amendment Closing Date (May 29, 2026), the company must deliver a blocked account control agreement and deposit the Additional Principal Amount into the blocked account.

Key Dates

Recommendation

The company is facing significant operational and compliance challenges, evidenced by the late filing and resulting debt renegotiations. While the waiver provides a temporary reprieve, the strict deadline and potential for accelerated debt repayment create substantial risk. The increased debt burden and potential for further financial distress warrant a cautious 'hold' stance until the company demonstrates consistent compliance and operational stability.

Keywords

promissory note, amended and restated note, subordinated debt, secured debt, debt financing, Fathom Holdings, Bed Bath & Beyond, SEC filing