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Related-Party Debt (Tables)

12 Months Ended

Dec. 31, 2023

Related Party Transactions [Abstract]

Schedule of Related-Party Promissory Notes

Our related-party debt is summarized below (in thousands):

			Balances as of December 31, 2023
			Maturity Year						Interest Rate						Principal Amount						Less: Unamortized Discounts						Total
Related-Party Nonconvertible Note:
$505 million December 2023 Promissory Note –    Tranche 1 (1), (2), (3)			2025						Term SOFR +8.0%						$	125,000					$	20,414					$	104,586
Related-Party Convertible Notes:
$300 million December 2021 Promissory Note (1), (2), (3)															$	300,000					$	26,091					$	273,909
$50 million December 2022 Promissory Note (1), (2), (3)															50,000						4,349						45,651
$30 million June 2023 Promissory Note (2), (3)															30,000						2,609						27,391
$505 million December 2023 Promissory Note Tranche 2			2025						Term SOFR +7.5%						380,000						33,049						346,951
$30 million March 2023 Promissory Note (2), (3)			2025						Term SOFR +8.0%						30,000						—						30,000
$200 million September 2023 Promissory Note (2), (3)			2026						Term SOFR +8.0%						200,000						—						200,000
Total related-party convertible notes															$	610,000					$	33,049					$	576,951

			Balances as of December 31, 2022
			Maturity Year						Interest Rate						Principal Amount						Accrued PIK Interest Added to Note						Less: Unamortized Discounts						Total
Related-Party Nonconvertible Notes:
$300 million December 2021    Promissory Note (1), (2), (3)			2023						Term SOFR +8.0%						$	300,000					$	—					$	35,822					$	264,178
$125 million August 2022    Promissory Note (1), (2), (3)			2023						Term SOFR +8.0%						125,000						—						7,039						117,961
$50 million December 2022    Promissory Note (1), (2), (3)			2023						Term SOFR +8.0%						50,000						—						238						49,762
Total related-party nonconvertible notes															$	475,000					$	—					$	43,099					$	431,901
Related-Party Convertible Notes:
Nant Capital 2015 Note Payable (1), (2)			2025						5.0%						$	55,226					$	9,320					$	5,188					$	59,358
Nant Capital 2020 Note Payable (1), (2)			2025						6.0%						50,000						7,039						4,068						52,971
Nant Capital 2021 Note Payable (1), (2)			2025						6.0%						40,000						—						2,580						37,420
NantMobile Note Payable (1), (2)			2025						3.0%						55,000						5,110						5,978						54,132
NCSC Note Payable (1), (2)			2025						5.0%						33,000						7,684						3,294						37,390
Total related-party convertible notes															$	233,226					$	29,153					$	21,108					$	241,271

The following table summarizes the Nant Capital promissory notes before the amendments on December 29, 2023 (principal amount in thousands):

Principal Amount

Maturity Date

Conversion Price

Interest Rate

Related-Party Nonconvertible Note:

$125 million August 2022 Promissory Note

$

125,000

12/31/2024

Term SOFR +8.0%

Related-Party Convertible Notes:

$300 million December 2021 Promissory Note

$

300,000

12/31/2024

Term SOFR +8.0%

$50 million December 2022 Promissory Note

50,000

12/31/2024

Term SOFR +8.0%

$30 million June 2023 Promissory Note

30,000

12/31/2024

Term SOFR +8.0%

$30 million March 2023 Promissory Note

30,000

12/31/2024

$2.2800

Term SOFR +8.0%

$200 million September 2023 Promissory Note

200,000

9/11/2026

$1.9350

Total related-party promissory notes    before amendments

$

735,000

The following table summarizes the Nant Capital promissory notes after the amendments on December 29, 2023 (principal amount in thousands):

Principal Amount

Maturity Date

Conversion Price

Interest Rate

Related-Party Nonconvertible Note:

$505 million December 2023 Promissory Note –    Tranche 1

$

125,000

12/31/2025

Term SOFR +8.0%

Related-Party Convertible Notes:

$300 million December 2021 Promissory Note

$

300,000

$50 million December 2022    Promissory Note

50,000

$30 million June 2023 Promissory Note

30,000

$505 million December 2023 Promissory Note –    Tranche 2

380,000

12/31/2025

$8.2690

Term SOFR +7.5%

Total $505 million December 2023 Promissory Note

505,000

$30 million March 2023 Promissory Note

30,000

12/31/2025

$2.2800

Term SOFR +8.0%

$200 million September 2023 Promissory Note

200,000

9/11/2026

$1.9350

Term SOFR +8.0%

Total related-party promissory notes    after amendments

$

735,000

The following table summarizes the interest expense for our related-party promissory notes during the year ended December 31, 2023 (in thousands):

						Year Ended December 31, 2023
						Interest Expense						Debt Discount Amortization
$300 million December 2021 Promissory Note (1)						$	39,653					$	27,967
$125 million August 2022 Promissory Note (1)						16,521						5,962
$50 million December 2022 Promissory Note (1)						6,609						478
$30 million March 2023 Promissory Note (1)						4,590						—
$30 million June 2023 Promissory Note						2,096						258
$200 million September 2023 Promissory Note						8,185						2,586
Related-Party Fixed-Rate Promissory Notes						8,799						5,145
Total						$	86,453					$	42,396

_______________

(1) Balances include the amortization of debt discount totaling $0.5 million recorded during the period from December 29, 2023 to December 31, 2023. The interest expense recorded during this period was $0.4 million.

Schedule of Estimated Future Contractual Obligations for Related-Party Notes Payable

The following table summarizes the estimated future contractual obligations for our related-party debt as of December 31, 2023 (in thousands):

			Principal Payments												Interest Payments (1)
			Convertible Notes						Nonconvertible Notes						Convertible Notes						Nonconvertible Notes						Total
2024			$	—					$	—					$	79,778					$	16,708					$	96,486
2025			410,000						125,000						79,556						16,663						631,219
2026			200,000						—						18,590						—						218,590
Total			$	610,000					$	125,000					$	177,924					$	33,371					$	946,295

_______________

(1) Interest payments on our promissory notes are calculated based on Term SOFR plus the contractual spread per the loan agreements. The weighted-average interest rate on our promissory notes as of December 31, 2023 was 13.09%.

Schedule of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis

Financial assets and liabilities measured at fair value on a recurring basis are summarized below (in thousands):

			Fair Value Measurements at December 31, 2023
			Total									Level 1						Level 2						Level 3
Assets at Fair Value:
Current:
Cash and cash equivalents			$	265,453								$	265,453					$	—					$	—
Equity securities			916									916						—						—
Foreign bonds			54									—						54						—
Mutual funds			39									39						—						—
Noncurrent:
Foreign bonds			891									—						891						—
Total assets measured at fair value			$	267,353								$	266,408					$	945					$	—
Liabilities at Fair Value:
Current:
Contingent consideration			$	(20)		(1)						$	—					$	—					$	(20)
Noncurrent:
Stock option purchase liability			(819)			(2)						—						—						(819)
Derivative liabilities			(35,333)			(3)						—						—						(35,333)
Warrant liabilities			(118,770)			(4)						—						—						(118,770)
Total liabilities measured at fair value			$	(154,942)								$	—					$	—					$	(154,942)

			Fair Value Measurements at December 31, 2022
			Total									Level 1						Level 2						Level 3
Assets at Fair Value:
Current:
Cash and cash equivalents			$	104,641		(5)						$	63,860					$	40,781					$	—
Equity securities			2,507									2,507						—						—
Mutual funds			36									36						—						—
Noncurrent:
Foreign bonds			840									—						840						—
Total assets measured at fair value			$	108,024								$	66,403					$	41,621					$	—
Liabilities at Fair Value:
Current:
Contingent consideration			$	(19)		(1)						$	—					$	—					$	(19)
Noncurrent:
Warrant liability			(21,636)			(4)						—						—						(21,636)
Total liabilities measured at fair value			$	(21,655)								$	—					$	—					$	(21,655)

_______________

(1) Contingent Consideration

Contingent consideration is recorded at estimated fair value and revalued each reporting period until the related contingency is resolved. The fair value measurement is based on inputs that are unobservable and significant to the overall fair value measurement (i.e., a Level 3 measurement within the fair value hierarchy) and are reviewed periodically by management. See Note 7, Commitments and Contingencies—Contingent Consideration Related to Business Combinations, for more information.

Changes in the carrying amount of contingent consideration were as follows (in thousands):

			Year Ended December 31,
			2023						2022						2021
Fair value, beginning of year			$	(19)					$	(409)					$	(972)
Consideration paid			—						339						419
Net (increase) decrease in fair value			(1)						51						144
Fair value, end of year			$	(20)					$	(19)					$	(409)

(2) Stock Option Purchase Liability

In connection with the RIPA, we entered into an SPOA pursuant to which Oberland has an option to purchase up to an additional $10.0 million of our common stock, at a price to be determined by reference to the 30-day trailing volume weighted-average price of our common stock calculated from the date of exercise. This stock purchase option was classified as a liability at its fair value upon issuance. The fair value was estimated using probability-weighted scenarios over the likelihood of this option being exercised. As of December 31, 2023, the stock purchase option was outstanding. The fair value of the stock purchase option was estimated at $0.8 million at issuance. Due to the proximity of the inception date of the SPOA to December 31, 2023, the change in fair value was immaterial. See Note 9, Revenue Interest Purchase Agreement, for more information.

(3) Derivative Liabilities

The debt incurred pursuant to the RIPA entered on December 29, 2023 contains embedded derivatives requiring bifurcation as a single compound derivative instrument. The company estimated the fair value of the derivative liability using a “with-and-without” method. The with-and-without methodology involves valuing the whole instrument on an as-is basis and then valuing the instrument without the individual embedded derivative. The difference between the entire instrument with the embedded derivative compared to the instrument without the embedded derivative is the fair value of the derivative liability, which is estimated at $34.5 million as of December 31, 2023. The estimated probability and timing of underlying events triggering the exercisability of the Put Option contained in the RIPA, forecasted cash flows and the discount rate are significant unobservable inputs used to determine the estimated fair value of the entire instrument with the embedded derivative. As of December 31, 2023, the discount rate used for valuation of the derivative liability was 12.1%. See Note 9, Revenue Interest Purchase Agreement, for more information.

In connection with the December 2023 debt extinguishment, the company identified an embedded derivative related to a contingently exercisable prepayment feature of the amended $505.0 million December 2023 promissory note, which allows the noteholder to request up to a $50.0 million prepayment and accrued interest upon occurrence of a specified transaction (defined in the promissory note). This embedded derivative is recorded as a derivative liability on the consolidated balance sheet and is measured at fair value. Changes in the fair value of the derivative liability are reported as change in fair value of derivative, on the consolidated statement of operations. The fair value of the derivative liability is determined at each period end using a with and without method, which assesses the likelihood and timing of a specified transaction that if triggered could result in a repayment. The fair value of the embedded derivative is estimated at $0.8 million as of December 31, 2023, and will be remeasured to fair value at each reporting date until the derivative is settled.

(4) Third-Party Warrant Liabilities

December 2022 Warrants

In connection with the December 12, 2022 registered direct offering of common stock, the company issued 9,090,909 warrants (December 2022 Warrants). The warrants were classified as a liability at their fair value upon issuance. As of December 31, 2023 and 2022, all warrants were outstanding. The estimated fair value of the warrants was computed using the Black-Scholes option pricing model with the following unobservable assumptions at the following dates:

			Year Ended December 31,
			2023						2022
Exercise price per share			$6.60						$6.60
Expected term			1.0 years						2.0 years
Expected average volatility			119.0		%				99.4		%
Expected dividend yield			—		%				—		%
Risk-free interest rate			4.7		%				4.4		%

February 2023 Warrants

In connection with the February 15, 2023 registered direct offering of common stock, the company issued 14,072,615 warrants. The warrants were classified as a liability at their fair value upon issuance. As of December 31, 2023, all warrants were outstanding. The estimated fair value of the warrants was computed using the Black-Scholes option pricing model with the following unobservable assumptions at the following dates:

			December 31, 2023						Issuance Date February 17, 2023
Exercise price per share			$3.2946						$4.2636
Expected term			2.6 years						2.0 years
Expected average volatility			107.3		%				97.0		%
Expected dividend yield			—		%				—		%
Risk-free interest rate			4.1		%				4.6		%

On July 25, 2023, the company reduced the exercise price of the outstanding February 2023 Warrants from $4.2636 per share to $3.2946 per share and extended the expiration date of the warrants until July 24, 2026. The effect of amending the terms of the warrants is reflected in a change in the fair value of warrant liability of $7.3 million.

July 2023 Warrants

In connection with the July 20, 2023 registered direct offering of common stock, the company issued 14,569,296 warrants (July 2023 Warrants). The warrants were classified as a liability at their fair value upon issuance. As of December 31, 2023, all warrants were outstanding. The estimated fair value of the warrants was computed using the Black-Scholes option pricing model with the following unobservable assumptions at the following dates:

			December 31, 2023						Issuance Date July 25, 2023
Exercise price per share			$3.2946						$3.2946
Expected term			2.6 years						3.0 years
Expected average volatility			107.3		%				121.0		%
Expected dividend yield			—		%				—		%
Risk-free interest rate			4.1		%				4.5		%

The change in the carrying amount of the warrant liabilities was as follows (in thousands):

			Total						December 2022 Warrants						February 2023 Warrants						July 2023 Warrants
Fair value, December 31, 2022						$	21,636											$	21,636								$	—					$	—
Fair value at issuance			49,534						—						23,698						25,836
Change in fair value			47,600						(4,545)						26,260						25,885
Fair value, December 31, 2023			$	118,770					$	17,091					$	49,958					$	51,721

			December 2022 Warrants
Fair value at issuance, December 12, 2022			$	35,096
Change in fair value			(13,460)
Fair value, December 31, 2022			$	21,636

(5) As of December 31, 2022, the Level 2 measurements include $32.0 million in U.S. government agency securities and $8.8 million in corporate debt securities with original maturities of less than 90 days.

The estimated fair value of the convertible note was computed using the binomial lattice model with the following observable assumptions before it was modified on December 29, 2023. After the debt extinguishment, the note is accounted for under the amortized cost basis.

Expected market yield			23.5		%
Expected volatility			138.0		%
Risk-free rate			5.2		%

The change in the carrying value of this note was as follows (in thousands):

Fair value at issuance date, March 31, 2023			$	29,850
Change in fair value			36,203
Gain on debt extinguishment with entities under common control			(36,053)
Carrying value, December 29, 2023			$	30,000

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Schedule of related party notes payable.

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Tabular disclosure of contractual obligation by timing of payment due. Includes, but is not limited to, long-term debt obligation, lease obligation, and purchase obligation.

+ References

Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 235
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 3
-Subparagraph (S-X 210.12-04)
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+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 820
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (a)
-Publisher FASB
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-Name Accounting Standards Codification
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