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Convertible Promissory Notes
12 Months Ended
Dec. 31, 2021
Debt Disclosure [Abstract]  
Convertible Promissory Notes

Note 15 — Convertible Promissory Notes

 

 On January 11, 2021, the Company’s Board of Directors and shareholders approved the amendment to the conversion formula of the Convertible Promissory Notes (the “Notes”) issued by the Company on dates between August 2020 and November 2020. Pursuant to the amendment, immediately prior to the consummation of a public transaction, the outstanding principal amount of the Notes, together with all accrued and unpaid interest, shall convert into a number of fully paid and non-assessable shares of common stock, at a conversion price of $7.72.

 

While the original conversion feature was bifurcated from the host instrument, the Company determined that the amended conversion feature would not require bifurcation. Since the accounting for the conversion feature changed because of the amendment, the Company applied extinguishment accounting pursuant to its accounting policy.

 

During the year ended December 31, 2020, the Company recognized an aggregate loss on extinguishment of $5.6 million for the difference between the net carrying amount of the extinguished debt of $10.0 million (inclusive of $11.8 million of principal, $4.2 million of debt discount and $2.4 million of derivative liabilities) and the reacquisition price of the debt in the same aggregate principal amount of $11.8 million, plus the fair value of the new notes’ conversion features of an aggregate of $3.9 million.

 

During the year ended December 31, 2021, the Company recognized a gain on extinguishment of $2.7 million in connection with the derecognition of the net carrying amount of the extinguished debt of $19.7 million (inclusive of $13.1 million of principal, $7.1 million of derivative liabilities, less $587 thousand of debt discount) and the recognition of the $17.0 million fair value of the new convertible notes (including the same principal amount of $13.1 million plus the $3.9 million fair value of the beneficial conversion feature).

 

On February 1, 2021, in conjunction with the closing of the Company’s IPO, the Notes in the aggregate principal amount of $13.1 million were converted into 1,697,075 shares of common stock at the election of the Company at a conversion price of $7.72 per share.