XML 32 R22.htm IDEA: XBRL DOCUMENT v3.22.1
Debt
 3 Months Ended
Mar. 31, 2022
Debt Disclosure [Abstract]  
Debt

Note 15 – Debt

 

The Company’s debt consisted of:

 

   March 31,
2022		   December 31,
2021		 
         
Note payable – SPA Note  $65,000   $
—
 
PPP Loan   794    804 
Other notes payable (1)   1,487    297 
Total debt   67,281    1,101 
Less: unamortized debt discount   (13,157)   
—
 
Total debt, net of debt discount   54,124    1,101 
Less: current portion, net of current unamortized debt discount   (2,970)   (1,089)
Long-term debt  $51,154   $12 

 

(1)Other notes payable relates to one-year insurance premium that was financed over nine-months.

 

Note Payable

 

Securities Purchase Agreement

 

On March 14, 2022, the Company entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with an accredited investor (the “Investor”), pursuant to which the Company agreed to issue and sell to the Investor, in a private placement transaction, in exchange for the payment by the Investor of $65 million, less applicable expenses, as set forth in the Securities Purchase Agreement, (i) a SPA Note in an aggregate principal amount of $65 million, and (ii) a warrant (the “SPA Warrant”) to purchase up to an aggregate of 6,881,108 shares of Common Stock.

 

The SPA Note is a senior secured obligation of the Company and ranks senior to all indebtedness of the Company. The Company will be required to make amortization payments equal to 4.0% of the original principal amount of the SPA Note on the first day of each calendar month starting on February 1, 2023 and extending through the maturity date of March 1, 2026 (the “Maturity Date”), at which time all remaining outstanding principal and accrued but unpaid interest will be due. The SPA Note has a stated interest rate of 6.75% per year, and the Company is required to pay interest on March 1, June 1, September 1, and December 1 of each calendar year through the Maturity Date. Following the one-year anniversary of the SPA Note’s issuance, the Company may, in lieu of paying interest in cash, pay such interest in kind, in which case interest on the SPA Note will be calculated at the rate of 8.75% per year and will be added to the principal amount of the SPA Note.

 

At any time following the one-year anniversary of the SPA Note’s issuance, the Company may prepay all (but not less than all) of the SPA Note by redemption at a price equal to 106.75% of the then-outstanding principal amount under the SPA Note, plus accrued but unpaid interest. The Investor will also have the option of requiring the Company to redeem the SPA Note if the Company undergoes a fundamental change at a price equal to 107% of the then-outstanding principal amount under the SPA Note, plus any accrued interest.

 

The Securities Purchase Agreement provides for up to two additional closings subject to certain conditions set forth in the Securities Purchase Agreement and on substantially the same terms as the initial closing. Each subsequent closing would result in the issuance of a senior secured note with an original principal amount of $35.0 million and warrants to purchase shares of Common Stock for up to 65% of such principal amount divided by the closing price of Common Stock on the trading day immediately prior to such subsequent closing.

 

The SPA Note imposes certain customary affirmative and negative covenants upon the Company, as well as covenants that (i) restrict the Company and its subsidiaries from incurring any additional indebtedness or suffering any liens, subject to specified exceptions, (ii) restrict the ability of the Company and its subsidiaries from making certain investments, subject to specified exceptions, (iii) restrict the declaration of any dividends or other distributions, subject to specified exceptions, (iv) require the Company to maintain specified earnings and adjusted EBITDA targets, and (v) require the Company to maintain minimum amounts of cash on hand. If an event of default under the SPA Note occurs, the Investor can elect to redeem the SPA Note for cash equal to 115% of the then-outstanding principal amount of the SPA Note (or such lesser principal amount accelerated by the Investor), plus accrued and unpaid interest, including default interest, which accrues at a rate per year equal to 15% from the date of a default or event of default.

 

Until the date the SPA Note is fully repaid, the Investor has, subject to certain exceptions, the right to participate for up to 30% of any debt, Preferred Stock or equity-linked financing of the Company or its subsidiaries.

 

Each SPA Warrant issued in the initial closing has an exercise price of $6.75 per share, subject to adjustment for stock splits, reverse stock splits, stock dividends and similar transactions, is immediately exercisable, has a term of five and one-half years from the date of issuance and is exercisable on a cash basis, unless there is not an effective registration statement covering the resale of the shares issuable upon exercise of the SPA Warrant (the “SPA Warrant Shares”), in which case the SPA Warrant is also exercisable on a cashless exercise basis at the Investor’s election. The Securities Purchase Agreement requires the Company to file resale registration statements with respect to the SPA Warrant Shares as soon as practicable and in any event within 45 days following the initial closing and any subsequent closings.

 

The SPA Warrant provides that in no event will the number of shares of Common Stock issued upon exercise of the SPA Warrant result in the Investor’s beneficial ownership exceeding 4.99% of the Company’s shares outstanding at the time of exercise (which percentage may be decreased or increased by the Investor, but to no greater than 9.99%, and provided that any increase above 4.99% will not be effective until the sixty-first day after notice of such request by the Investor to increase its beneficial ownership limit has been delivered to the Company).

 

The Securities Purchase Agreement also contains customary representations and warranties of the Company and the Investor. There is no material relationship between the Company or its affiliates and the Investor other than in respect of the Securities Purchase Agreement, the SPA Note and the SPA Warrant.

 

The following table provides a breakdown of the note payable balances as of March 31, 2022:

 

(In thousands)  Balance at
January 1,
2022		   Additions   Payments   Amortization
of Debt
Discount		   Balance at
March 31,
2022		 
Direct issuance costs  $
—
    2,669    
—
    (20)  $2,649 
                          
Accrued interest expense  $
—
    (98)   
—
    
—
   $(98)
                          
Principal  $
—
   $65,000   $
—
   $
—
   $65,000 
Notes payable, discount   
—
    (13,258)   
—
    (101)   (13,157)
Net carrying amount  $
—
   $51,742   $
—
   $(101)  $51,843 

 

The following table summarizes short-term and long-term portion of the SPA Note as of March 31, 2022:

 

(In thousands)  Short-Term   Long-Term   Notes
payable, net		 
             
Direct issuance costs  $833   $1,816   $2,649 
                
Principal  $5,200   $59,800   $65,000 
Unamortized discount   (4,511)   (8,646)   (13,157)
Net carrying amount  $689   $51,154   $51,843 

 

As of March 31, 2022, future minimum payments were as follows:

 

Years ending December 31 (In thousands),     
      
Remaining 2022   $
—
 
2023    28,600 
2024    31,200 
2025    5,200 
Total future payments   $65,000 

 

Paycheck Protection Program Loan

 

Paycheck Protection Program Loans under the Coronavirus Aid, Relief, and Economic Security Act

 

In May 2020, the Company entered into a PPP Loan with Bank of America pursuant to the PPP under the CARES Act administered by the SBA.

 

The Company received total proceeds of approximately $779 thousand from the unsecured PPP Loan, which is scheduled to mature on May 7, 2022. Subject to certain conditions, the PPP Loan may be forgiven in whole or in part by applying for forgiveness pursuant to the CARES Act and the PPP. The Company’s submission to have the remaining $779 thousand PPP Loan forgiven is currently being reviewed by the SBA. If the remaining principal amount from the $779 thousand PPP Loan is not forgiven in full, the Company would be obligated to repay any principal amount not forgiven and interest accrued thereon. As of March 31, 2022 and December 31, 2021, all of our PPP Loan balances were reported as current portion of long-term debt in the accompanying consolidated balance sheets.

 

PurePressure SBA Debt

 

As part of the acquisition of PurePressure, $159 thousand of debt remained outstanding from a standard SBA loan as of December 31, 2021. This debt has subsequently been paid as a part of the PurePressure acquisition.