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Debt
 12 Months Ended
Dec. 31, 2022
Debt Disclosure [Abstract]  
Debt

Note 8 – Debt

Our long-term debt primarily consists of notes payable associated with our Perceptive Term Loan which is described in further detail below. Long-term notes payable were as follows (in thousands):

 

 

As of December 31,

 

 

 

2022

 

 

2021

 

Perceptive Term Loan

 

$

30,000

 

 

$

—

 

2021 Term Loan

 

 

—

 

 

 

10,000

 

Other

 

 

127

 

 

 

75

 

Unamortized debt discount and debt issuance costs

 

 

(5,074

)

 

 

(63

)

 

 

 

25,053

 

 

 

10,012

 

Less: current maturities

 

 

49

 

 

 

19

 

Long-term notes payable

 

$

25,004

 

 

$

9,993

 

Perceptive Term Loan Facility

On November 16, 2022 (the Closing Date), the Company entered into a Credit Agreement and Guaranty (the Credit Agreement) with Perceptive Credit Holdings IV, LP as the lender and administrative agent (the Lender). The Credit Agreement provides for a senior secured delayed draw term loan facility with Perceptive Advisors LLC (Perceptive), in an aggregate principal amount of up to $50.0 million (the Perceptive Term Loan Facility). The initial funding of the Perceptive Term Loan Facility was subject to a capital raise of at least $30.0 million in gross proceeds from an equity offering of the Company's common stock. On November 21, 2022 (the Funding Date), the Company raised approximately $40.6 million in gross proceeds from the sale of common stock (the Public Offering and November 2022 Subscription Agreements, together, "the Equity Offerings", see Note 10 - Equity). The Tranche A Loan, in an aggregate amount of up to $30.0 million (the Tranche A Loan), was funded under the Perceptive Term Loan Facility substantially and concurrently with the closing of the Equity Offerings on the Funding Date. In addition to the Tranche A Loan, the Perceptive Term Loan Facility includes an additional Tranche B Loan, in an aggregate amount of up to $10.0 million, and an additional Tranche C Loan, in an aggregate amount of up to $10.0 million, which will be accessible by the Company so long as the Company satisfies certain customary conditions precedent, including revenue milestones. The Tranche B and C loans have loan commitments dates through December 31, 2023 and September 30, 2024, respectively. The Perceptive Term Loan Facility has a maturity date of November 21, 2027 (the Maturity Date)

and provides for an interest-only period during the term of the loan with principal due at the Maturity Date. The Company's net proceeds from the Tranche A Loan were approximately $27.9 million, after deducting debt issuance costs and expenses.

Interest Rate

The Perceptive Term Loan Facility will accrue interest at an annual rate equal to the greater of (a) forward-looking one-month term SOFR as posted by CME Group Inc. and (b) 3.0% per annum, plus an applicable margin of 9.0%. As of December 31, 2022, the stated interest rate was approximately 13.3%.

Amortization and Prepayment

On the Maturity Date, the Company is required to pay the Lender the aggregate outstanding principal amount underlying the Loan and any accrued and unpaid interest thereon. Prior to the Maturity Date, there will be no scheduled principal payments under the Perceptive Term Loan Facility. The Perceptive Term Loan Facility may be prepaid at any time, subject to a prepayment premium equal to 2% to 10% of the aggregate outstanding principal amount being prepaid, depending on the date of prepayment.

Security Instruments and Warrants

Pursuant to a Security Agreement, dated as of the Funding Date (the Security Agreement), between the Company and the Lender, substantially all of the Company’s obligations under the Credit Agreement are secured by a first lien perfected security interest on all of the Company’s assets, subject to customary exceptions.

As consideration for the Credit Agreement, the Company has issued, on the Funding Date, the Perceptive Warrant of up to 5,000,000 shares of the Company's common stock, including the Initial Warrants which are equity classified at a per share exercise price equal to $1.0648 which is equal to the lower of (A) the 10-day volume weighted average price (VWAP) of the Company’s common stock, on the business day immediately prior to the Closing Date of the Tranche A Loan or (B) the public offering price per share of Common Stock of $1.15 (see Note 10 - Equity). In addition to the Initial Warrants, the Additional Warrants will each become exercisable into 1,000,000 shares of common stock concurrently with the borrowing date of the Tranche B and C Loans, respectively. The per share exercise price for the Additional Warrants will be equal to the lower of (A) the Initial Warrant exercise price or (B) the 10-day VWAP ending on the business day immediately preceding the funding date of the Tranche B Loan or the Tranche C loan, respectively. Each warrant will be exercisable, in whole or in part, until the 10th anniversary of the applicable date of issuance. If the Tranche B or C loans are not drawn by the respective loan commitment dates, the associated Additional Warrants expire and will not become exercisable. The Company accounts for the Additional Warrants as liabilities as the Additional Warrants do not meet the criteria for equity treatment (see Note 4 - Fair Value).

Representations, Warranties, Covenants, and Events of Default

The Credit Agreement contains certain representations and warranties, affirmative covenants, negative covenants, financial covenants, and conditions that are customarily required for similar financings. The affirmative covenants, among other things, require the Company to undertake various reporting and notice requirements, maintain insurance and maintain in full force and effect all Regulatory Approvals, Material Agreements, Material Intellectual Property (each as defined in the Credit Agreement) and other rights, interests or assets (whether tangible or intangible) reasonably necessary for the operations of the Company’s business. The negative covenants restrict or limit the ability of the Company to, among other things and subject to certain exceptions contained in the Credit Agreement, incur new indebtedness; create liens on assets; engage in certain fundamental corporate changes, such as mergers or acquisitions, or changes to the Company’s business activities; make certain Investments or Restricted Payments (each as defined in the Credit Agreement); change its fiscal year; pay dividends; repay other certain indebtedness; engage in certain affiliate transactions; or enter into, amend or terminate any other agreements that has the impact of restricting the Company’s ability to make loan repayments under the Credit Agreement. In addition, the Company must (i) at all times prior to the Maturity Date maintain a minimum cash balance of $2.5 million; and (ii) as of the last day of each fiscal quarter commencing on the fiscal quarter ending March 31, 2023, receive revenue in amounts agreed to between the Company and Perceptive from time to time.

The Credit Agreement also contains certain customary Events of Default which include, among others, non-payment of principal, interest, or fees, violation of covenants, inaccuracy of representations and warranties, bankruptcy and insolvency events, material judgments, cross- defaults to material contracts, certain regulatory-related events and events constituting a change of control. As of December 31, 2022, the Company was in compliance with all restrictive and financial covenants associated with its borrowings. The occurrence of an Event of Default could result in, among other things, the declaration that all outstanding principal and interest under the Perceptive Term Loan Facility are immediately due and payable in whole or in part.

The Initial Warrants and Additional Warrants were valued at $2.9 million and $0.1 million, respectively, using the Black-Scholes option-pricing model, estimated settlement probabilities and estimated exercise prices. As a result of the fees paid to Perceptive and the value of the Perceptive Warrant, the Company recognized a discount on the Perceptive Term Loan in the amount of $5.2 million. The Company recorded the debt discount as a reduction to the principal amount of the debt and is amortized as interest expense over the life of the debt.

Securities Purchase Agreement

On May 9, 2022 (the First Closing Date), the Company entered into a securities purchase agreement (the SPA) with Streeterville Capital, LLC (Streeterville), pursuant to which, among other things, Streeterville: (i) purchased a secured promissory note (Promissory Note One) in the aggregate principal amount totaling $16.0 million in exchange for $15.0 million less certain expenses and (ii) agreed to purchase another secured promissory note at the Company’s election (Promissory Note Two and, together with Promissory Note One, the Promissory Notes), subject to certain conditions precedent in aggregate principal amount totaling $10.3 million in exchange for $10.0 million in cash proceeds. Each of the Promissory Notes, at the Company's option, could be settled in cash or shares of common stock of the Company, upon the terms and subject to the limitations and conditions set forth in the Promissory Notes. The Company's net proceeds from the issuance of Promissory Note One were approximately $12.8 million, after deducting debt issuance costs and original issue discount (OID).

The Promissory Notes had a stated interest rate of 6% per annum. The maturity date of each Promissory Note was 24 months from the issuance date of such Note. Promissory Note One was issued with an OID of $1.0 million while Promissory Note Two, if issued, would have been subject to an OID of $0.3 million subject to certain contingencies which could increase the OID by an additional $0.5 million. The Promissory Notes were eligible for early payment for cash, at the Company’s election, subject to a prepayment premium of 10% of the outstanding principal balance. During the year ended December 31, 2022, the Company recorded $1.8 million for accrued interest, amortization of the OID and debt issuance costs to interest expense in the accompanying statements of operations.

Substantially and concurrently with the completion of the Equity Offerings, the Company fully repaid all outstanding principal, accrued and unpaid interest, and prepayment and other fees due under the existing SPA with Streeterville in the amount of $18.2 million. As a result of the extinguishment of Promissory Note One, the Company recorded a loss on debt extinguishment of $3.6 million during the three months ended December 31, 2022, associated with the prepayment premium and with the write-off of unamortized debt issuance costs and OID.

2021 Term Loan

On March 19, 2021 (Effective Date), the Company entered into a Loan and Security Agreement (the 2021 Term Loan) by and between Silicon Valley Bank, a California corporation (SVB) and the Company, as borrower, whereby subject to the terms and conditions of the 2021 Term Loan, SVB advanced to the Company an original principal amount of $30 million.

The 2021 Term Loan provided for an “interest-only” period from the Effective Date through February 28, 2023, with interest due and payable monthly on the first calendar day of each month. However, the Company achieved a revenue milestone of at least $65 million on a trailing twelve-month basis during the three months ended March 31, 2021 which automatically extended the interest-only period through February 28, 2024. Beginning on the first calendar day of the month following the end of the interest-only period, the 2021 Term Loan was payable in (i) consecutive equal installments of principal through March 1, 2026, plus (ii) monthly payments of accrued interest. The principal amount outstanding under the 2021 Term Loan accrued interest at a floating per annum rate equal to the greater of (i) 2.00% above the prime rate, or (ii) 5.25%, which interest, in each case, was payable monthly. Changes to the interest rate applicable to the 2021 Term Loan based on changes to the prime rate were effective on the effective date of any change to the prime rate. The Company’s final payment to SVB included a payment of $2.7 million and was amortized as interest expense over the term of the 2021 Term Loan.

During the year ended December 31, 2022 and through the Closing Date of the Perceptive Term Loan Facility, the Company repaid $7.0 million in outstanding principal on the 2021 Term Loan. Substantially and concurrently with the completion of the Equity Offerings, the Company fully repaid all outstanding principal, accrued and unpaid interest, and other fees due under the existing 2021 Term Loan with SVB in the amount of $5.7 million, which included $3.0 million in remaining outstanding principal. As a result of the extinguishment of the 2021 Term Loan, the Company recorded a loss on debt extinguishment of $0.4 million during the three months ended December 31, 2022, associated with the final payment and the write-off of unamortized debt issuance costs.

Scheduled principal repayments (maturities) of long-term obligations were as follows (in thousands):

 

 

As of
December 31, 2022

 

2023

 

$

49

 

2024

 

 

50

 

2025

 

 

21

 

2026

 

 

7

 

2027

 

 

30,000

 

2028 and thereafter

 

 

—

 

Total

 

$

30,127