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Debt
 9 Months Ended
Sep. 30, 2024
Debt  
Debt

(7) Debt

Convertible Note

On August 7, 2023, the Company entered into an investment agreement with Oakstone Ventures, Inc. (“Oakstone”), an affiliate of Capital One Services, LLC (“Capital One”), relating to the sale and issuance to Oakstone of an 8% Senior Secured Convertible Note due 2028 in a principal amount of $25.0 million (the “Note”). On September 29, 2023, the Company issued the Note. The total net proceeds from this offering were $23.1 million, after deducting $1.9 million of debt issuance costs.

The Note bears interest at a fixed rate of 8% per annum. Interest on the Note is payable quarterly on the last business day of each calendar quarter following the issuance of the Note and the Company has elected to pay interest in kind by increasing the outstanding principal amount of the Note by the amount of interest payable on such interest payment date. As of September 30, 2024 and December 31, 2023, the outstanding amount of the Note was $27.1 million and $25.5 million, respectively.

The current conversion price of the Note is $30 per share and on or after September 29, 2026, the Note will be redeemable (subject to certain terms and conditions) by the Company in whole (but not in part) at a redemption price equal to the fair market value of the Class A Common Stock issuable upon conversion of the then-outstanding principal amount of the Note. The Note also includes a minimum liquidity threshold of $10 million.

The Company has elected to carry the Note at fair value, with changes in its value recognized as fair value gains or losses on the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). A fair value loss of $0.1 million and a fair value gain of $3.8 million for the three and nine months ended September 30, 2024, respectively, were recorded in loss (gain) on fair value instruments within the Company’s Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

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Loan Facility

In October 2020, the Company obtained a revolving line of credit that was scheduled to mature in October 2023 and was terminated in March 2023. The facility had a limit of $14 million. There was no interest expense related to the facility for the three and nine months ended September 30, 2023.

Interest, Net

The Company incurred net interest expense of $0.5 million and $1.2 million for the three and nine months ended September 30, 2024, respectively, and $1.7 million and $1.2 million for the three and nine months ended September 30, 2023, respectively, which has been recognized to interest, net within the Company’s Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). The Company incurred interest expense on the Note of $0.6 million and $1.6 million during the three and nine months ended September 30, 2024, respectively, and $2.0 million during both the three and nine months ended September 30, 2023. The interest expense was offset by interest income from the Company’s banking relationship of $0.1 million and $0.4 million for the three and nine months ended September 30, 2024, respectively, and $0.3 million and $0.8 million for the three and nine months ended September 30, 2023, respectively.