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Notes Payable
 9 Months Ended
Sep. 30, 2023
Debt Disclosure [Abstract]  
Notes Payable

Note 10. Notes Payable

 

The SVB Loan Facility

 

On June 18, 2021, the Company entered into a $10 million loan facility (the “SVB Loan Facility”) with Silicon Valley Bank (“SVB”). The Company immediately used $6 million from the SVB Loan Facility to retire all outstanding indebtedness with Horizon Technology Finance Corporation as further discussed below. Concurrently with this transaction, the Company used $6.0 million of other available funds to establish a restricted cash account which served as security for the SVB Loan Facility.

 

The SVB Loan Facility is in the form of money market secured indebtedness bearing interest at a calculated WSJ Prime-based variable rate. A final payment equal to 3% of the total $10 million commitment amount is due upon maturity or prepayment of the SVB Loan Facility. There was no facility commitment fee and no stock or warrants were issued to SVB. Payments under the loan agreement are interest only for the first 24 months after loan closing, followed by a 24-month amortization period of principal and interest through the scheduled maturity date.

 

In connection with the SVB Loan Facility, the Company incurred financing fees and expenses totaling $243,370 which are recorded and classified as debt discount and are being amortized as interest expense using the effective interest method over the life of the loan. Also, in connection with the SVB Loan Facility, the Company is required to pay an end-of-term fee equal to 3.0% of the original loan amount at time of maturity. Therefore, these amounts totaling $300,000 are being amortized as interest expense using the effective interest method over the life of the loan. During the three-month periods ended September 30, 2023 and 2022, the Company incurred interest expense of $0 and $82,083, respectively, and amortized $0 and $44,942, respectively, as interest expense for debt discounts and end-of-term fee in connection with the SVB Financing Facility. During the nine-month periods ended September 30, 2023 and 2022, the Company incurred interest expense of $141,958 and $191,167, respectively, and amortized $55,122 and $135,572, respectively, as interest expense for debt discounts and end-of-term fee in connection with the SVB Financing Facility.

 

 

On April 21, 2023, the Company repaid the outstanding principal balance, an early termination fee and the end-of-term charges in full satisfaction of the SVB Loan Facility. The following is a schedule of the amounts paid to SVB on April 21, 2023:

 

      
Principal balance at April 21, 2023  $6,000,000 
Early termination fee   120,000 
End-of-term charges   300,000 
Total  $6,420,000 

 

During the nine months ended September 30, 2023, the Company recorded a loss of $329,158 on the early termination of the SVB Loan Facility which represented the early termination fee and the end of the term fees, net of previously amortized interest expense totaling $334,212 on the date of its payoff.