Debt Obligations

3 Months Ended

Mar. 31, 2022

Debt Disclosure [Abstract]

Debt Obligations

Note 8. Debt Obligations

Current portion of long-term debt consisted of the following as of the dates indicated:

	March 31,		December 31,
	2022		2021
SVB Term Loan	$	5,000,000	$	5,000,000
2021 Insurance Note		—		167,586
	$	5,000,000	$	5,167,586

Long-term debt, net of current portion, discount and debt issuance costs, consisted of the following as of the dates indicated:

	March 31,		December 31,
	2022		2021
SVB Term Loan, net of discount and debt issuance costs	$	4,046,356	$	5,178,629

SVB Term Loan

On June 24, 2020 (the “Closing Date”), the Company entered into the SVB Term Loan, by and among the Company and SVB, as lender, which provides a secured term loan in the principal amount of $10.0 million. The proceeds from the SVB Term Loan were fully funded on June 25, 2020.

The SVB Term Loan bears interest at a floating rate equal to the greater of 2.50% above the Prime Rate (as defined in the Loan Agreement) and 5.75%. Interest on the SVB Term Loan is due and payable monthly in arrears. The SVB Term Loan originally required interest-only payments through June 30, 2021. As a result of the Company’s achievement of an equity milestone defined in the Loan Agreement during the quarter ended June 30, 2021, the interest-only period was extended for six months through December 31, 2021. The extended interest-only period is followed by equal monthly payments of principal and interest through the maturity date of December 1, 2023.

The Company’s obligations under the Loan Agreement are secured by a security interest in substantially all of its assets, excluding intellectual property (which is subject to a negative pledge), and the Company’s future subsidiaries, if any, may be required to become co-borrowers or guarantors under the Loan Agreement. In addition, the Company must comply with a financial covenant in the SVB Term Loan requiring the Company to maintain unrestricted cash of not less than the greater of (i) $12.5 million and (ii) an amount equal to six times the amount of the Company’s average monthly Cash Burn (as defined in the Loan Agreement) over the trailing three months.

In connection with the Loan Agreement, the Company granted to SVB a warrant to purchase up to 42,894 shares of the Company’s common stock at a purchase price of $11.6565 per share. The warrant will expire on June 24, 2030 and may be exercised for cash or at the election of the holder on a cashless, net exercise basis. The fair value of the warrant on the date of issuance was approximately $0.4 million, determined using the Black-Scholes option-pricing model, and was recorded as a discount to the SVB Term Loan, with a corresponding credit to additional paid in capital since the warrant met the requirements to be classified as equity.

The Company included $0.5 million and $0.6 million of debt discount associated with the SVB Term Loan, resulting from fees and debt issuance costs, inclusive of the fair value of warrants issued, in long-term debt, net of current portion, discount and debt issuance costs in the accompanying condensed consolidated balance sheets as of March 31, 2022 and December 31, 2021, respectively. Amortization of the debt discount associated with the SVB Term Loan was approximately $0.1 million for both the three months ended March 31, 2022 and 2021, and was included in interest expense in the accompanying condensed consolidated statements of operations.

The remaining principal repayments due under the SVB Term Loan as of March 31, 2022 are as follows for each fiscal year:

2022	$	3,750,000
2023		5,000,000
Total SVB Term Loan payments		8,750,000
Less discount and deferred financing costs		(503,644	)
Plus final fee premium		800,000
Total SVB Term Loan, net	$	9,046,356

Insurance Note

On May 5, 2021, the Company entered into a new commercial financing agreement to extend the payment period related to its director and officer insurance policy (the “2021 Insurance Note”). The 2021 Insurance Note required a down payment to be made upon signing the agreement equal to approximately $0.4 million. The remaining unpaid premium balance of approximately $0.7 million has been financed at an annual rate of 3.57% and is to be repaid in nine equal monthly payments of principal and interest beginning in June 2021. The 2021 Insurance Note contains customary events of default relating to, among other things, payment defaults and breaches of representations, warranties or terms of the 2021 Insurance Note documents, and may be prepaid by the Company at any time prior to maturity with no prepayment penalties.