Convertible Promissory Notes and Convertible Promissory Notes, Related Parties

12 Months Ended

Dec. 31, 2022

Convertible Promissory Notes and Convertible Promissory Notes, Related Parties [Abstract]

Convertible Promissory Notes and Convertible Promissory Notes, Related Parties

11.          Convertible Promissory Notes and Convertible Promissory Notes, Related Parties

	December 31, 2022
(In thousands, except conversion price)	Conversion Price		Principal		Debt Discount			Conversion Option		Carrying Value
Acquisition convertible promissory note, in default	$	0.10	$	4,000	$	-		$	-	$	4,000
Convertible promissory note, related party, in default	$	0.10		1,373		-			-		1,373
2022 Convertible notes payable	$	0.04		13,660		(2,532	)		1,585		12,713
2022 Convertible notes payable, related parties	$	0.04		6,515		(1,234	)		755		6,036
Total Convertible promissory notes			$	25,548	$	(3,766	)	$	2,340	$	24,122

	December 31, 2021
(In thousands, except conversion price)	Conversion Price		Principal		Debt Discount			Conversion Option		Carrying Value
2021 Convertible promissory notes payable	$	0.10	$	2,446	$	(1,100	)	$	6,255	$	7,601
Acquisition convertible promissory note, in default	$	0.10		4,000		-			-		4,000
Convertible promissory note payable, related parties, in default	$	0.10		1,596		-			-		1,596
Total Convertible Promissory Notes			$	8,042	$	(1,100	)	$	6,255	$	13,197

2022 Convertible Notes Payable and 2022 Convertible Notes Payable, Related Parties - In August 2022 and November 2022, the Company entered into a Securities Purchase Agreements (the “Purchase Agreements”), for the sale in a private placement of (i) Future Advance Convertible Promissory Notes (the “Notes”) in an aggregate principal amount of $16.2 million in August and $4.0 million in November, (ii) Common Stock Purchase Warrants to purchase an additional 504.4 million shares of common stock with an exercise price of $0.067 per share and (iii) Common Stock Purchase Warrants to purchase an additional 504.4 million shares of common stock with an exercise price of $0.04 per share. The Company paid issuance costs totaling approximately $1.4 million.  Interest expense for the year ended December 31, 2022, totaled $4.4 million, $1.2 million in contractual interest expense and $3.2 million in amortization of debt discount and issuance costs.

Pursuant to the Notes, the Company promised to pay in cash and/or in shares of common stock, at a conversion price of $0.04 (the “Conversion Price”), the principal amount and interest at a rate of 15% per annum on any outstanding principal. The Conversion Price of the Notes is subject to adjustment, including if the Company issues or sells shares of common stock for a price per share less than the Conversion Price of the Notes or if the Company lists its shares of common stock on The Nasdaq Capital Market and the average volume weighted average price of such common stock for the five trading days preceding such listing is less than $0.04 per share; provided, however, that the Conversion Price shall never by less than $0.01. The Notes contain customary events of default and covenants, including limitations on incurrences of indebtedness and liens.  In addition, pursuant to the Notes, the Company agreed to reduce its outstanding shares via a reverse stock split to provide the number of authorized and unissued shares of common stock sufficient to permit the conversion of these Notes on or before December 31, 2022. However, the Company obtained a waiver of this requirement through December 31, 2023 from all holders of the Notes and amended its Articles of Incorporation to increase its number of authorized shares of common stock from 800,000,000 to 2,500,000,000.

Acquisition Convertible promissory notes payable - In August 2020, the Company entered into an asset purchase agreement with Celularity to acquire Celularity’s UltraMIST assets. A portion of the aggregate consideration of $24 million paid for the assets included the issuance of a promissory note to Celularity in the principal amount of $4 million (the “Seller Note”). The Seller Note matured on August 6, 2021, and was not repaid. The Company’s failure to pay the outstanding principal balance when due constituted an event of default under the terms of the Seller Note and, accordingly, it began accruing additional interest of 5.0% in addition to the 12.0% initial rate, as of the date of the default. As of December 31, 2022, and 2021, the Seller Notes had outstanding accrued interest of $1.5 million and $761 thousand, respectively.

The Company evaluated embedded conversion features within the convertible promissory note and determined that the conversion feature does not require to be bifurcated. Upon adoption of ASC 2020-6 effective January 1, 2021, the convertible promissory note is accounted for as a single liability due to the elimination of the beneficial conversion feature accounting model.

Convertible promissory notes payable, related party - In August 2020, the Company issued a convertible promissory note payable in the amount of $1.4 million. The note matured on August 6, 2021, and was not repaid and is currently in default. As of December 31, 2022, and 2021, the note had outstanding accrued interest of $444 thousand and $241 thousand, respectively.

2021 Convertible Promissory Notes Payable – Previously, the Company entered into a Securities Purchase Agreement (the “2021 Purchase Agreement”) for the sale by the Company in a private placement (the “2021 Private Placement”) of (i) the Company’s future advance convertible promissory note in an aggregate principal amount of up to $3.4 million, later amended to $4.2 million and (ii) a warrant to purchase up to an additional 16,666,667 shares of common stock of the Company. The warrants had an exercise price of $0.18 per share and a four-year term.  Advances totaled $1.9 million and warrants to purchase 9.3 million shares were outstanding prior to the settlement discussed below.

In addition, the Company issued notes to five institutional investors totaling approximately $0.5 million, which were subject to substantially the same terms and conditions as the Purchase Agreement. Warrants to purchase 2.8 million shares of common stock with an exercise price of $0.18 per share were issued and outstanding prior to the settlement discussed below.

Upon the closing of the Private Placement in August 2022, the 2021 Convertible Promissory Notes Payable were paid and settled in full using proceeds from the Private Placement. The settlement payment included cash totaling $3.9 million, which included accrued interest and penalties, and the issuance of Company shares of common stock totaling 19.4 million shares. The lenders surrendered the outstanding warrants to the Company. The Company recognized a $0.9 million loss on extinguishment of debt during the year ended December 31, 2022.