Debt

12 Months Ended

Dec. 31, 2022

Debt

Debt

6. Debt

In May 2017, we executed the 2017 Credit Facility with SVB for a $12.0 million term loan, which we subsequently amended in January 2019 and June 2019. In August 2019, the 2019 Credit Facility amended and restated the 2017 Credit Facility, providing for a Line of Credit and the 2019 Term Loan with SVB to refinance in full the outstanding principal balance of $8.0 million under the 2017 Credit Facility.

In July 2020, we executed the first amendment to the 2019 Credit Facility with SVB. The amendment, among other things, extended the initial 12-month interest-only period for the term loan to a 16-month interest-only period and lowered the floor interest rate. The floor interest rates for 2019 Term Loan and the Line of Credit Facility were reduced from 4.75% and 6.75% to 3.75% and 4.75%, respectively.

The amended Line of Credit allows for a maximum draw of $5.0 million, subject to a formula borrowing base, has a two-year term and bears interest at a floating rate equal to the WSJ prime rate plus 1.5%, per annum, subject to a floor of 4.75%. As of December 31, 2022, the interest rate was 9.00%. The Line of Credit required a commitment fee of 1.6% of the maximum availability of the Line of Credit, which was paid in August 2019 upon closing, and was accounted for as a debt discount. The Line of Credit also provides for a termination fee equal to 1% of the maximum availability under the Line of Credit, which is due in case of a termination of the Line of Credit prior to the scheduled maturity date, and an unused facility fee equal to 0.125% per annum of the average unused portion of the Line of Credit, which is expensed as incurred. Currently, $4.0 million remains available under the Line of Credit, subject to borrowing base availability. As of December 31, 2022, the effective interest rate under the Line of Credit was 9.36% and the outstanding balance was $1.0 million. The Line of Credit was set to mature on August 5, 2022. The third amendment entered into on July 22, 2022, extended the maturity date of the Line of Credit to August 5, 2023.

The amended 2019 Term Loan provides for a $6.0 million term loan. The amended 2019 Term Loan has a term of 46 months, and a 16-month interest-only period followed by 30 months of equal principal payments of $200,000 per month, plus accrued interest. The 2019 Term Loan bears interest at a floating rate equal to the WSJ prime rate minus 0.75%, subject to a floor of 3.75%. As of December 31, 2022, the interest rate was 6.75%. A final payment of 7% of the original principal amount of the 2019 Term Loan must be made when the 2019 Term Loan is prepaid or repaid, whether at maturity or as a result of a prepayment or acceleration or otherwise. The additional payment, which is accounted for as a debt discount, is being accreted using the effective interest method. The 2019 Term Loan has a prepayment fee equal to 2% of the total commitment, which is due only if the 2019 Term Loan is prepaid prior to the scheduled maturity date for any reason. As of December 31, 2022, the effective interest rate under the 2019 Term Loan was 6.94% and the outstanding balance was $1.6 million. The 2019 Term Loan matures on June 1, 2023.

Collateral for the 2019 Credit Facility includes all of our assets except for intellectual property. We are required to comply with certain covenants under the 2019 Credit Facility, including requirements to maintain a minimum cash balance and availability under the Line of Credit, and restrictions on certain actions without the consent of the lender,

such as limitations on our ability to engage in mergers or acquisitions, sell assets, incur indebtedness, or grant liens or negative pledges on our assets, make loans or make other investments. Under these covenants, we are prohibited from paying cash dividends with respect to our capital stock. We were in compliance with all covenants at December 31, 2022.

The carrying value of the Company’s 2019 Credit Facility at December 31, 2022, was as follows (in thousands):

	Current		Long-Term
	Portion		Debt		Total
Credit Facility	$	2,620	$	—	$	2,620
Unamortized debt discounts		(26)		—		(26)
Net carrying value	$	2,594	$	—	$	2,594

The carrying value of the Company’s 2019 Credit Facility at December 31, 2021, was as follows (in thousands):

	Current		Long-Term
	Portion		Debt		Total
Credit Facility	$	3,400	$	1,620	$	5,020
Unamortized debt discounts		(30)		(91)		(121)
Net carrying value	$	3,370	$	1,529	$	4,899

The table below includes the principal repayments due under the 2019 Credit Facility as of December 31, 2022 (in thousands):

	Principal Repayment as of December 31, 2022
2023	$	2,620
Total principal repayments	$	2,620