Debt

6 Months Ended

Jun. 30, 2022

Debt Disclosure [Abstract]

Debt

7. Debt

CIBC term loan

On October 8, 2021, the Company entered into a Loan and Security Agreement (the CIBC Agreement) with Canadian Imperial Bank of Commerce (CIBC), which provides for a senior secured term loan in an aggregate principal amount of $40.0 million (the CIBC Loan), the full amount of which was funded at the closing of the CIBC Agreement.

The CIBC Loan provides for 24 months of interest-only payments followed by 36 equal monthly payments of principal, plus accrued and unpaid interest, with the final obligations due and payable in full on October 8, 2026. The CIBC Loan accrues interest at a floating rate equal to 2.5% above the prime rate, and the interest is payable monthly in arrears. As of June 30, 2022, the CIBC Loan had an annual effective interest rate of 8.3% per annum. The Company may prepay the CIBC Loan in whole or in parts.

Obligations under the CIBC Agreement are secured by substantially all of the Company’s assets. The CIBC Agreement contains customary affirmative and negative covenants as well as financial covenants that require the Company to maintain minimum revenue and minimum cash thresholds.

The CIBC Agreement contains customary events of default subject to customary cure periods for certain defaults that include, among others, non-payment defaults, inaccuracy of representations and warranties, covenant defaults, cross-defaults to certain other material indebtedness, bankruptcy, and insolvency events with respect to the Company, and material judgements. Upon the occurrence and during the continuance of an event of default, CIBC may accelerate the Company’s obligations under the CIBC Agreement, increase the applicable interest rate by 5.0% and exercise other remedies provided for under the CIBC Agreement and applicable law.

The CIBC Loan consists of the following (in thousands):

		June 30,		December 31,
		2022		2021
Term loan principal	$	40,000	$	40,000
Less: Debt discount and debt issuance cost		(792)		(915)
Accrued interest		219		189
Term loan	$	39,427	$	39,274

The Company paid $1.0 million in fees to CIBC and third parties which is reflected as a debt discount and debt issuance costs, respectively, and are being accreted over the life of the term loan using the effective interest method.

During the three- and six-month periods ended June 30, 2022 the Company recorded interest expense of $0.7 million and $1.3 million, respectively, which includes interest expense related to accretion of debt discount and debt issuance costs of the CIBC Loan of $0.1 million.

During the three- and six-month periods ended June 30, 2021 the Company recorded interest expense of $1.5 million and $3.0 million, respectively, which includes interest expense related to accretion of debt discount, debt issuance costs and exit fee of the Ares Loan of $0.6 million and $1.1 million, respectively. In three months ended December 31, 2021, the Company repaid its entire obligation under the Ares Loan.

During the three- and six-month periods ended June 30, 2021 the Company recorded interest expense of $2.0 million and $4.0 million, respectively, on the 2018, 2019 and 2020 Notes, which includes interest expense related to amortization of debt discount of the 2018, 2019 and 2020 Notes of $0.6 million and $1.1 million, respectively. In three months ended December 31, 2021, the Company converted outstanding principal and accrued interest of the convertible notes into shares of redeemable convertible preferred stock.

Contractual maturities of financing obligations

As of June 30, 2022, the aggregate future payments under the CIBC Loan (including interest payments) are as follows (in thousands):

2022 (remaining six months)	$	1,442
2023		5,056
2024		15,286
2025		14,344
2026		12,317
Total		48,445
Less: unamortized debt discounts and issuance costs		(792)
Less: interest		(8,226)
Term loan	$	39,427