Notes Payable

12 Months Ended

Dec. 31, 2021

Debt Disclosure [Abstract]

Notes Payable

Note 10: Notes Payable

Notes payable consist of the following (in thousands):

	December 31, 2021			December 31, 2020
Notes payable under the Loan Agreement	$	—		$	—
Short-term financing		256			84
Total notes payable		256			84
Less:  Current portion		(256	)		(84	)
Total notes payable, net of current portion	$	—		$	—

In October 2016, the Company entered into the Loan Agreement with Horizon Technology Finance Corporation and Silicon Valley Bank, under which the Company and vTv LLC borrowed $20.0 million.  On April 1, 2020, the Company entered into an amendment to the Loan Agreement (the “Second Amendment”) and on July 29, 2020, the Company entered into the Third Amendment to the Loan Agreement.  These amendments extended the maturity dates of the loans and adjusted the minimum cash balance requirements and their impacts have been incorporated into these disclosures and are more fully described below.

Each loan tranche bore interest at a floating rate equal to 10.5% plus the amount by which the one-month LIBOR exceeds 0.5%.

The Company borrowed the first tranche of $12.5 million upon close of the Loan Agreement in October 2016.  The first tranche required only monthly interest payments until May 1, 2018, followed by equal monthly payments of principal plus accrued interest through the scheduled maturity date on May 1, 2020.  In connection with the Third Amendment, the maturity date of the first tranche was extended to September 1, 2020.  In addition, a final payment for the first tranche loan equal to $0.8 million originally due on May 1, 2020, was extended to September 1, 2020, as part of the Third Amendment, or such earlier date specified in the Loan Agreement.  The Company borrowed the second tranche of $7.5 million in March 2017.  The second tranche requires only monthly interest payments until October 1, 2018, followed by equal monthly payments of principal plus accrued interest through the scheduled maturity date on October 1, 2020.  In connection with the Second Amendment, the maturity date of the second tranche was extended to January 1, 2021.  In addition, a final payment for the second tranche loan equal to $0.5 million was originally due on October 1, 2020, or such earlier date specified in the Loan Agreement.  In connection with the Second Amendment, the due date for this final payment was extended to January 1, 2021, or such earlier date specified in the Loan Agreement.  The total amount of the payment was increased to $0.8 million as a result of the Second and Third Amendments.  For each of the first and second tranches, the combined Second and Third Amendment required only monthly interest payments on the outstanding principal balance for the amounts due from April 1, 2020, through August 1, 2020.  As amended, the remaining principal balance and final interest payment under the first tranche was paid upon maturity.  Further, the Second and Third Amendments require equal monthly principal payments plus accrued interest for the second tranche beginning September 1, 2020, through the scheduled maturity on January 1, 2021.  The full amount outstanding under both the first and second tranches, including the related final interest payments were paid in accordance with the scheduled maturities, with the final payment made prior to December 31, 2020.

F-19

In connection with the Loan Agreement, the Company has issued to the Lenders warrants to purchase shares of the Company’s Class A Common Stock (the “Warrants”).  On October 28, 2016, the Company issued Warrants to purchase 152,580 shares of its Class A Common Stock at a per share exercise price of $6.39 per share, which aggregate exercise price represents 6.0% of the principal amount borrowed under the first tranche of the Loan Agreement and 3.0% of the principal amount available under the second tranche of the Loan Agreement. On March 24, 2017, in connection with the funding of the second tranche, the Company issued Warrants to purchase 38,006 shares of its Class A Common Stock at a per share exercise price of $5.92 per share, which aggregate exercise price represents 3.0% of the principal amount of the second tranche of the Loan Agreement.  In each instance, the Warrants have an exercise price equal to the lower of (a) the volume weighted average price per share of the Company’s Class A Common Stock, as reported on the principal stock exchange on which the Company’s Class A Common Stock is listed, for 10 trading days prior to the issuance of the applicable Warrants or (b) the closing price of a share of the Company’s Class A Common Stock on the trading day prior to the issuance of the applicable Warrants.  The Warrants will expire seven years from their date of issuance.

The Company’s obligations under the Loan Agreement were secured by a first priority security interest in substantially all of its assets.  As a result of the termination of the STEADFAST Study, the Company granted the Lenders a first priority security interest in all of the Company’s intellectual property, subject to certain limited exceptions.  The Company agreed not to pledge or otherwise encumber its intellectual property assets, subject to certain exceptions.  Upon full repayment and termination of the Loan Agreement in December 2020, these security interests and pledges have been extinguished.

The Loan Agreement included customary affirmative and restrictive covenants, including, but not limited to, restrictions on the payment of dividends or other equity distributions and the incurrence of debt or liens upon the assets of the Company or its subsidiaries.  The Loan Agreement did not contain any financial maintenance covenants other than a requirement to maintain a minimum cash balance from time-to-time in a deposit account pledged to secure the Loan Agreement and subject to an account control agreement.  The Loan Agreement included customary events of default, including payment defaults, covenant defaults, and material adverse change default.  Upon full repayment and termination of the Loan Agreement in December 2020, the associated covenants terminated.   

The Company recorded interest expense related to the Loan Agreement of $0.7 million and $1.8 million for the years ended December 31, 2020, and 2019, respectively. The Company did not recognize any interest expense related to the Loan Agreement during the year ended December 31, 2021, as the Loan Agreement was paid in full and terminated during December 2020.