Debt

12 Months Ended

Dec. 31, 2021

Debt Disclosure [Abstract]

DEBT

NOTE 7 – DEBT

On June 10, 2021, the Company entered into a Loan and Security Agreement (the “Term Loan”) with Silicon Valley Bank and SVB Innovation Credit Fund VIII, L.P., together (the “Lenders”).  The Term Loan provides for a $15.0 million term loan, of which the Company borrowed the entire amount on June 10, 2021, and is secured by the Company’s assets.  The Term Loan also provides for the Company to request an additional $5.0 million term loan from the Lenders, which may be granted or denied at the sole discretion of the Lenders.

The Company paid the Lenders $47,000 to access the term loan, which has been included as a component of the debt discount and is amortized to interest expense over the term of the loan. The term loan and debt discount are as follows as of December 31, 2021:

(in thousands) 

Term Loan	$	15,000
Less: debt discount and financing costs, net		(542	)
Less: current portion		-
Long-term debt	$	14,458

For the year ended December 31, 2021, the Company recognized interest expense of $985,000 related to the Term Loan. 

The term loan repayment schedule provided for interest only payments beginning on July 1, 2021, and continuing for 12 months, followed by monthly principal and interest payments, starting on July 1, 2022 and continuing through the maturity date of January 1, 2025. During August 2021, the Lenders extended the interest-only period for one year due to the Company achieving an equity milestone as fully defined in the Term Loan. As a result of achieving the equity milestone, monthly principal and interest payments begin on July 1, 2023. All outstanding principal and accrued and unpaid interest will be due and payable on the maturity date.  The Term Loan provides for an annual interest rate equal to the greater of (i) the prime rate then in effect as reported in The Wall Street Journal plus 4.50% and (ii) 7.75%. At December 31, 2021, the interest rate was 7.75%.

The Term Loan includes a final payment fee equal to 6.5% of the original principal amount borrowed payable on the earlier of the repayment of the loan in full and the maturity date.  The Company has the option to prepay the outstanding balance of the term loans in full, subject to a prepayment premium of (i) 3% of the original principal amount borrowed for any prepayment on or prior to the first anniversary of the loan, (ii) 2% of the original principal amount borrowed for any prepayment after the first anniversary and on or before the second anniversary of the loan or (iii) 1% of the original principal amount borrowed for any prepayment after the second anniversary of the loan but before the maturity date.

The expected repayment of the $15.0 million Term loan principal is as follows as of December 31, 2021:

(in thousands, except years)

2022	$	-
2023		5,833
2024		9,167
Total debt		15,000

Upon the occurrence of certain events, including but not limited to the Company’s failure to satisfy its payment obligations under the Term Loan, the breach of certain of its other covenants under the Term Loan, or the occurrence of a material adverse change, the Lenders will have the right, among other remedies, to declare all principal and interest immediately due and payable, and will have the right to receive the final payment fee and, if the payment of principal and interest is due prior to maturity, the applicable prepayment fee. The Company was in compliance with its debt covenants at December 31, 2021.