Notes Payable and Convertible Notes

9 Months Ended

Sep. 30, 2023

Debt Disclosure [Abstract]

Notes Payable and Convertible Notes

NOTES PAYABLE AND CONVERTIBLE NOTES

The Company’s notes payable and convertible notes are as follows:

Terms	September 30, 2023		December 31, 2022
Secured promissory notes dated May 10, 2019, as subsequently amended, with a related party which mature on May 1, 2026 and bear interest at a rate of 16.5% per annum through May 1, 2024 and 12% per annum thereafter	$	46,827	$	49,807
Convertible promissory note dated October 6, 2021, which mature on October 6, 2024 and bear interest at a rate of 6% per annum (3)	15,677		14,843
Unsecured convertible promissory note at $0.50 per share due December 18, 2023 at 12% per annum through May 2023 and 14% per annum through December 2023 (3)	3,981		3,554
Promissory note issued for the acquisition of NECC due January 7, 2023 at 10% per annum	—		519
Promissory note issued for the acquisition of Island due October 25, 2026 at 6% per annum	10,880		10,431
Secured promissory note due February 28, 2023 at 1.5% monthly interest for three months and 2% monthly interest for three months (1)	2,561		3,230
Unsecured promissory note due November 30, 2024, monthly interest payments at 12% per annum through September 2023 and 11% per annum through November 2024 (2)	1,705		1,730
Various	29		51
Total Notes Payable and Convertible Notes	$	81,660	$	84,165

(1) The Company was in default of the secured promissory note as of September 30, 2023. Effective October 10, 2023, management has renegotiated the terms of the promissory note and extended the term of the lender note to January 1, 2024 in exchange for a loan extension fee of $0.1 million issued in warrants. Refer to Note 19 for further information.

(2) The Company entered into an amendment of this promissory note in September 2023 to reduce the interest rate to 11% and extend the maturity date to November 30, 2024.

(3) Refer to Note 19 for further information.

LI Lending LLC

On May 10, 2019, the Company entered into a loan agreement with LI Lending LLC, a related party, for $50.0 million, of which $43.0 million was drawn as of September 30, 2023 in two amounts: (i) $35.0 million bearing interest at a rate of 10.25% and (ii) $10.0 million bear interest at a rate of 12.25%. The loan matures on May 10, 2024 upon the Company shall pay an exit fee of 20% of the remaining principal balance.

In April 2020, the loan was amended to release certain assets previously held as collateral and to make principal prepayments totaling $2.0 million applied to the initial $35.0 million amount, decreasing the principal balance to $33.0 million. In December 2020, the loan was amended to increase the interest rate by 2.5% of which payments of the incremental interest were paid-in-kind until January 1, 2022. The Company was still required to make interest-only payments monthly of 10.25% on the initial $33.0 million and 12.25% on the final $10.0 million of the loan until January 1, 2022, when monthly interest rates were increased to 12.75% for the initial $35.0 million and 14.75% for the final $10.0 million for the remaining term.

In July 2023, the Company entered into the First Amendment to the loan agreement with LI Lending LLC to extend the maturity date of the related party loan to May 1, 2026, to reduce the interest rate to 12.0% per annum beginning May 1, 2024, and to expand the amount of third-party financings allowed under the loan agreement. As compensation for the amendment, the Company shall pay an extension fee of $0.5 million payable in cash on May 1, 2024. In addition, the Company issued 100,358,824 warrants on August 10, 2023 in accordance with this amendment. See Note 6 for further information regarding the fair value of the warrants. The amendment to the related party loan was not deemed to be a substantial modification under ASC Subtopic 470-50. As a result of the modification, the Company recorded an additional debt discount of $4.7 million related to the extension fee and the fair value of the warrants.

For the three months ended September 30, 2023 and 2022, the Company recognized accrued interest expense of $2.0 million and $2.5 million, respectively, on the related party loan and made $1.6 million and $2.2 million, respectively, in payments of principal and interest to the related party. For the nine months ended September 30, 2023 and 2022, the Company recognized accrued interest expense of $5.8 million and $5.8 million, respectively, on the related party loan and made $4.8 million and $4.7 million, respectively, in payments of principal and interest to the related party. See Note 13 for further discussion of this related party transaction.

October 2021 Convertible Note

On October 6, 2021, the Company entered into a convertible promissory note for $15.0 million that is exercisable into Class A Subordinate Voting Shares for $1.03 per share at any time at the option of the holder. The notes bear interest at 6% per annum and mature on October 6, 2024 upon which any remaining balance is payable in cash. All accrued and unpaid interest is payable in cash on an annual basis beginning on October 6, 2022. As of September 30, 2023, payments of principal and interest totaling $1.1 million have been made for this loan. As of September 30, 2023 and December 31, 2022, the unamortized discount balance related to the October 2021 Convertible Note was $0.2 million and $0.4 million, respectively, with a remaining amortization period of 1.00 year and 1.75 years, respectively. For the nine months ended September 30, 2023 and 2022, the Company recognized interest expense of $0.7 million and $0.3 million, respectively, and accretion of debt discount of $0.2 million and $0.1 million, respectively, related to the October 2021 Convertible Note.