Long-Term Debt and Other Financing Arrangements

6 Months Ended

Jun. 30, 2022

Debt Disclosure [Abstract]

Long-Term Debt and Other Financing Arrangements

Long-Term Debt and Other Financing Arrangements

The following is a summary of the Company’s long-term indebtedness as of:

	June 30, 2022		December 31, 2021
Term note payable to SVB, maturing on April 1, 2024	$	11,000	$	14,000
Financed insurance premium	85		2,534
Total debt	11,085		16,534
Less: current portion	(11,085)		(8,534)
Less: debt discount and debt issuance costs	—		(7)
Total long-term debt, net	$	—	$	7,993

As of June 30, 2022, the Company was in violation of its minimum net revenue requirement for the three months ended June 30, 2022 under the amended and restated loan and security agreement, which governs both the Company’s term loan and its line of credit. On August 10, 2022, the Company executed a waiver agreement with SVB. This agreement waives the minimum net revenue covenant violation for the three months ended June 30, 2022, lowers the minimum liquidity covenant from $30,000 to $22,500, and reduces the line of credit capacity from $17,500 to $5,000.

The Company does not currently expect that it will be in compliance with the minimum net revenue covenant for the third and fourth quarter of 2022, which were not amended under the waiver agreement. As a result, the $11,000 term note and the Company’s line of credit with $4,339 of outstanding borrowings is presented as a current liability.

Future Aggregate Maturities

As of June 30, 2022, future aggregate maturities of the Term Note and Financed Insurance Premium payables were as follows:

Years Ending December 31,	Amount
2022 (excluding the six months ended June 30, 2022)	$	3,085
2023	6,000
2024	2,000
Total	$	11,085

The maturities shown in the table above represent the contractual maturities of the Term Note and Financed Insurance Premium payables as of June 30, 2022. The Company is actively engaged with SVB to come to terms on a further restructured financing arrangement, including revised financial covenants for future periods. If the Company is unable to come to terms regarding an amendment, and the Company is in violation of its covenants in future periods, SVB can elect to take certain actions, including terminating the line of credit and declaring the principal amount of the term note and line of credit as immediately due and payable.

Term Note

The Company has an amended and restated loan and security agreement (the "A&R LSA") with SVB which was entered into on April 22, 2020, and which replaced the loan and security agreement previously in place (the ‘‘Original LSA’’). These agreements provided the Company with both a line of credit (the ‘‘SVB Revolver’’) and a term loan (the ‘‘Term Note’’).

On January 31, 2022, the Company further amended the A&R LSA, which modified the SVB Revolver annual interest rate, decreased the advance rate for borrowing base assets, and increased the cash and cash availability streamline threshold. The amendment also modified the Term Note annual interest rates, replaced the existing EBITDA covenant for 2022 and beyond with a net revenue covenant, and increased the minimum liquidity threshold from $5,000 to $30,000.

As of June 30, 2022, the Term Note had an aggregate principal balance of $11,000, bore interest at a rate equal to the greater of the bank's prime rate plus 2.50%, or 5.75%, required 30 consecutive equal monthly payments of principal and matures on April 1, 2024.

Prior to January 31, 2022, the Term Note bore interest at a rate equal to the greater of the bank's prime rate plus 3.50%, or 6.50%.

The Company's borrowings under the A&R LSA are secured by substantially all of its current and future assets.

Financed Insurance Premium

During the year ended December 31, 2021, the Company renewed its corporate liability policies and entered into several new short-term commercial premium finance agreements with AFCO Credit Corporation totaling $4,699 to be paid in ten equal monthly payments, all of which accrue interest at a rate of 3.59%. As of June 30, 2022, the remaining principal balance on the financed insurance premium was $85.

In July 2022, the company renewed its corporate liability policies and entered into a new short-term commercial premium finance agreement with First Insurance Funding totaling $3,041 to be paid in eleven equal monthly payments, accruing interest at a rate of 4.40%.

Line of Credit

As of June 30, 2022, our borrowing capacity under the SVB Revolver was $17,500 and bore interest at an annual rate equal to (i) the greater of the bank’s prime rate plus 0.75%, or 5.00% when a streamline period is in effect and (ii) the greater of the bank’s prime rate plus 1.25%, or 5.00% at all other times. The SVB Revolver is an asset based lending facility subject to borrowing base availability which is limited by specified percentages of eligible accounts receivable and eligible inventory. Borrowing base availability can be impacted based upon the period's eligible accounts receivable and eligible inventory, and may be significantly lower than borrowing base capacity.

Prior to January 31, 2022, the SVB Revolver bore interest at an annual rate equal to (i) the greater of the bank’s prime rate plus 0.75%, or 5.50% when a streamline period is in effect and (ii) the greater of the bank’s prime rate plus 1.25%, or 6.00% at all other times.

Each streamline period commences the first day of the month following a written report of our liquidity and ends the first day after we fail to maintain a required cash and cash availability streamline threshold, provided no event of default has occurred and is continuing. If an event of default has occurred and is continuing, SVB may maintain our streamline status at its discretion. The required cash and cash availability streamline threshold was $50,000 as of June 30, 2022, which the Company did not maintain and was therefore not within a streamline period. The actual interest rate on the SVB Revolver was 6.00% as of June 30, 2022. The SVB Revolver is subject to renewal and is scheduled to mature on April 22, 2024. As of June 30, 2022, there was $4,339 of outstanding borrowings under the SVB Revolver.