Loan and Security Agreement
|9 Months Ended|
Sep. 30, 2022
|Debt Disclosure [Abstract]|
|Loan and Security Agreement||
6. Loan and Security Agreement
The Company entered into a Loan and Security Agreement with Oxford Finance LLC (“Oxford”) and Silicon Valley Bank (“SVB”) in February 2020 (the “LSA”). See “Note 7. Loan and Security Agreement” to the Company’s Financial Statements included in the Annual Report on Form 10-K for the year ended December 31, 2021, or as further described below, for additional information.
In June 2022, the Company entered into an amendment to the LSA with Oxford and SVB (the “LSA Amendment”). The LSA Amendment added a financial covenant that requires the Company to maintain a minimum unrestricted cash balance of $10.0 million. The Company was in compliance with the financial covenant under the LSA Amendment as of September 30, 2022.
In connection with entering into the LSA in February 2020, the Company issued to the lenders warrants exercisable for 81,257 shares of the Company’s common stock (the “2020 Warrants”). The 2020 Warrants are exercisable in whole or in part, immediately, and have a per share exercise price of $9.23, which was the closing price of the Company’s common stock reported on the Nasdaq Global Market on the day prior to the effective date of the LSA. The 2020 Warrants will terminate on the earlier of February 28, 2030 or the closing of certain merger or consolidation transactions. The estimated fair value upon issuance of the Warrants of $0.6 million was recorded as a debt discount on the associated borrowings on the Company’s balance sheet. The debt discount is being amortized to interest expense over the expected repayment period of the loan using the effective-interest method.
As of September 30, 2022 and December 31, 2021, the Company has classified $12.5 million and $9.4 million, respectively, of the outstanding debt balance as current and $6.8 million and $15.7 million, respectively, as non-current, which reflects the scheduled repayment terms under the February 2020 LSA.
As of September 30, 2022 and December 31, 2021, accrued interest expense was $0.1 million and $0.2 million, respectively.
During the three and nine months ended September 30, 2022, the Company recorded interest expense related to loans outstanding of $0.6 million and $1.8 million, respectively, with average interest rates of 8.63% and 8.26%, respectively, and interest related to the accretion of debt discount of $0.1 million and $0.4 million, respectively.During the three and nine months ended September 30, 2021, the Company recorded interest expense related to loans outstanding of $0.7 million and $1.9 million, respectively, with average interest rates of 8.07% in both periods, and interest related to the accretion of debt discount of $0.1 million and $0.4 million, respectively.
The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef