Quarterly report pursuant to Section 13 or 15(d)

Debt

v3.23.3
Debt
9 Months Ended
Sep. 30, 2023
Debt Disclosure [Abstract]  
Debt Debt
Debt as of September 30, 2023 and December 31, 2022 consists of the following:

September 30, 2023 December 31, 2022
Convertible Note $ 59,863 $ 73,863
Facility 3,000 3,000
Prepaid Advance Agreement 200
Insurance Finance Agreement 910
Total debt principal 63,973 76,863
Unamortized debt discount - Convertible Note (5,922) (14,735)
Unamortized debt discount - Facility (14) (25)
Unamortized debt discount - Prepaid Advance Agreement (26) — 
Total debt less unamortized debt discount $ 58,011 $ 62,103
     Less current portion - Convertible Note (53,941)
     Less current portion - Prepaid Advance Agreement (174)
     Less current portion - Insurance Finance Agreement (910)
Total long-term debt $ 2,986 $ 62,103
Convertible Note
In conjunction with the Business Combination, the Company entered into the 7.5% $100,000 Convertible Note and paid issuance costs of $5,000. The Convertible Note has a maturity date of May 15, 2024 and has semi-annual interest payments due May 15 and November 15 of each year starting on November 15, 2021. The Convertible Note has a conversion feature at a conversion price of $230.00 and warrants to purchase up to 434,782 shares of common stock for a per share price of $230.00. The Convertible Note has a mandatory conversion option that: a) is exercisable at the option of the Company on or after May 15, 2022; b) occurs when the Company’s stock price (1) is greater than 120% of the conversion price of $230.00, or $276.00 for 20 trading days in a period of 30 consecutive trading days and (2) the 30-day average daily trading volume during the applicable exercise period, i.e., consecutive 30 trading day period, is greater than or equal to $3,000; and c) the Company will make payments in accordance with the interest make-whole (defined below) amount in cash or issuance of additional shares of the Company’s common stock.
The interest make-whole amount means, with respect to the conversion of the Convertible Note, in an amount denominated in U.S. dollars, the sum of all regularly scheduled interest payments, if any, due on such Convertible Note on each interest payment date occurring after the conversion date for such conversion and on or before the maturity date; provided, however, that (A) for these purposes, the amount of interest due on the interest payment date immediately after such conversion date will be deemed to be the following amount: any accrued and unpaid interest, if any, at such conversion date, plus any remaining amounts that would be owed to, but excluding, the maturity date in respect of such Convertible Note, including all regularly scheduled interest payments; and (B) if such conversion date occurs after the Company has sent a mandatory conversion notice, then the interest make-whole amount for such conversion shall be the sum of all regularly scheduled interest payments, if any, due on such Convertible Note on each interest payment date occurring after the conversion date for such conversion to, but excluding, the maturity date.
If the Company incurs other unpermitted indebtedness, it is required to redeem the Convertible Notes in full including outstanding principal and accrued and unpaid interest, plus a prepayment premium equal to the amount of interest which would have accrued on the Convertible Notes through maturity (the “Redemption Feature”). In addition, the Company is required to issue to the holders a fixed number of warrants to purchase shares of Common Stock. The fixed number of warrants will be based on the principal balance of the Convertible Notes, divided by $230.00 (“Redemption Warrants”). The Redemption Warrants will be exercisable from the date of repayment of the Convertible Notes through the original maturity date of the Convertible Notes. Further, in the event the Company is not successful in its appeal of delisting to the NYSE, such delisting will represent a “Fundamental Change,” giving each holder of Convertible Notes the right to require the Company to repurchase its Convertible Notes pursuant to the terms and procedures set forth in the indenture for a cash repurchase price equal to 100% of the principal amount of the Convertible Notes to be so repurchased, plus accrued and unpaid interest thereon, if any, plus any remaining amounts that would be owed to, but excluding the Maturity Date (as defined in the indenture), including all regularly scheduled interest payments.
If the number of outstanding shares of Common Stock is increased by a stock split or other similar event, the number of shares issuable on exercise of each warrant shall be increased proportionately and the exercise price shall be decreased proportionately. Consequently, if the number of outstanding shares of Common Stock is decreased by a reverse stock split, consolidation, combination or reclassification of shares of Common Stock or other similar event, the number of shares of Common Stock issuable on exercise of each warrant shall be decreased proportionately and the exercise price shall be increased proportionately.
The Company has identified certain embedded derivatives related to its Convertible Note. Since the Convertible Note has a conversion feature whereby the principal amount will convert into a variable number of shares based on the future trading price of the Company’s common stock, the conversion feature is recorded as a derivative liability. Therefore, the fair value of the convertible feature at inception on May 6, 2021 in the amount of $17,063 was recorded as a debt discount and an addition to “Derivative liability” on the consolidated balance sheets. The derivative liability is adjusted to fair value each reporting period, with the changes in fair value reported in “(Gain) loss from change in fair value of derivative liability” on the consolidated statements of operations.
On November 21, 2022, the Company completed an exchange with certain holders of the Convertible Notes via privately negotiated exchange agreements, pursuant to which the holders agreed to exchange $14,000 in aggregate principal amount of the Company's outstanding Convertible Notes for 663,822 newly issued shares of the Company's common stock, par value $0.0001 per share, at a price of $21.00 per share. The Company recognized a gain on extinguishment of $2,921 in “(Gain) loss on extinguishment of debt” on the consolidated statement of operations associated with the difference between (1) the sum of the fair value of the common stock issued of $8,138 and (2) the sum of the carrying amount of the converted debt $11,021 and the fair value of the convertible note derivative liability of $38.
On February 10, 2023, the Company completed an exchange with a holder of the Convertible Notes via a privately negotiated exchange agreement, pursuant to which the holder agreed to exchange $3,500 in aggregate principal amount of the Company's outstanding Convertible Notes at 95% of par for 210,443 newly issued shares of the Company's common stock, par value $0.0001 per share, at a price of $15.80 per share. The Company recognized a gain on extinguishment of $47 in “(Gain) loss on extinguishment of debt” on the consolidated statement of operations associated with the difference between (1) the sum of the fair value of the common stock issued of $2,811 and (2) the sum of the carrying amount of the converted debt $2,850 and the fair value of the convertible note derivative liability of $8.
On March 15, 2023, the Company completed an exchange with certain holders of the Convertible Notes via privately negotiated exchange agreements, pursuant to which the holders agreed to exchange $10,500 in aggregate principal amount of the Company's outstanding Convertible Notes for 937,500 newly issued shares of the Company's common stock, par value $0.0001 per share, at a price of $11.20 per share. The Company recognized a gain on extinguishment of $2,918 in “(Gain) loss on extinguishment of debt” on the consolidated statement of operations associated with the difference between (1) the sum of the fair value of the common stock issued of $5,756 and (2) the sum of the carrying amount of the converted debt $8,669 and the fair value of the convertible note derivative liability of $5.
The following table provides a reconciliation of the beginning and ending balances for the Convertible Note derivative liability measured at fair value using significant unobservable inputs (Level 3):
2023
Balance at beginning of period $ 78 
(Gain) Loss 290
Change resulting from conversions (13)
Balance at end of period $ 355

The Convertible Note warrants are considered free-standing instruments and meet the criteria for equity classification because they are indexed to the Company’s own stock and provide a fixed number of shares. Therefore, the fair value of the Convertible Note warrants on May 6, 2021 in the amount of $14,522 was recorded as a debt discount and an addition to “Additional paid-in capital” on the consolidated balance sheets.
Interest expense for the three months ended September 30, 2023 and 2022 was $3,279 and $4,129, respectively, of which $1,122 and $1,647, respectively, related to contractual interest expense and $2,157 and $2,482, respectively, related to amortization of the discount. Interest expense for the nine months ended September 30, 2023 and 2022 was $9,818 and $11,830, respectively, of which $3,499 and $4,942, respectively, related to contractual interest expense and $6,319 and $6,888, respectively, related to amortization of the discount.
Facility
The Loan and Security Agreement with Cupola Infrastructure Income Fund, L.L.L.P., as amended (the “Facility”), provides for both term and working capital loans for borrowings up to $8,600 as of September 30, 2023. However, the Company’s Convertible Note requirements limit the Company’s permitted indebtedness to $5,000. Interest is payable quarterly on borrowings at a fixed annual rate of 18%. Borrowings under the Facility are secured by substantially all the Company’s assets, are subject to borrowing base limitations, and require the Company to meet certain covenants. The Facility borrowings, with a maturity date of October 21, 2024, were $3,000 as of September 30, 2023 and December 31, 2022. Interest expense related to the Facility was $130 and $118 for the three months ended September 30, 2023 and 2022, and $361 and $348 for the nine months ended September 30, 2023 and 2022, respectively.
Pre-Paid Advance Agreement
On May 16, 2023, the Company entered into a Pre-Paid Advance Agreement (the “PPA”) with YA II PN, Ltd., a Cayman Islands exempt limited partnership (the “Investor”). In accordance with the terms of the PPA, the Company may request pre-paid advances of up to $2,000 from the Investor (or such greater amount that the parties may mutually agree) (each, a “Pre-Paid Advance”), with an aggregate limit of $50,000, over an 18-month period. Such Pre-Paid Advances will be purchased by the Investor at 92% of the face amount. Interest will accrue on the outstanding balance of any Pre-Paid Advance at 0%, subject to an increase to 15% upon events of default described in the PPA. At any time while a Pre-Paid Advance is outstanding, the Investor may, by providing written notice to the Company (a “Purchase Notice”), require the Company to issue and sell shares of common stock to the Investor. The aggregate purchase price of the shares of common stock will be based on a price per share equal to the lower of: (a) with respect to each Pre-Paid Advance, 100% of the volume weighted average price (the “VWAP”) of the Company’s common stock on the trading day immediately preceding the closing of such Pre-Paid Advance (the “Fixed Price”) or (b) 92.0% of the average of the two lowest daily VWAPs during the seven trading days immediately prior to receipt of the Purchase Notice (as applicable, the “Purchase Price”), however in no event will the Purchase price be less than $0.856 (the “Contractual Floor Price”).
While Pre-Paid Advances are outstanding, and within three trading days of a Trigger Event (as defined below), the Company must pay the Investor a monthly cash payment (the “Monthly Payment”) of $1,000, plus any accrued and unpaid interest and a 7% redemption premium. Thereafter, the Company must pay the Investor the Monthly Payment every 30 calendar days after the due date of the initial Monthly Payment; provided that the Company’s monthly obligation to make such payments will end with respect to a particular Trigger Event if the daily VWAP of the Company’s common stock for five consecutive trading days immediately prior to the due date of the next Monthly Payment is 20% or greater than the Contractual Floor Price, unless a new Trigger Event occurs. A “Trigger Event” occurs if (i) the common stock is lower than the Contractual Floor Price for any five of seven consecutive trading days or (ii) the Company has issued substantially all of the shares available under the rules of the New York Stock Exchange until stockholder approval is received (19.9% of the shares outstanding as of the date hereof) (excluding the initial Pre-Paid Advance).
During the nine months ended September 30, 2023, the Company received Pre-Paid Advances in the aggregate amount of $3,200 and received proceeds in the amount of $2,944, net of issuance cost in the amount of $256. During the three months ended September 30, 2023, the Company converted $1,250 with the issuance of 443,303 newly issued shares of common stock to Yorkville. During the nine months ended September 30, 2023, the Company converted $2,800 with the issuance of 904,851 newly issued shares of common stock to Yorkville. The Company recognized a loss on extinguishment of $357 and $825 for the three and nine months ended September 30, 2023, respectively in “Interest expense, net” on the consolidated statement of operations associated with the difference between (1) the sum of the fair value of the common stock issued of $1,510 and (2) the sum of the carrying amount of the converted debt $1,153 for the three months ended September 30, 2023, and (1) the sum of the fair value of the common stock issued of $3,404 and (2) the sum of the carrying amount of the converted debt $2,579 for the nine months ended September 30, 2023. Interest expense related to the PPA was $825 for the three and nine months ended September 30, 2023 and zero for the three and nine months ended September 30, 2022. Due to the suspension of trading of the Company’s common stock from the NYSE, the Company is currently unable to utilize the PPA.
On September 19, 2023, the Company and the Investor entered into a waiver agreement (the “Waiver Agreement”). Under the terms of the Waiver Agreement, the Investor agreed to waive the default under the PPA created by the suspension of trading of the common stock on the NYSE. As consideration for the Waiver Agreement, the Company agreed to make an Optional Prepayment (as defined in the PPA) of $200 of the outstanding advance of $400, plus the associated Payment Premium (as defined in the PPA) of $14. The Waiver Agreement did not otherwise modify or amend the PPA.
Debt maturities

The total balance of all debt matures as follows:

Period Ending December 31,
Amount
2023 (remainder of the year)
$ 200 
2024 63,773 
2025 — 
Thereafter — 
Total $ 63,973