Borrowing Arrangements |
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| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||
| Borrowing Arrangements |
NOTE 8 — BORROWING ARRANGEMENTS
K2 Health Ventures Loan and Security Agreement
In May 2020, the Company entered into the K2 Loan and Security Agreement in the amount of $45.0 million. The K2 Loan and Security Agreement was drawable in three tranches and to date the Company has drawn down $35.0 million with the remaining tranche of $10.0 million having lapsed as of December 31, 2021. Pursuant to the terms of the K2 Loan and Security Agreement, the principal accrues interest at an annual rate equal to the greater of 8.45 % or the sum of the Prime Rate plus 5.2%. In April 2022, the K2 Loan and Security Agreement was amended in exchange for a $0.3 million amendment fee so that (i) payments will be interest only until the loan’s maturity date of June 1, 2024 and (ii) the minimum cash covenant will apply for the entire term of the K2 Loan and Security Agreement. This amendment resulted in a debt modification with the $0.3 million amendment fee recorded as a debt discount.
The K2 Loan and Security Agreement includes both financial and non-financial covenants including the minimum cash covenant. The Company was in compliance with the debt covenants at December 31, 2022.
The Company recorded the debt net of $2.8 million comprised of deferred financing costs, debt discount and associated exit fee which are being accreted to interest expense over the term of the K2 Loan and Security Agreement using the effective interest method. Additionally, the Company incurred $0.2 million in facilities fee related to the second tranche which was previously classified as a prepaid asset.
As of December 31, 2022 and December 31, 2021, the K2 Loan principal balance was $35.0 million and $35.0 million, respectively.
As of December 31, 2022 and December 31, 2021, the carrying value of the long-term debt was $36.2 million and $35.5 million, respectively.
Future required principal and final payments on the K2 Loan were as follows at December 31, 2022 ($ in thousands):
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