Quarterly report [Sections 13 or 15(d)]

Long-Term Debt, Net of Debt Discount and Financing Fees

v3.25.1
Long-Term Debt, Net of Debt Discount and Financing Fees
 3 Months Ended
Mar. 31, 2025
Debt Disclosure [Abstract]  
Long-Term Debt, Net of Debt Discount and Financing Fees Long-Term Debt, Net of Debt Discount and Financing Fees
Long-term debt, net of debt discount and financing fees consists of the following:
(in thousands) March 31, 2025 December 31, 2024
Credit Facility - first tranche $ 35,000  $ 35,000 
Credit Facility - second tranche 15,000  15,000 
Less - unamortized debt discount and deferred financing fees (2,284) (2,504)
Long-term debt, net of debt discount and financing fees $ 47,716  $ 47,496 
Credit Facility
On June 29, 2023, the Company amended its Credit Facility with Oberland Capital and its affiliates, TPC Investments II LP and Argo LLC (collectively, the “Lender”), to transition the base interest rate from the three-month London Interbank Offered Rate to the forward-looking term rate based on the secured overnight financing rate as set by the Federal Reserve Bank of New York plus 0.10% (“Adjusted SOFR”). The Company obtained the first tranche of $35,000 at closing on June 30, 2020. On June 30, 2021, the second tranche of $15,000 was drawn down by the Company.
Each tranche under the Credit Facility requires quarterly interest payments for seven years. Interest is calculated as 7.5% plus the greater of Adjusted SOFR or 2.0% (11.91% at March 31, 2025), provided that the interest rate shall never be less than 9.5%. Each tranche of the Credit Facility has a term of seven years from the date of issuance (with the first tranche issued on June 30, 2020, maturing on June 30, 2027, and the second tranche issued on June 30, 2021, maturing on June 30, 2028). In connection with the Credit Facility, the Company entered into a revenue participation agreement (the “Revenue Participation Agreement”) with the Lender, which provided that, among other things, a quarterly royalty payment as a percentage of the Company’s net revenues, up to $70 million in any given year, after April 1, 2021, ending on the date upon which all amounts owed under the Credit Facility have been paid in full. This structure results in approximately 1.5% per year of additional interest payments on the outstanding loan amount. The Company recorded $524 and $447 as interest expense for this Revenue Participation Agreement for the three months ended March 31, 2025 and 2024, respectively. The Company pays the quarterly debt interest on the last day of the quarter and for the three months ended March 31, 2025 and 2024 paid $1,489 and $1,634, respectively, to the Lender. As of March 31, 2025, the Company was in compliance with all financial covenants. The borrowings under the Credit Facility are secured by substantially all of the assets of the Company.
Embedded Derivatives
The debt derivative liabilities are recorded at fair value, with the change in fair value reported in Change in fair value of derivatives on the Condensed Consolidated Statements of Operations at each reporting date. The fair values of the debt derivative liabilities were $2,558 and $2,400 at March 31, 2025 and December 31, 2024, respectively. See Note 6 - Fair Value Measurement.
Unamortized Debt Discount and Financing Fees
The unamortized debt discount consists of the remaining initial fair values of the embedded derivatives related to the Credit Facility.
The financing fees for the Credit Facility were $642 and were recorded as a contra liability to Long-term debt on the Condensed Consolidated Balance Sheets.
Amortization of debt discount and deferred financing fees for the three months ended March 31, 2025 and 2024 was $220 and $222, respectively.
Other Credit Facilities
The Company had restricted cash of $6,000 at both March 31, 2025 and December 31, 2024, which represents collateral for an irrevocable standby letter of credit