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Subsequent Event
3 Months Ended
Mar. 31, 2022
Subsequent Events [Abstract]  
Subsequent Event Subsequent Events
On April 12, 2022, the Company entered into a sublease agreement with a subtenant for 100% of the leased office space located at Santa Monica, California. The sublease agreement commences 30 days following the execution of a consent agreement by the prime landlord, which was executed on May 3, 2022. As such, the sublease will commence on June 3, 2022 and expire on July 17, 2024, unless sooner terminated.

On April 15, 2022, the Company entered into a Master Note Purchase Agreement (the “Keep Well Agreement”) with Acuitas Capital LLC ("Acuitas"), an entity indirectly wholly owned and controlled by Terren S. Peizer, the Company's Executive Chairman and largest stockholder, pursuant to which, subject to specified conditions, the Company may borrow up to $25.0 million (the “Available Amount”) from time to time through the earlier of (a) the date on which the Company files a report with the SEC that states there is substantial doubt regarding the Company’s ability to continue as a going concern during the twelve month period following such filing and (b) September 1, 2023. In connection with each borrowing under the Keep Well Agreement, the Company will issue senior secured notes (each, a "Keep Well Note") to Acuitas, or an entity affiliated with it ("Purchaser"), in return for the specified face amount of such senior secured note. The Keep Well Notes will accrue interest based on the Secured Overnight Financing Rate plus a corresponding applicable margin, for an all-in interest rate equating to 16.25% as of the closing date of the Keep Well Agreement. The Keep Well Notes will be due on September 1, 2023, subject to acceleration for certain customary events of default. In addition to customary conditions precedent, Purchaser's obligation to purchase Keep Well Notes is subject to the condition that (x) the Company used best efforts to obtain sufficient financing from a third party for the Company to pay and discharge, when due and payable, its obligations, (y) the Company was unable despite its best efforts to obtain such financing from a third party on reasonably acceptable terms, as determined by a majority of the independent directors of the Company (such determination to be made as if the financing contemplated by the Keep Well Agreement were not available to the Company; and (z) (1) absent obtaining the funds requested by the Company, the Company will not have sufficient unrestricted cash to pay and discharge all its obligations then due or scheduled to become due within the 30 days following the date of the request, and (2) there are no conditions or events that, when considered in the aggregate, raise substantial doubt about the Company’s ability to continue as a going concern through August 15, 2023, after giving effect to the receipt of the funds requested and the remaining Available Amount.

As of the date hereof, the Company has borrowed no funds under the Keep Well Agreement. If a Keep Well Note is issued, the Company’s obligations under the Keep Well Agreement will be unconditionally guaranteed by certain of the Company’s subsidiaries and will be secured by a first priority lien on substantially all of the present and future property and assets of the Company and such subsidiaries, in each case, subject to customary exceptions and exclusions.

The Keep Well Agreement was evaluated by, and negotiated at the direction of, a special committee of independent and disinterested directors of the Company’s board of directors. The Company’s board of directors approved the Keep Well Agreement upon the recommendation for such approval by the special committee.

The Keep Well Agreement contains customary covenants that must be complied with by the Company, including, among other covenants, restrictions on the Company’s ability to incur debt, grant liens, make certain investments and acquisitions, pay dividends, repurchase equity interests, repay certain debt, amend certain contracts, enter into certain asset sale transactions, and covenants that require the Company to, among other things, provide annual, quarterly and monthly financial statements, together with related compliance certificates, maintain its property in good repair, maintain insurance and comply with applicable laws. The Keep Well Agreement also includes the following financial covenants: a requirement that annualized consolidated recurring revenue for 2022, and during 2023, consolidated recurring revenue for the preceding twelve months be at least $15.0 million tested monthly; and a requirement that consolidated liquidity must be greater than $5.0 million at all times.

The Keep Well Agreement contains customary events of default, including, among others, a payment default, bankruptcy events, cross-default provisions, breaches of covenants and representations and warranties, change of control, and judgment defaults. In the case of an event of default, Purchaser may, among other remedies, accelerate the payment of all obligations under the Keep Well Notes.

The Company has the right terminate the Keep Well Agreement at any time prior to borrowing funds thereunder (such date on which such funds are borrowed, the "Initial Keep Well Note Date"). Any Commitment Shares (as defined below) that would have been earned prior to such termination, subject to obtaining the Commitment Shares Stockholder Approval (as defined below), will
be earned and issued upon Commitment Shares Stockholder Approval, and the Company’s obligation to seek Commitment Shares Stockholder Approval shall survive any such termination.

In connection with entering into the Keep Well Agreement, subject to obtaining approval of the Company’s stockholders as required by applicable Nasdaq listing rules (the “Commitment Shares Stockholder Approval”), the Company will issue up to 739,645 shares of its common stock to Purchaser (or any entity affiliated with Purchaser, as designated by Purchaser) (the “Commitment Shares”), (a) 50% of which will be issued upon obtaining Commitment Shares Stockholder Approval, (b) 25% of which will be issued upon the later of June 1, 2022 and obtaining Commitment Shares Stockholder Approval, unless on or before June 1, 2022, the Company has secured sufficient capital to replace the Available Amount pursuant to an alternative financing approved by the Company’s board of directors; and (c) 25% of which will be issued on the later of the Initial Keep Well Note Date and obtaining the Commitment Shares Stockholder Approval.

In connection with the each Keep Well Note sold by Company, subject to obtaining approval of the Company’s stockholders as required by applicable Nasdaq listing rules (the “Keep Well Warrant Stockholder Approval”), the Company will issue to Purchaser (or an entity affiliated with Purchaser, as designated by Purchaser) a warrant to purchase shares of the Company’s common stock (each, a “Keep Well Warrant”). The number of shares of the Company’s common stock underlying each Keep Well Warrant will be equal to (y) the product of the principal amount of the applicable Keep Well Note and 20% divided by (z) the exercise price of the applicable Keep Well Warrant. Each Keep Well Warrant will have a term of five years and an exercise price equal to $1.69, which was the consolidated closing bid price of the Company’s common stock as reported by Nasdaq immediately preceding the time the parties entered into the Keep Well Agreement. Each Keep Well Warrant will contain customary adjustment provisions in the event of stock splits, combinations, and similar transactions, and will provide specified information, registration and indemnification rights to the holder of such Keep Well Warrant.

The Company agreed to seek the Commitment Shares Stockholder Approval and the Keep Well Warrant Stockholder Approval at a stockholders meeting to be held on or on or before September 9, 2022.

If Acuitas' beneficial ownership of the Company’s capital stock equals at least a majority of the voting power of the Company’s outstanding capital stock following the issuance of any of the Commitment Shares, a Keep Well Warrant or any shares of common stock issuable upon exercise of a Keep Well Warrant, Acuitas agreed to enter into a stockholders agreement with the Company (the “Stockholders Agreement”) pursuant to which Acuitas would agree to vote the shares of the Company’s common stock it beneficially owns (a) in favor of an amendment to the certificate of incorporation or bylaws of the Company that would require the Company’s board of directors to include not fewer than three independent directors at all times, (b) in favor of the election or re-election of independent directors nominated for election by the Company’s board of directors or by the nominating committee thereof unless the failure of a nominee to be elected or re-elected to the Company’s board of directors would not result in the Company having fewer than three independent directors following such election, and (c) against any proposal or action that would result in the Company’s board of directors having fewer than three independent directors at all times. In addition, under the Stockholders Agreement, the parties will agree that the Company will not enter into any transaction between the Company or any of its affiliates, on the one hand, and Acuitas or any of its affiliates (excluding the Company and its affiliates), on the other hand, unless it is approved by a majority of the independent directors then serving on the Company’s board of directors.