Loan with First Citizens Bank (formerly with Silicon Valley Bank)

12 Months Ended

Dec. 31, 2023

Debt Disclosure [Abstract]

Loan with First Citizens Bank (formerly with Silicon Valley Bank)

6. Loan with First Citizens Bank (formerly with Silicon Valley Bank)

On February 15, 2022 (the “Closing Date”), the Company entered into a Loan and Security Agreement (the “Loan Agreement”), with Silicon Valley Bank, as lender (“SVB”). The Company drew $10,000,000 in term loans under the Loan Agreement (the "Term Loans") on the Closing Date. The Loan Agreement was amended in April 2023.

The Term Loans bear interest at a floating rate per annum equal to the greater of (A) the prime rate (as published in the money rates section of The Wall Street Journal) plus 2.25% and (B) 5.50%. The Term Loans were interest only from the Closing Date through June 30, 2023, after which the Company is required to pay 30 equal monthly installments of principal. At December 31, 2023, the interest rate was 10.75% which is based on the prime rate plus 2.25%.

The Term Loans may be prepaid in full prior to February 15, 2024 with payment of a 2.00% prepayment premium, on or after which they may be prepaid in full with payment of a 1.00% prepayment premium. Upon prepayment or repayment in full of the Term Loans, the Company will be required to pay a one-time final payment fee equal to 5.00% of the original principal amount of any funded Term Loans being repaid. This one-time final payment fee is recorded to interest expense using the effective interest method over the period of the Term Loans in the consolidated statements of operation and other comprehensive loss.

The Term Loans and related obligations under the Loan Agreement are secured by substantially all of the Company’s properties, rights and assets, except for its intellectual property which is subject to a negative pledge under the Loan Agreement.

The Loan Agreement contains customary representations, warranties, events of default and covenants, including a requirement that the Company maintain in accounts of the Company at SVB unrestricted and unencumbered cash equal to the lesser of all of the Company’s cash or $20,000,000. On March 10, 2023, SVB was closed and the FDIC was appointed receiver for the bank. The FDIC created a successor bridge bank, and all deposits and loans of SVB were transferred to the bridge bank under a systemic risk exception approved by the United States Department of the Treasury, the Federal Reserve and the FDIC. On March 27, 2023, First Citizens Bank & Trust Company (“First Citizens Bank”), assumed all of SVB’s deposits and certain other liabilities and acquired substantially all of SVB’s loans and certain other assets from the FDIC. First Citizens Bank continues to hold the Company’s Term Loans under the same existing terms and covenants which were in place with SVB.

During the years ended December 31, 2023 and 2022, the Company recognized interest expense related to the Term Loans of $1,003,000 and $570,000, respectively, and $130,000 and $109,000, respectively, in interest expense related to accretion of the final repayment.

The following table presents the aggregate maturities of Long-term debt as of December 31, 2023 (in thousands):
Year
2024	$	4,000
2025		4,000
Total	$	8,000
The following table presents long-term and current portions of debt as of December 31, 2023 (in thousands):
Long-term debt	$	4,000
Accretion of final payment		239
Less: unamortized debt issuance costs		(37	)
Long-term debt, net	$	4,202
Current portion of long-term debt	$	4,000
Less: unamortized debt issuance costs		(37	)
Current portion of long-term debt, net	$	3,963

Debt Issuance Costs

Debt issuance costs are deferred and presented as a reduction to long-term debt. Debt issuance costs are amortized using the effective interest rate method over the term of the loan. Amortization of deferred debt issuance costs are included in interest expense in the consolidated statements of operations and comprehensive loss. The Company incurred approximately $142,000 in debt issuance costs related to the Loan Agreement. For the years ended December 31, 2023 and 2022, the Company recorded approximately $37,000 and $31,000, respectively, in amortization of debt issuance costs to interest expense in the consolidated statements of operations and comprehensive loss. The Company recorded $37,000 to both short- and long-term debt issuance costs contra-liabilities as of December 31, 2023.