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Loans payable

12 Months Ended

Dec. 31, 2022

9. Loans payable

As of December 31, 2022 and December 31, 2021, loans payable consisted of the following (in thousands):


	December 31,		December 31,
	2022		2021
Loans from FFG	$	2,855	$	6,074
Unamortized debt discount		(350)		(1,063)
Total loans payable, net	$	2,505	$	5,011

In connection with the funding agreements with the Austrian Research Promotion Agency, (Österreichische Forschungsförderungsgesellschaft, or “FFG”), the Company has received various loans (“FFG Loans”). The FFG Loans were made on a project-by-project basis. Amounts due under the FFG Loans bear interest at a rate of 0.75% per annum and mature at various dates between March 2023 and March 2024. Interest on amounts due under the loans is payable semi-annually in arrears, with all principal and remaining accrued interest due upon maturity.

The FFG Loans bear interest at rates that are below market rates of interest. The Company accounts for the imputed benefit arising from the difference between an estimated market rate of interest and the rate of interest charged by FFG as grant income from FFG. On the date that FFG loan proceeds are received, the Company recognizes the

portion of the loan proceeds allocated to grant funding as a discount to the carrying value of the loan and as unearned income, which is recognized as grant income over the term of the funding agreement.

The Company recognized grant income of $0.6 million, $0.8 million and $0.7 million during the years ended December 31, 2022, 2021 and 2020, respectively, related to the recognition of the unearned income recorded for the imputed benefit of FFG Loans at below-market interest rates. Unearned income (current) related to the imputed benefit of FFG Loans at below-market interest rates was $0.3 million and $0.7 million as of December 31, 2022 and 2021, respectively, and unearned income (non-current) presented under loans payable non-current related to such benefit was $0.1 million and $0.4 million as of December 31, 2022 and 2021, respectively.

In addition, the Company has recorded a discount to the carrying value of each FFG Loan for the portion of the loan proceeds allocated to grant funding, which is being amortized to interest expense over the term of the loan using the effective interest method. As of December 31, 2022 and 2021, the unamortized debt discount related to FFG Loans was $0.4 million and $1.1 million, respectively.

The Company recognized interest expense of $0.7 million, $0.9 million and $0.8 million during the years ended December 31, 2022, 2021 and 2020, respectively, related to the FFG Loans, which included interest expense related to the amortization of debt discount of $0.7 million, $0.8 million and $0.7 million during the years ended December 31, 2022, 2021 and 2020, respectively. A principal repayment of $2.8 million, and no principal repayment was made in the years ended December 31, 2022 and 2021, respectively.

The Company uses an estimated market rate of 20%, which was determined based on an average of the available interest rates on unsecured loans to comparable companies. A 10% increase or decrease in the estimated market rate of interest would have no material impact on grant income or liabilities.

In the event that the underlying program research results in a scientific or technical failure, the principal then outstanding under any loan may be forgiven by FFG on a project-by-project basis. The FFG Loans contain no financial covenants and are not secured by any of the Company's assets.

As of December 31, 2022, the aggregate minimum future principal payments due in connection with the FFG Loans are summarized as follows (in thousands):


Payments Due by Calendar Year	Amount
2023		1,721
2024		1,134
2025		—
2026		—
2027		—
Thereafter		—
Total	$	2,855