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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission File Number 001-37900

Everspin Technologies, Inc.

(Exact name of Registrant as specified in its Charter)

Delaware

    

26-2640654

(State or other jurisdiction

of incorporation or organization)

(I.R.S. Employer

Identification No.)

5670 W. Chandler Boulevard, Suite 100

Chandler, Arizona 85226

(Address of principal executive offices including zip code)

Registrant’s telephone number, including area code: (480347-1111

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.0001

MRAM

The Nasdaq Stock Market LLC

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    YES      NO  

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).    YES      NO  

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

  

Small reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    YES      NO  

The number of shares of Registrant’s Common Stock outstanding as of October 30, 2020 was 19,005,599.

Table of Contents

Table of Contents

    

Page

PART I—FINANCIAL INFORMATION

Item 1.

Financial Statements

3

Condensed Balance Sheets as of September 30, 2020 (unaudited) and December 31, 2019

3

Condensed Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2020 and 2019 (unaudited)

4

Condensed Statements of Stockholders’ Equity for the three and nine months ended September 30, 2020 and 2019 (unaudited)

5

Condensed Statements of Cash Flows for the nine months ended September 30, 2020 and 2019 (unaudited)

6

Notes to Condensed Financial Statements (unaudited)

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

16

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

25

Item 4.

Controls and Procedures

25

PART II—OTHER INFORMATION

Item 1.

Legal Proceedings

27

Item 1A.

Risk Factors

27

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

44

Item 3.

Defaults Upon Senior Securities

44

Item 4.

Mine Safety Disclosures

44

Item 5.

Other Information

44

Item 6.

Exhibits

45

EXHIBIT INDEX

45

SIGNATURES

47

In this Quarterly Report on Form 10-Q, “we,” “our,” “us,” “Everspin Technologies,” and “the Company” refer to Everspin Technologies, Inc. The Everspin logo and other trade names, trademarks or service marks of Everspin Technologies are the property of Everspin Technologies, Inc. This report contains references to our trademarks and to trademarks belonging to other entities. Trade names, trademarks and service marks of other companies appearing in this report are the property of their respective holders. We do not intend our use or display of other companies’ trade names or trademarks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

2

Table of Contents

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

EVERSPIN TECHNOLOGIES, INC.

Condensed Balance Sheets

(In thousands, except share and per share amounts)

September 30, 

December 31,

2020

2019

Assets

 

  

 

  

Current assets:

 

  

 

  

Cash and cash equivalents

$

13,927

$

14,487

Accounts receivable, net

 

8,167

 

5,799

Inventory

 

6,173

 

7,863

Prepaid expenses and other current assets

 

99

 

539

Total current assets

 

28,366

 

28,688

Property and equipment, net

 

2,126

 

3,479

Right-of-use assets

2,652

 

3,132

Other assets

 

73

 

73

Total assets

$

33,217

$

35,372

Liabilities and Stockholders’ Equity

 

  

 

  

Current liabilities:

 

  

 

  

Accounts payable

$

2,806

$

2,873

Accrued liabilities

 

1,708

 

2,727

Current portion of long-term debt

 

3,614

 

670

Operating lease liabilities

1,531

1,582

Other liabilities

38

42

Total current liabilities

 

9,697

 

7,894

Long-term debt, net of current portion

 

4,283

 

7,149

Operating lease liabilities, net of current portion

1,279

1,840

Total liabilities

 

15,259

 

16,883

Commitments and contingencies

 

  

 

  

Stockholders’ equity:

 

  

 

  

Preferred stock, $0.0001 par value per share; 5,000,000 shares authorized; no shares issued and outstanding as of September 30, 2020 and December 31, 2019

Common stock, $0.0001 par value per share; 100,000,000 shares authorized; 18,970,791 and 18,081,753 shares issued and outstanding as of September 30, 2020 and December 31, 2019

 

2

2

Additional paid-in capital

 

173,539

 

167,149

Accumulated deficit

 

(155,583)

 

(148,662)

Total stockholders’ equity

 

17,958

 

18,489

Total liabilities and stockholders’ equity

$

33,217

$

35,372

The accompanying notes are an integral part of these condensed financial statements.

3

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EVERSPIN TECHNOLOGIES, INC.

Condensed Statements of Operations and Comprehensive Loss

(In thousands, except share and per share amounts)

(Unaudited)

Three Months Ended September 30, 

Nine Months Ended September 30, 

    

2020

    

2019

    

2020

    

2019

    

Product sales

$

9,577

$

8,370

$

30,139

$

25,396

Licensing, royalty, and other revenue

543

808

1,915

 

2,454

Total revenue

 

10,120

 

9,178

 

32,054

 

27,850

Cost of sales

 

7,791

 

4,824

 

19,183

 

14,692

Gross profit

 

2,329

 

4,354

 

12,871

 

13,158

Operating expenses:1

 

  

 

  

 

  

 

  

Research and development

 

2,579

 

3,395

 

8,383

 

10,912

General and administrative

 

2,549

 

3,050

 

7,797

 

9,501

Sales and marketing

 

912

 

1,491

 

3,071

 

4,094

Total operating expenses

 

6,040

 

7,936

 

19,251

 

24,507

Loss from operations

 

(3,711)

 

(3,582)

 

(6,380)

 

(11,349)

Interest expense

 

(157)

 

(170)

 

(501)

 

(567)

Other (expense) income, net

(27)

89

 

(40)

 

327

Net loss and comprehensive loss

$

(3,895)

$

(3,663)

$

(6,921)

$

(11,589)

Net loss per common share, basic and diluted

$

(0.21)

$

(0.21)

$

(0.37)

$

(0.67)

Weighted-average shares used to compute net loss per common share, basic and diluted

 

18,942,163

 

17,312,226

 

18,705,149

 

17,183,306

1Operating expenses include stock-based compensation as follows:

Research and development

$

182

$

176

$

538

$

484

General and administrative

657

627

1,888

1,692

Sales and marketing

71

92

207

221

Total stock-based compensation

$

910

$

895

$

2,633

$

2,397

The accompanying notes are an integral part of these condensed financial statements.

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EVERSPIN TECHNOLOGIES, INC.

Condensed Statements of Stockholders’ Equity

(In thousands, except share and per share amounts)

(Unaudited)

Three and Nine Months Ended September 30, 2020

Additional

Total

Common Stock

Paid-In

Accumulated

Stockholders’

  

Shares

  

Amount

  

Capital

  

Deficit

  

Equity

Balance at December 31, 2019

18,081,753

$

2

$

167,149

$

(148,662)

$

18,489

Issuance of common stock in at-the-market offering, net of issuance costs (Note 7)

468,427

2,084

2,084

Adjustment to opening balance for adoption of new accounting standard

Issuance of common stock under stock incentive plans

88,375

315

315

Compensation expense related to vesting of common stock issued to GLOBALFOUNDRIES

Stock-based compensation expense

805

805

Net loss

(1,732)

(1,732)

Balance at March 31, 2020

18,638,555

$

2

$

170,353

$

(150,394)

$

19,961

Issuance of common stock under stock incentive plans

231,220

827

827

Stock-based compensation expense

918

918

Net loss

(1,294)

(1,294)

Balance at June 30, 2020

18,869,775

$

2

$

172,098

$

(151,688)

$

20,412

Issuance of common stock under stock incentive plans

101,016

379

379

Stock-based compensation expense

910

910

Issuance of warrant

152

152

Net loss

(3,895)

(3,895)

Balance at September 30, 2020

18,970,791

$

2

$

173,539

$

(155,583)

$

17,958

Three and Nine Months Ended September 30, 2019

Additional

Total

Common Stock

Paid-In

Accumulated

Stockholders’

  

Shares

  

Amount

  

Capital

  

Deficit

  

Equity

Balance at December 31, 2018

17,095,456

$

2

$

158,912

$

(133,993)

$

24,921

Issuance of common stock under stock incentive plans

12,607

13

13

Stock-based compensation expense

704

704

Net loss

(4,256)

(4,256)

Balance at March 31, 2019

17,108,063

$

2

$

159,629

$

(138,249)

$

21,382

Issuance of common stock under stock incentive plans

43,227

137

137

Stock-based compensation expense

798

798

Net loss

(3,670)

(3,670)

Balance at June 30, 2019

17,151,290

$

2

$

160,564

$

(141,919)

$

18,647

Issuance of common stock under stock incentive plans

7,341

28

28

Stock-based compensation expense

895

895

Modification of warrant in connection with 2019 Credit Facility

(19)

(19)

Issuance of common stock in at the market offering

377,115

2,172

2,172

Net loss

(3,663)

(3,663)

Balance at September 30, 2019

17,535,746

$

2

$

163,640

$

(145,582)

$

18,060

The accompanying notes are an integral part of these condensed financial statements.

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EVERSPIN TECHNOLOGIES, INC.

Condensed Statement of Cash Flows

(In thousands)

(Unaudited)

Nine Months Ended September 30, 

    

2020

    

2019

Cash flows from operating activities

 

  

 

  

Net loss

$

(6,921)

$

(11,589)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

Depreciation and amortization

 

1,611

 

1,297

Loss on disposal of property and equipment

 

 

20

Stock-based compensation

 

2,633

 

2,397

Non-cash loss on warrant revaluation

2

Non-cash interest expense

 

231

 

219

Inventory reserves

1,692

Changes in operating assets and liabilities:

 

 

Accounts receivable

 

(2,368)

 

1,954

Inventory

 

(2)

 

779

Prepaid expenses and other current assets

 

440

 

466

Accounts payable

 

(31)

 

518

Accrued liabilities

 

(692)

 

(1,444)

Lease liabilities

(132)

(72)

Net cash used in operating activities

 

(3,537)

 

(5,455)

Cash flows from investing activities

 

 

Purchases of property and equipment

 

(307)

 

(566)

Net cash used in investing activities

 

(307)

 

(566)

Cash flows from financing activities

 

 

Payments on debt

 

 

(4,840)

Payments of debt issuance costs

 

 

(80)

Payments on finance lease obligation

 

(6)

 

(8)

Proceeds from exercise of stock options and purchase of shares in employee stock purchase plan

 

1,206

 

178

Proceeds from issuance of common stock in at-the-market offering, net of issuance costs

2,084

2,172

Net cash provided by (used in) financing activities

 

3,284

 

(2,578)

Net decrease in cash and cash equivalents

 

(560)

 

(8,599)

Cash and cash equivalents at beginning of period

 

14,487

 

23,379

Cash and cash equivalents at end of period

$

13,927

$

14,780

Supplementary cash flow information:

 

 

Interest paid

$

271

$

373

Operating cash flows paid for operating leases

$

1,298

$

1,264

Financing cash flows paid for finance leases

$

6

$

8

Non-cash investing and financing activities:

 

 

Right-of-use assets obtained in exchange for new operating leases

$

$

23

Increase of right-of-use asset and lease liability due to lease modification

$

545

$

Purchase of property and equipment in accounts payable and accrued liabilities

$

8

$

33

Bonus settled in shares of common stock

$

315

$

Modification of warrant

$

$

36

Issuance of warrant

$

152

$

The accompanying notes are an integral part of these condensed financial statements.

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EVERSPIN TECHNOLOGIES, INC.

Notes to Unaudited Condensed Financial Statements

1. Organization and Nature of Business

Everspin Technologies, Inc. (the Company) was incorporated in Delaware on May 16, 2008. The Company’s magnetoresistive random-access memory (MRAM) solutions offer the persistence of non-volatile memory with the speed and endurance of random-access memory (RAM) and enable the protection of mission critical data particularly in the event of power interruption or failure. The Company’s MRAM solutions allow its customers in the industrial, automotive, transportation, and data center markets to design high performance, power efficient and reliable systems without the need for bulky batteries or capacitors.

Ability to continue as a going concern

The Company believes that its existing cash and cash equivalents as of September 30, 2020, coupled with its anticipated growth and sales levels will be sufficient to meet its anticipated cash requirements for at least the next twelve months from the financial statement issuance date. The Company’s future capital requirements will depend on many factors, including its growth rate, the timing and extent of its spending to support research and development activities, the timing and cost of establishing additional sales and marketing capabilities, and the introduction of new products. The Company may be required at some point in the future to seek additional equity or debt financing, to sustain operations beyond that point, and such additional financing may not be available on acceptable terms or at all. If the Company is unable to raise additional capital or generate sufficient cash from operations to adequately fund its operations, it will need to curtail planned activities to reduce costs. Doing so will likely harm its ability to execute on its business plan.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (GAAP) and applicable rules and regulations of the Securities and Exchange Commission (SEC) regarding interim financial reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP have been condensed or omitted, and accordingly the balance sheet as of December 31, 2019 has been derived from the audited financial statements at that date but does not include all of the information required by GAAP for complete financial statements. These unaudited interim condensed financial statements have been prepared on the same basis as the Company’s annual financial statements and, in the opinion of management, reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for a fair statement of the Company’s financial information. The results of operations for the three and nine months ended September 30, 2020 are not necessarily indicative of the results to be expected for the year ending December 31, 2020 or for any other interim period or for any other future year.

The accompanying condensed financial statements and related financial information should be read in conjunction with the audited financial statements and the related notes thereto for the year ended December 31, 2019, included in the Company’s Annual Report on Form 10-K filed with the SEC.

Use of Estimates

The preparation of the condensed financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the condensed financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, management evaluates its estimates, including those related to revenue recognition, fair value of assets and liabilities, inventory reserves, product warranty reserves, deferred tax assets and related valuation allowances, and stock-based compensation. The Company believes its estimates and assumptions are reasonable; however, actual results may differ from the Company’s estimates.

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Accounts receivable, net

The Company establishes an allowance for product returns. The Company analyzes historical returns, current economic trends and changes in customer demand and acceptance of products when evaluating the adequacy of sales returns. Returns are processed as credits on future purchases, and as a result, the allowance is recorded against the balance of trade accounts receivable. In addition, the Company establishes an allowance for estimated price concessions related to its distributor agreements. The Company estimates credits to distributors based on the historical rate of credits provided to distributors relative to sales.

Accounts receivable, net consisted of the following (in thousands):

September 30,

December 31, 

2020

2019

Trade accounts receivable

$

8,142

$

5,454

Unbilled accounts receivable

168

576

Allowance for product returns and price concessions

 

(143)

 

(231)

Accounts receivable, net

$

8,167

$

5,799

Concentration of Credit Risk

Financial instruments that potentially expose the Company to a concentration of credit risk consist principally of cash and cash equivalents that are held by a financial institution in the United States and accounts receivable. Amounts on deposit with a financial institution may at times exceed federally insured limits. The Company maintains its cash accounts with high credit quality financial institutions and, accordingly, minimal credit risk exists with respect to the financial institutions.

Significant customers are those which represent more than 10% of the Company’s total revenue or net accounts receivable balance at each respective balance sheet date. For the purposes of this disclosure, the Company defines “customer” as the entity that is purchasing the products or licenses directly from the Company, which includes the distributors of the Company’s products in addition to end customers that the Company sells to directly. For each significant customer, revenue as a percentage of total revenue and accounts receivable as a percentage of total accounts receivable, net are as follows:

Revenue

Accounts Receivable, net

 

Three Months Ended

Nine Months Ended

As of

 

September 30, 

September 30, 

September 30, 

December 31, 

Customers

    

2020

    

2019

    

2020

    

2019

    

2020

    

2019

 

Customer A

 

38

%

25

%

32

%

19

%

47

%

41

%  

Customer B

 

*

*

*

*

*

11

%  

Customer C

*

*

*

12

%

*

*

Customer D

*

*

*

11

%

*

*

Customer E

*

    

12

%

*

12

%

*

*

Customer F

*

    

10

%

*

*

*

*

*

Less than 10%

Fair Value of Financial Instruments

Fair value is defined as an exit price, representing the amount that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants. The framework for measuring fair value provides a three-tier hierarchy prioritizing inputs to valuation techniques used in measuring fair value as follows:

Level 1— Observable inputs such as quoted prices for identical assets or liabilities in active markets;

Level 2— Inputs, other than quoted prices for identical assets or liabilities in active markets, which are observable either directly or indirectly; and

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Level 3— Unobservable inputs in which there is little or no market data requiring the reporting entity to develop its own assumptions

As of September 30, 2020, based on Level 2 inputs and the borrowing rates available to the Company for loans with similar terms and consideration of the Company’s credit risk, the carrying value of the Company’s variable interest rate debt, excluding unamortized debt issuance costs, approximates fair value. The Company’s financial instruments consist of Level 1 assets and a Level 3 liability. Where quoted prices are available in an active market, securities are classified as Level 1. Level 1 assets consist of highly liquid money market funds that are included in cash equivalents. The Company’s Level 3 liability consists of warrants issued in connection with the Company’s current credit facility (Note 6).

The following tables sets forth the fair value of the Company’s financial assets and liabilities measured at fair value on a recurring basis (in thousands):

September 30, 2020

    

Level 1

    

Level 2

    

Level 3

    

Total

Assets:

  

  

  

Money market funds

$

14,011

  

$

  

$

  

$

14,011

Total assets measured at fair value

$

14,011

  

$

  

$

  

$

14,011

Liabilities:

  

  

  

Warrant liability

$

  

$

  

$

35

  

$

35

Total liabilities measured at fair value

$

  

$

  

$

35

  

$

35

December 31, 2019

    

Level 1

    

Level 2

    

Level 3

    

Total

Assets:

  

  

  

Money market funds

$

12,367

  

$

  

$

  

$

12,367

Total assets measured at fair value

$

12,367

  

$

  

$

  

$

12,367

Liabilities:

  

  

  

Warrant liability

$

  

$

  

$

33

  

$

33

Total liabilities measured at fair value

$

  

$

  

$

33

  

$

33

Recently Issued Pronouncements

In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which amends the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. As the Company is a smaller reporting company, ASU 2016-13 is effective for the Company’s annual reporting periods, and interim periods within those years, beginning after December 15, 2022, and requires a cumulative effect adjustment to the balance sheet as of the beginning of the first reporting period in which the guidance is effective. In April 2019, the FASB issued ASU No. 2019-04, Codification Improvements Financial Instruments-Credit Losses (Topic 326). The new ASU provides narrow-scope amendments to help apply ASU No. 2016-13. The Company is evaluating the impact of the adoption of ASU 2016-13 and ASU 2019-04 on its financial statements.

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3. Revenue

The Company sells the majority of its products to its distributors, but also to original equipment manufacturers (OEMs). The Company also recognizes revenue under licensing and royalty agreements with some customers. The following table presents the Company’s revenues disaggregated by sales channel (in thousands):

Three Months Ended September 30, 

Nine Months Ended September 30, 

    

2020

    

2019

    

2020

    

2019

Distributor

$

5,385

$

5,720

$

18,952

$

18,469

Non-distributor

4,735

3,458

13,102

9,381

Total revenue

$

10,120

$

9,178

$

32,054

$

27,850

The following table presents the Company’s revenues disaggregated by timing of recognition (in thousands):

Three Months Ended September 30, 

Nine Months Ended September 30, 

    

2020

    

2019

    

2020

    

2019

Point in time

$

9,756

$

8,525

$

30,982

$

26,156

Over time

364

653

1,072

1,694

Total revenue

$

10,120

$

9,178

$

32,054

$

27,850

The following table presents the Company’s revenues disaggregated by type (in thousands):

Three Months Ended September 30, 

Nine Months Ended September 30, 

    

2020

    

2019

    

2020

    

2019

Product sales

$

9,577

$

8,370

$

30,139

$

25,396

Royalties

179

155

843

760

Other revenue

364

653

1,072

1,694

Total revenue

$

10,120

$

9,178

$

32,054

$

27,850

The Company recognizes revenue in three primary geographic regions: North America; Europe, Middle East and Africa (EMEA); and Asia-Pacific and Japan (APJ). The following table presents the Company’s revenues disaggregated by the geographic region to which the product is delivered or licensee is located (in thousands):

Three Months Ended September 30, 

Nine Months Ended September 30, 

    

2020

    

2019

    

2020

    

2019

North America

$

2,109

$

1,527

$

5,033

$

7,244

EMEA

859

2,048

4,586

6,776

APJ

7,152

5,603

22,435

13,830

Total revenue

$

10,120

$

9,178

$

32,054

$

27,850

4. Balance Sheet Components

Inventory

Inventory consisted of the following (in thousands):

September 30, 

December 31,

    

2020

    

2019

Raw materials

$

366

$

119

Work-in-process

 

5,042

 

6,329

Finished goods

 

765

 

1,415

Total inventory

$

6,173

$

7,863

During the three months ended September 30, 2020, the Company recorded a $1.7 million reserve for excess and obsolete inventory as a result of management’s quarterly assessment of declining forecasted demand and the loss of certain designs in the period.

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Accrued Liabilities

Accrued liabilities consisted of the following (in thousands):

September 30, 

December 31,

    

2020

    

2019

Accrued payroll-related expenses

$

1,088

$

1,236

Accrued joint development agreement expenses

170

Accrued inventory

311

87

Restructuring expenses

 

 

782

Other

 

309

 

452

Total accrued liabilities

$

1,708

$

2,727

As of September 30, 2020, the Company completed the corporate restructuring activity initiated during the year ended December 31, 2019. Cash paid for employee severance and benefit arrangements in connection with the restructuring activity were $0.06 million and $0.8 million during the three months and nine months ended September 30, 2020, respectively.

5. Leases

Operating leases consist primarily of office space expiring at various dates through 2023. In May 2020, the Company executed an amendment to its lease agreement for its manufacturing facility. The amendment extended the lease term by one year and reduced the monthly rent payment.

The undiscounted future non-cancellable lease payments under the Company’s operating leases were as follows (in thousands):

As of September 30, 2020

    

Amount

2020 (remaining three months)

    

$

437

    

2021

1,603

2022

861

2023

68

Total undiscounted lease payments

$

2,969

6. Debt

2019 Credit Facility

In August 2019, the Company executed an Amended and Restated Loan and Security Agreement (2019 Credit Facility), which amended and restated the Company’s prior loan and security agreement (2017 Credit Facility), providing for a formula revolving line of credit (Line of Credit) and a term loan (2019 Term Loan) with Silicon Valley Bank (SVB) to refinance in full the outstanding principal balance of $8.0 million under the 2017 Credit Facility. In August 2019, the Company paid the final payment of $0.8 million, which was due upon the refinancing of the 2017 Credit Facility.

In July 2020, the Company executed the first amendment to the 2019 Credit Facility with SVB. The amendment, among other things, extended the initial 12 months interest-only period for the 2019 Term Loan to a 16 months interest-only period and lowered the floor interest rate. The floor interest rates for 2019 Term Loan and the Line of Credit were reduced from 4.75% and 6.75% to 3.75% and 4.75%, respectively.

The amended Line of Credit allows for a maximum draw of $5.0 million, subject to a formula borrowing base, has a two-year term and bears interest at a floating rate equal to the Wall Street Journal (WSJ) prime rate plus 1.5%, per annum, subject to a floor of 4.75%. As of September 30, 2020, the interest rate was 4.75%. The Line of Credit required a commitment fee of 1.6% of the maximum availability of the Line of Credit, which was paid in August 2019 upon closing, and was accounted for as a debt discount. The Line of Credit also provides for a termination fee equal to 1% of the maximum availability under the Line of Credit, which is due in case of a termination of the Line of Credit prior to the

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scheduled maturity date, and an unused facility fee equal to 0.125% per annum of the average unused portion of the Line of Credit, which is expensed as incurred. At execution, $2.0 million from the Line of Credit was used to refinance a portion of the outstanding balance of the 2017 Credit Facility, and $3.0 million remains available under the Line of Credit, subject to borrowing base availability. As of September 30, 2020, the effective interest rate under the Line of Credit was 10.18% and the outstanding balance was $2.0 million. The Line of Credit matures on August 5, 2021.

The amended 2019 Term Loan provides for a $6.0 million term loan, which was used to refinance the remaining balance of the 2017 Credit Facility. The 2019 Term Loan has a term of 46 months, and a 16-month interest only period followed by 30 months of equal principal payments, plus accrued interest. The 2019 Term Loan bears interest at a floating rate equal to the WSJ prime rate minus 0.75%, subject to a floor of 3.75%. As of September 30, 2020, the interest rate was 3.75%. A final payment of 7% of the original principal amount of the 2019 Term Loan must be ma