Quarterly report pursuant to Section 13 or 15(d)

Borrowing Arrangements

v3.21.2
Borrowing Arrangements
 9 Months Ended
Sep. 30, 2021
Debt Disclosure [Abstract]  
Borrowing Arrangements
Note 10. Borrowing Arrangements
The Company’s outstanding debt obligations consisted of the following:
 
 
  
September 30,
2021
 
  
December 31,
2020
 
Dutch Landlord Loan
    $ 127      $ 163  
Term Loan
      —        3,423  
Convertible Promissory Notes
      —          5,000  
PPP Loan
      —          1,982  
    
 
 
     
 
 
  
       127        10,568  
Less: current portion
      (39 )       (8,332 ) 
    
 
 
     
 
 
  
Long-term debt
    $ 88      $ 2,236  
    
 
 
     
 
 
  
Dutch Landlord Loan
On May 12
,
2014, the Company entered into a loan agreement with its landlord at the Eindhoven factory (the “Dutch Landlord Loan”) to advance
€242 (equivalent to $280 and $297
in total at September 30, 2021 and December 31, 2020, respectively) to finance leasehold improvements
.
The Dutch Landlord Loan is unsecured and required interest-only payments until September 30, 2016, followed by monthly payments of principal and interest. Interest accrues at 8.50% per annum through the maturity date on September 30, 2024.
For the three months ended September 30, 2021 and 2020, interest expense totaled $5, respectively. For the nine months ended September 30, 2021 and 2020, interest expense totaled $14, respectively.
Term Loan
On October 29, 2018, the Company entered into a loan and security agreement (the “Term Loan”) for the principal sum of $5,000 with a maturity date of October 29, 2022. The Term Loan requires interest-only payments until October 29, 2019, followed by monthly payments of principal and interest. Interest is payable at a rate equal to the prime rate, plus 0.25% per annum. At the Closing of the Business Combination, the Company repaid and terminated the Term Loan in full. As of December 31, 2020, the interest rate was 3.50%. In connection with the Term Loan, the bank is due a $75 fee in the event of a liquidity event valuing the Company above a certain threshold.
For the three months ended September 30, 2021 and 2020, interest expense totaled $12 and $36, respectively. For the nine months ended September 30, 2021 and 2020, interest expense totaled $66 and $129, respectively.
Convertible Promissory Notes
On June 19, 2019, the Company entered into note purchase agreements (the “Convertible Promissory Notes”) with certain stockholders of the Company for the aggregate principal sum of $5,000. The Convertible Promissory Notes bear interest at a rate of 8% per annum with all principal and interest due on or before the earlier of (i) December 19, 2020; and (ii) the closing of a Qualified Equity Financing, as defined below. The Convertible Promissory Notes are automatically converted into conversion shares upon the closing of a Qualified Equity Financing. Qualified Equity Financing is defined as the next sale by the Company of preferred stock following the date of the Convertible Promissory Notes on or prior to the maturity date with the principal purpose of raising capital. In the event there is a
non-Qualified
Equity Financing, the outstanding principal and unpaid accrued interest of each note may be converted, at the written election of the holders of the Convertible Promissory Notes, into conversion shares.
Non-Qualified
Equity Financing shall mean the next sale by the Company of its equity following the date of the Convertible Promissory Notes on or prior to the maturity date with the principal purpose of raising capital which is not a Qualified Equity Financing. If the next equity financing or a corporate transaction has not occurred on or before the maturity date of the Convertible Promissory Notes, the principal and unpaid accrued interest of each outstanding note may be converted, at the written election of each holder of the Convertible Promissory Notes, into conversion shares on the date of such written election. The number of conversion shares to be issued upon conversion shall be equal to the quotient obtained by dividing (i) the outstanding principal and unpaid accrued interest due on a Convertible Promissory Note to be converted on the date of the conversion by (ii) the Conversion Price. The conversion price is defined as the Discounted Conversion Price, which is 70% of the next equity price per share. The Convertible Promissory Notes are subordinated in right of payment to all indebtedness of the Company arising under the Term Loan. At inception, the terms of the notes gave rise to a contingent beneficial conversion feature.
On December 14, 2020, the Company executed an amendment to the Convertible Promissory Notes that extended the maturity date to August 10, 2021. All other relevant terms and conditions of the Convertible Promissory Notes remain binding.
Immediately prior to the completion of the Business Combination, the Convertible Promissory Notes in the aggregate principal amount of
$5,000
were converted into
 
1,434,391
shares of common stock of Legacy Shapeways (1,189,558 shares of Common Stock post Business Combination), and the related unpaid and accrued interest totaling
 
$
913
were
 
converted into
261,884
shares of common stock of Legacy
Shapeways (217,183 shares of Common Stock post Business Combination).
For the three months ended September 30, 2021 and 2020, interest expense totaled $109 and $100, respectively. For the nine months ended September 30, 2021 and 2020, interest expense totaled $309 and $300, respectively.
Paycheck Protection Program Loan
On May 4, 2020, the Company received an unsecured loan of $1,982 under the Paycheck Protection Program (the “PPP Loan”). The Paycheck Protection Program (or “PPP”) was established under the recently enacted CARES Act and is administered by the U.S. Small Business Administration (“SBA”). On May 4, 2020, the Company entered into a promissory note with Pacific Western Bank evidencing the unsecured PPP Loan.
The PPP Loan has a maturity date of May 4, 2022 and accrues interest at an annual rate of 1.00%. To the extent the loan amount is not forgiven under the PPP, the Company is obligated to make monthly payments of principal and interest, beginning six months from the date of the note, until the maturity date. In October 2020, the PPP Flexibility Act of 2020 extended the deferral period for borrower payments on all PPP loans from six months to ten months. Interest expense totaled $18 for the nine months ended September 30, 2021. There was no interest expense incurred for the nine months ended September 30, 2020.
The CARES Act and the PPP provide a mechanism for forgiveness of up to the full amount borrowed. Under the PPP, the Company may apply for and be granted forgiveness for all or part of the PPP Loan. The amount of the loan proceeds eligible for forgiveness is based on a formula that takes into account a number of factors, including the amount of loan proceeds used by the Company during the eight-week period after the loan origination for certain purposes including payroll costs, and certain rent payments, mortgage payments, and utility payments, provided that at least 75% of the loan amount is used for eligible payroll costs. Subject to the other requirements and limitations on loan forgiveness, only loan proceeds spent on payroll and other eligible costs during the covered eight-week period will qualify for forgiveness.
As of September 30, 2021, the full principal and interest amount of $2,000 of
the PPP Loan was forgiven and recorded in other income on the condensed consolidated statement of operations and comprehensive loss. Although the PPP Loan has been forgiven as of September 30, 2021, the Company intends to repay the PPP Loan in its entirety during the fourth quarter of 2021 and will reverse the previously recognized gain on debt forgiveness when repaid.