Item 1.01. Entry into a Material Definitive Agreement
On May 4, 2022 (the "Effective Date"), Augmedix, Inc., a Delaware corporation
("Augmedix"), and Augmedix Operating Corporation, a Delaware corporation
("OpCo"), entered into a loan and security agreement (the "Loan Agreement") by
and among Augmedix and OpCo as borrowers (individually and collectively,
"Borrower") and Silicon Valley Bank, a California corporation, as lender
("Lender"). The Loan Agreement provides for a revolving credit facility in an
aggregate principal amount of the lesser of (i) $5 million and (ii) 80% of
eligible accounts (the "Revolving Credit Facility") and two tranches of term
loan advances, comprised of a term loan advance under Tranche A in an aggregate
principal amount of up to $15 million and additional term loan advances under
Tranche B in an aggregate principal amount of up to $5 million (the "Term Loan
Facility" and, together with the Revolving Credit Facility, the "Facilities").
Borrower's obligations under the Loan Agreement are secured by first-priority
liens on substantially all assets of Borrower. The Facilities are expected to
extend Borrower's operating runway and provide more financial flexibility. The
proceeds of the initial draw under the Term Loan Facility, together with a
portion of Borrower's balance sheet cash, will be used to repay all of
Borrower's outstanding obligations under Borrower's existing credit facility
("Existing Credit Facility") provided by Eastward Fund Management, LLC.
Revolving Credit Facility: The Revolving Credit Facility's stated maturity date
is May 4, 2024 (the "RCF Maturity Date"). Interest on the borrowings under the
Revolving Credit Facility is payable in arrears monthly at a floating rate per
annum equal to the greater of (a) 3.75% and (b) the Prime Rate plus 0.50%. The
Loan Agreement requires Borrower to pay to Lender a non-refundable commitment
fee in respect of the Revolving Credit Facility of $50,000 for each year the
Revolving Credit Facility is outstanding. Upon termination of the Revolving
Credit Facility prior to the RCF Maturity Date, Borrower is required to pay a
termination fee of $100,000.
Term Loan Facility: The Term Loan Facility's stated maturity date is June 1,
2025, provided that, if Borrower achieves certain performance milestones as set
forth in the Loan Agreement, the Term Loan Facility maturity date will
automatically be extended to December 1, 2025 (the "Term Loan Maturity Date").
Interest on the borrowings under the Term Loan Facility is payable in arrears
monthly at a floating rate per annum equal to the greater of (a) 3.25% and (b)
the Prime Rate plus 0.00%. The interest rate under the Term Loan Facility is
lower than Existing Credit Facility and highlights the increased maturity of
Borrower and will save Borrower $1.3 million of interest expense during the next
twelve months. The Term Loan Facility is interest only until July 1, 2023
provided that if Borrower achieves certain performance milestones, the
amortization date automatically extends to January 1, 2024. The Term Loan
Facility extends Augmedix's interest-only period by at least nine months, and
potentially fifteen months, relative to Existing Credit Facility. The Loan
Agreement permits Borrower to prepay all borrowings under the Term Loan Facility
provided that Borrower, among other things, pays a prepayment fee of (a) 3.00%
of the outstanding principal amount of the borrowings under the Term Loan
Facility at the time of such prepayment if it occurs prior to the first
anniversary of the effective date, (b) 2.00% of the outstanding principal amount
of the borrowings under the Term Loan Facility at the time of such prepayment if
it occurs on or after the first anniversary of the effective date but prior to
the second anniversary of the effective date, and (c) 1.00% of the outstanding
principal amount of the borrowings under the Term Loan Facility at the time of
such prepayment if it occurs on or after the second anniversary of the effective
date but prior to the Term Loan Facility's maturity date.
The Loan Agreement contains customary restrictions and covenants applicable to
Borrower and its subsidiaries. In particular, the Loan Agreement contains a
financial covenant which provides that if Borrower fails to maintain minimum
cash and cash equivalents in an amount of (a) no less than $25,000,000 (prior to
any Tranche B advance) and (b) $30,000,000 (following any Tranche B advance),
Borrower is then required to maintain certain minimum revenue requirements as
set forth in the Loan Agreement, which will be measured on a trailing 3-month
basis and tested quarterly. If Borrower has failed to maintain the minimum cash
and cash equivalents set forth in the preceding sentence, in lieu of being
subject to the minimum revenue requirements, Borrower has the ability to cure
such failure to maintain minimum cash and cash equivalents by delivering
evidence satisfactory to Lender that Borrower has raised at least $10,000,000 in
net cash proceeds from the sale of Borrower's equity interests. The Loan
Agreement also contains customary covenants that limit, among other things, the
ability of Borrower and its subsidiaries to (i) incur indebtedness, (ii) incur
liens on their property, (iii) pay dividends or make other distributions, (iv)
sell their assets, (v) make certain loans or investments, (vi) merge or
consolidate, (vii) voluntarily repay or prepay certain indebtedness and (viii)
enter into transactions with affiliates, in each case subject to certain
exceptions. The Loan Agreement contains customary representations and warranties
and events of default.
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The foregoing summary of the terms of the Loan Agreement does not purport to be
complete and is subject to, and qualified in its entirety by, the full text of
the Loan Agreement, which is attached to this Current Report on Form 8-K as
Exhibit 10.1 and incorporated herein by reference.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant
The information in Item 1.01 of this Current Report on Form 8-K is incorporated
by reference into this Item 2.03.
Item 3.02. Unregistered Sales of Equity Securities
In connection with the Loan Agreement, Augmedix issued to Lender a warrant to
purchase stock, dated as of the Effective Date (the "Warrant"), to purchase up
to 48,295 shares of Augmedix's common stock, $0.0001 par value per share,
exercisable at any time for a period of approximately seven years from the
Effective Date, at an exercise price of $2.38 per share, payable in cash or on a
cashless basis according to the formula set forth in the Warrant.
The issuance of the Warrant was exempt from the registration requirements of the
Securities Act of 1933, as amended (the "Securities Act"), pursuant to 4(a)(2)
thereof and/or Regulation D promulgated thereunder. Augmedix relied on the above
exemption from registration based in part on the representations made by Lender,
including the representation with respect to Lender's status as an accredited
investor, as such term is defined in Rule 501(a) of the Securities Act, and
Lender's investment intent.
The foregoing summary of the terms of the Warrant does not purport to be
complete and is subject to, and qualified in its entirety by, the full text of
the Warrant, which is attached to this Current Report on Form 8-K as Exhibits
10.2 and incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits.
Exhibit No. Description
10.1 Loan and Security Agreement by and among Augmedix, OpCo and Lender
dated as of May 4, 2022
10.2 Warrant to Purchase Stock by and between Augmedix and Lender dated
as of May 4, 2022
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
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