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Debt | Debt The following is a summary of debt balances as of June 28, 2025 and December 31, 2024:
Convertible Senior Notes On March 5, 2021, the Company issued $1.0 billion aggregate principal amount of its 0% Convertible Senior Notes due 2027 (the “Convertible Notes”) in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. On March 12, 2021, the initial purchasers of the Convertible Notes exercised their option to purchase an additional $150.0 million aggregate principal amount of the Company’s 0% Convertible Senior Notes due 2027 (the “Additional Notes”, and together with the Convertible Notes, the “Notes”), and such Additional Notes were issued on March 16, 2021. The total amount of debt issuance costs of $23.6 million was recorded as a reduction to Convertible senior notes, net in the Company’s condensed consolidated balance sheet and is being amortized as interest expense over the term of the Notes using the effective interest method. In each of the three months ended June 28, 2025 and June 29, 2024, the Company recognized $1.0 million in interest expense related to the amortization of the debt issuance costs related to the Notes. The annualized effective interest rates in the three months ended June 28, 2025 and June 29, 2024 were 0.34% and 0.35%, respectively. In each of the six months ended June 28, 2025 and June 29, 2024, the Company recognized $2.0 million in interest expense related to the amortization of the debt issuance costs related to the Notes. The annualized effective interest rates in the six months ended June 28, 2025 and June 29, 2024, were 0.34% and 0.35%, respectively. There were $6.6 million and $8.5 million in unamortized issuance costs related to the Notes as of June 28, 2025 and December 31, 2024, respectively. The following is a summary of the Company’s Notes as of June 28, 2025:
The Notes are carried at face value less the unamortized debt issuance costs on the Company’s condensed consolidated balance sheets. As of June 28, 2025, the estimated fair value of the Notes was approximately $101.2 million. The Notes are quoted on the Intercontinental Exchange and are classified as Level 2 financial instruments. The estimated fair value of the Notes was determined based on the actual bid price of the Notes on June 9, 2025, the last business day of the period when the Notes were traded. As of June 28, 2025, the remaining life of the Notes was approximately 1.7 years. Loan and Security Agreement On May 7, 2025, the Company, as borrower, entered into the Loan and Security Agreement pursuant to which the Lenders agreed to provide for the Delayed Draw Term Loan Facility and the loans thereunder in an aggregate principal amount of $100.0 million. Certain of the Company’s subsidiaries have guaranteed the Company’s obligations under the Loan and Security Agreement. The Delayed Draw Term Loans are secured by a first-priority lien and security interest in substantially all of the assets, subject to certain exceptions, of the Company and certain of its subsidiaries. In connection with the entry into the Delayed Draw Term Loan Facility, the Company paid the Lenders a non-refundable fee of $625,000. The Delayed Draw Term Loans are available to be drawn in one or more draws until February 7, 2026, subject to a minimum borrowing requirement of $3.0 million and satisfaction or waiver by the Lenders of the applicable conditions precedent set forth in the Loan and Security Agreement. Any Delayed Draw Term Loans borrowed under the Loan and Security Agreement will mature on February 7, 2030 (the “Initial Maturity Date”), which date may be extended by the Company, with the relevant Lenders’ consent, to no later than May 7, 2035. Borrowings under the Loan and Security Agreement will accrue interest at a rate per annum of 12.0%; provided that if the maturity date of any Delayed Draw Term Loan has been extended after the Initial Maturity Date, then such rate per annum will be 17.5% after the Initial Maturity Date. Proceeds of the Delayed Draw Term Loans may not be used to repay, amortize or restructure any debt for borrowed money other than debt owed to the Lenders and debt incurred by a Loan Party to finance the purchase, construction or improvement of any asset or services. Accrued but unpaid interest on each Delayed Draw Term Loan will be compounded on a quarterly basis and payable “in kind” by adding the amount of such accrued interest to the principal amount of the outstanding Delayed Draw Term Loans under the Loan and Security Agreement. Among other things, the Loan and Security Agreement includes covenants that (i) require the Company to maintain liquidity of at least $15.0 million, (ii) do not permit the Company’s cash interest payments due under all of the Loan Parties’ subordinated debt and unsecured debt for borrowed money for any fiscal year of the Company, in the aggregate, to exceed $20.0 million, and (iii) cap the amount of cash that can be used to repay the Notes at maturity at $60.0 million, subject to increase to the extent of any equity raises by the Company. The Loan and Security Agreement also contains covenants that restrict the ability of the Loan Parties and certain of their subsidiaries to make dividends or distributions, incur additional debt (including subordinated debt), engage in certain asset sales, mergers, acquisitions or similar transactions, create liens on assets, engage in certain transactions with affiliates, change their businesses or make investments. The Loan and Security Agreement also contains change of control provisions that could have the effect of delaying or preventing an otherwise beneficial takeover of the Company. On June 26, 2025, at the Company’s request, Unprocessed Foods, as the sole Lender at such time, made a Delayed Draw Term Loan to the Company in the principal amount of $40.0 million. The Company plans to use the proceeds of such Delayed Draw Term Loan for general corporate purposes of the Company and the guarantors. The total amount of debt issuance costs related to the Delayed Draw Term Loan Facility was $3.7 million, consisting of an upfront fee of $0.6 million paid to the Lender, legal and other costs, of which $1.5 million was apportioned to the Initial Draw and recorded as a reduction to the Delayed draw term loan facility, net in the Company’s condensed consolidated balance sheet and is being amortized as interest expense over the term of the Initial Draw using the effective interest rate method. In the three and six months ended June 28, 2025, the Company recognized $3,000 in interest expense related to the amortization of the debt issuance costs related to the Initial Draw. There were $1.5 million and $0 in unamortized issuance costs related to the Initial Draw as of June 28, 2025 and December 31, 2024, respectively. The remaining $2.2 million in debt issuance costs relating to the Delayed Draw Term Loan Facility was apportioned to the $60.0 million in undrawn Delayed Draw Term Loan Facility and has been recorded in Prepaid expenses and other current assets in the Company’s condensed consolidated balance sheet as of June 28, 2025. Warrant Agreement On May 7, 2025, in connection with the entry into the Loan and Security Agreement, the Company and the Lenders entered into the Warrant Agreement setting forth the rights and obligations of the Company and the Lenders, as holders, in connection with Warrants representing the Lenders’ right to purchase up to, in the aggregate, 9,558,635 shares of common stock, at an exercise price calculated as 115% of the average daily volume-weighted average prices of the Company’s common stock for the 30-day period beginning on May 8, 2025, subject to a minimum exercise price of $2.00 and a maximum exercise price of $3.75. The Loan and Security Agreement provides that at each funding date of any Delayed Draw Term Loans, the Company will execute and deliver to the applicable Lenders, Warrants representing the pro rata portion of the Maximum Warrant Share Amount based on the amount of Delayed Draw Term Loans provided by such Lender on the date thereof. The Warrants are exercisable by the Holder thereof, in whole or in part, at any time, or from time to time, prior to the expiration of the Warrant Agreement by tendering to the Company at its principal office a notice of exercise. Promptly upon receipt of such exercise notice and the payment of the exercise price, and in no event later than business days thereafter, the Company will issue to such Holder the whole number of shares of common stock purchased plus an amount in cash representing any fractional share of common stock otherwise due upon such exercise. The Warrants will be exercisable by payment in cash from time to time until or prior to 5:00 p.m. (Eastern Time) on the 5th anniversary of the initial issuance of any Warrants, which is expected to occur on the initial funding date of any Delayed Draw Term Loans pursuant to the Loan and Security Agreement. The Warrants are subject to adjustment from time to time in accordance with the provisions of the Warrant Agreement, including a weighted average adjustment for certain below-market issuances of equity or equity-linked securities, subject to exceptions set forth in the Warrant Agreement. Subject to compliance with applicable federal and state securities laws, the Warrant Agreement and all rights thereunder are transferable by the Holder subject to the terms of the Warrant Agreement. The Company agreed in the Warrant Agreement to provide certain customary registration rights with respect to the resale of shares of common stock underlying Warrants held by or issuable to the holders from time to time. The Warrant Agreement also contains customary indemnity, exculpation and contribution obligations in connection with such registration. On June 26, 2025, in connection with the Delayed Draw Term Loan made on the same date, the Company issued to Unprocessed Foods, Warrants to purchase 3,823,454 shares of Common Stock with an exercise price of $3.26 per share, fair value per share of $2.088 and an aggregate fair value of approximately $8.0 million. The change in fair value per share as of June 28, 2025 was not material. The aggregate fair value of the issued Warrants recorded in Delayed draw term loan warrants as of June 28, 2025 was $8.0 million, which was recorded as a reduction of the $40.0 million in debt balance and will be amortized to interest expense using the effective interest rate method. The Company concluded it was reasonably certain to draw the remaining $60.0 million available under the Delayed Draw Term Loan before December 31, 2025, and expects to issue to the Lenders warrants to purchase the remaining 5,735,181 unissued shares of common stock pursuant to the Loan and Security Agreement. The fair value of the contingently issuable warrants measured as of June 28, 2025 using a Monte-Carlo valuation model was $12.1 million. This amount has been initially classified as a warrant asset included in Prepaid expenses and other current assets in the Company’s condensed consolidated balance sheet. The warrant asset will be proportionately reclassified to debt discount when amounts are drawn from the delayed draw term loan commitment, reducing the initial net carrying amount of the funded debt. The Company has recorded $20.1 million in liability for the total fair value of the issued and contingently issuable warrants in Delayed draw term loan warrant liability in its condensed consolidated balance sheet at June 28, 2025. See Note 2.
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