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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the Quarterly Period Ended
or
For the transition period from ______ to ______
Commission file number:
(Exact name of registrant as specified in its charter)
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3841 |
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(
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
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.
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).
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.
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
There were
TABLE OF CONTENTS
PART I: Financial Information |
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ITEM 1: Financial Statements |
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Condensed Consolidated Balance Sheets as of June 30, 2026 (Unaudited) and December 31, 2025 |
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Notes to Unaudited Condensed Consolidated Financial Statements |
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ITEM 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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ITEM 3: Quantitative and Qualitative Disclosures About Market Risk |
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ITEM 2: Unregistered Sales of Equity Securities and Use of Proceeds |
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2
Senseonics Holdings, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
June 30, |
December 31, |
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2026 |
2025 |
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(unaudited) |
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Assets |
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Current assets: |
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Cash and cash equivalents |
$ |
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$ |
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Restricted cash |
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Short term investments, net |
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Accounts receivable, net |
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Accounts receivable, net - related parties |
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Inventory, net |
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Prepaid expenses and other current assets |
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Total current assets |
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Deposits and other assets |
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Property, equipment and intangible assets, net |
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Total assets |
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$ |
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Liabilities and Stockholders’ Equity |
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Current liabilities: |
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Accounts payable |
$ |
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$ |
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Accrued expenses and other current liabilities |
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Accrued expenses and other current liabilities, related parties |
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Total current liabilities |
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Long-term debt and notes payables, net |
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Non-current operating lease liabilities |
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Total liabilities |
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Commitments and contingencies |
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Stockholders’ equity: |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated other comprehensive income |
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Accumulated deficit |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
$ |
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$ |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
Senseonics Holdings, Inc.
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss
(in thousands, except share and per share data)
Three Months Ended |
Six Months Ended |
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June 30, |
June 30, |
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2026 |
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2025 |
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2026 |
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2025 |
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Revenue, net |
$ |
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$ |
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$ |
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$ |
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Revenue, net - related parties |
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Total revenue |
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Cost of sales |
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Gross profit |
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Expenses: |
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Research and development expenses |
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Selling, general and administrative expenses |
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Operating loss |
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Other income (expense), net: |
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Interest income |
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Interest expense |
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Other expense |
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Total other income (expense), net |
( |
( |
( |
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Net Loss |
( |
( |
( |
( |
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Other comprehensive loss |
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Unrealized (loss) gain on marketable securities |
( |
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( |
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Other comprehensive (loss) gain |
( |
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( |
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Total comprehensive loss |
$ |
( |
$ |
( |
$ |
( |
$ |
( |
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Basic net loss per common share |
$ |
( |
$ |
( |
$ |
( |
$ |
( |
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Basic weighted-average shares outstanding |
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Diluted net loss per common share |
$ |
( |
$ |
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$ |
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Diluted weighted-average shares outstanding |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
Senseonics Holdings, Inc.
Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity
(in thousands)
Accumulated |
Series B |
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Common Stock |
Paid-In |
Other |
Accumulated |
Stockholders' |
Convertible |
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Shares |
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Amount |
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Capital |
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Comprehensive Loss |
Deficit |
Equity |
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Preferred Stock Temporary Equity |
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Three months ended June 30, 2025: |
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Balance, March 31, 2025 |
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$ |
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$ |
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$ |
( |
$ |
( |
$ |
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$ |
— |
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Issuance of common stock, net of issuance costs |
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— |
— |
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— |
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Issued common stock for vested RSUs and ESPP purchase |
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— |
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— |
— |
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— |
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Stock-based compensation expense |
— |
— |
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— |
— |
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— |
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Shares withheld related to net share settlement of equity awards |
( |
— |
( |
— |
— |
( |
— |
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Net loss |
— |
— |
— |
— |
( |
( |
— |
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Other comprehensive loss |
— |
— |
— |
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— |
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— |
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Balance, June 30, 2025 |
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$ |
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$ |
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$ |
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$ |
( |
$ |
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$ |
— |
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Six months ended June 30, 2025: |
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Balance, December 31, 2024 |
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$ |
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$ |
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$ |
— |
$ |
( |
$ |
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$ |
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Conversion of preferred stock |
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— |
— |
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( |
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Issuance of common stock, net of issuance costs |
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— |
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Issued common stock for vested RSUs and ESPP purchases |
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Stock-based compensation expense |
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— |
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— |
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— |
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Shares withheld related to net share settlement of equity awards |
( |
— |
( |
— |
— |
( |
— |
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Net loss |
— |
— |
— |
— |
( |
( |
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Other comprehensive income, net of tax |
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— |
— |
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— |
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— |
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Balance, June 30, 2025 |
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$ |
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$ |
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$ |
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$ |
( |
$ |
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$ |
— |
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Three months ended June 30, 2026: |
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Balance, March 31, 2026 |
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$ |
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$ |
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$ |
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$ |
( |
$ |
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$ |
— |
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Issuance of common stock, net of issuance costs |
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— |
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Issuance of warrants, net of issuance costs |
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Stock-based compensation expense |
— |
— |
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— |
— |
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Shares withheld related to net share settlement of equity awards |
( |
— |
( |
— |
— |
( |
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Net loss |
— |
— |
— |
— |
( |
( |
— |
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Other comprehensive gain |
— |
— |
— |
( |
— |
( |
— |
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Balance, June 30, 2026 |
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$ |
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$ |
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$ |
( |
$ |
( |
$ |
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$ |
— |
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Six months ended June 30, 2026: |
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Balance, December 31, 2025 |
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$ |
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$ |
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$ |
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$ |
( |
$ |
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$ |
— |
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Issuance of common stock, net of issuance costs |
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— |
— |
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— |
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Issuance of warrants, net of issuance costs |
— |
— |
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— |
— |
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— |
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Issued common stock for vested RSUs, ESPP purchases and stock option exercises |
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— |
— |
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Stock-based compensation expense |
— |
— |
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— |
— |
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Shares withheld related to net share settlement of equity awards |
( |
— |
( |
— |
— |
( |
— |
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Net loss |
— |
— |
— |
— |
( |
( |
— |
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Other comprehensive loss |
— |
— |
— |
( |
— |
( |
— |
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Balance, June 30, 2026 |
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$ |
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$ |
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$ |
( |
$ |
( |
$ |
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$ |
— |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5
Senseonics Holdings, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
Six Months Ended |
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June 30, |
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2026 |
2025 |
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Cash flows from operating activities |
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Net loss |
$ |
( |
$ |
( |
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Adjustments to reconcile net loss to net cash used in operating activities: |
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Depreciation and amortization expense |
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Non-cash interest expense (debt discount and deferred costs) |
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Net amortization of premiums and accretion of discounts on marketable securities |
( |
( |
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Stock-based compensation expense |
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Provision for inventory obsolescence and losses |
( |
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Allowance for credit losses |
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Other |
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Changes in assets and liabilities: |
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Accounts receivable |
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Prepaid expenses and other current assets |
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Inventory |
( |
( |
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Deposits and other assets |
( |
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Accounts payable |
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( |
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Accrued expenses and other liabilities |
( |
( |
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Accrued interest |
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( |
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Payments on lease liabilities |
( |
( |
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Net cash used in operating activities |
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( |
( |
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Cash flows from investing activities |
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Capital expenditures |
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( |
( |
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Purchase of marketable securities |
( |
( |
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Proceeds from sale and maturity of marketable securities |
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— |
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Cash paid in connection with asset acquisition |
( |
— |
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Net cash used in investing activities |
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( |
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( |
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Cash flows from financing activities |
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Proceeds from issuance of common stock, net |
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Proceeds from exercise of stock options, RSUs, and ESPP issuances, net |
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Proceeds from issuance of Loan and Security Agreement, net |
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— |
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Taxes paid related to net share settlement of equity awards |
( |
( |
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Proceeds from issuance of warrants, net |
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— |
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Repayment of 2025 Notes |
— |
( |
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Net cash provided by financing activities |
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Net increase (decrease) in cash, cash equivalents, and restricted cash |
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( |
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Cash, cash equivalents, and restricted cash at beginning of period |
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Cash, cash equivalents, and restricted cash at end of period |
$ |
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$ |
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Supplemental disclosure of cash flow information |
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Cash paid during the period for interest |
$ |
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$ |
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Supplemental disclosure of non-cash investing and financing activities |
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Property and equipment purchases included in accounts payable and accrued expenses |
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Issuance of common stock upon conversion of preferred shares |
— |
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Issuance of warrants for loan amendment |
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— |
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Lease liabilities arising from obtaining right-of-use assets |
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— |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6
Senseonics Holdings, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
1.Organization and Nature of Operations
Business
Senseonics Holdings, Inc., a Delaware corporation, is a medical technology company focused on the design, development and commercialization of long-term, implantable continuous glucose monitoring (“CGM”) systems to improve the lives of people with diabetes by enhancing their ability to manage their disease with relative ease and accuracy.
Senseonics, Incorporated is a wholly owned subsidiary of Senseonics Holdings, Inc. and was originally incorporated on October 30, 1996, and commenced operations on January 15, 1997. Eon Care Services, LLC and Eon Management Services, LLC are wholly owned subsidiaries of Senseonics, Incorporated formed in April 2024 and July 2024, respectively. In connection with the transition of commercialization activities in Italy, Germany, Spain and Sweden (the “European Territories”), the Company established wholly owned subsidiaries in the European Territories in late 2025 and early 2026 to support local commercial operations and distribution activities. Senseonics Holdings, Inc. and its consolidated subsidiaries and affiliated entities, including its consolidated variable interest entities (“VIEs”) are hereinafter collectively referred to as the “Company”, unless otherwise indicated or the context otherwise requires.
Reverse Stock Split
On October 17, 2025, at 4:05 p.m. Eastern Time (the “Effective Time”), the Company effected a 1-for reverse stock split of the Company’s issued and outstanding shares of common stock (the “Reverse Stock Split”) and a proportionate reduction in the total number of authorized shares of its common stock from
Transfer to Nasdaq Stock Exchange
On November 14, 2025, the Company provided written notice to NYSE American of its determination to make a voluntary withdrawal of the Company’s common stock from the NYSE American to the Nasdaq Global Select Market (“Nasdaq”). The Company ended trading on the NYSE American effective after the market closed on November 14, 2025 and began trading on Nasdaq under the existing ticker symbol “SENS” on November 17, 2025.
Charter Amendment
At the Company’s 2026 Annual Meeting of Stockholders held on May 20, 2026, the Company’s stockholders approved an amendment to the Company’s Amended and Restated Certificate of Incorporation to increase the total number of authorized shares of common stock from
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2.Liquidity and Capital Resources
The Company has not generated significant profit from the sale of products and its ability to generate revenue and achieve profitability largely depends on the Company’s ability to successfully expand the commercialization of its implantable continuous glucose monitoring systems, including the Eversense E3 system (“Eversense E3”) and the Eversense 365 system (“Eversense 365” and, together with Eversense E3, “Eversense” or the “Eversense Systems”), continue the development of its products and product upgrades, and to obtain necessary regulatory approvals or certifications for the sale of those products. These activities including the costs associated with our plans to transition the commercial activities back to the Company (as further described in Note 4) will require significant uses of working capital through 2026 and beyond. The Company generated total net loss of $(
Several actions have been taken by the Company with regards to liquidity and to manage our cash flows for the year ended December 31, 2025, and the six months ended June 30, 2026. These actions included, but were not limited to, the completion of multiple equity financing transactions during 2025 and 2026.
On May 4, 2026, the Company completed an underwritten public offering (the “Public Offering”) of
On May 1, 2026, the Company entered into a Second Amendment to its Loan and Security Agreement with Hercules Capital, Inc. (the “Amended Loan Agreement”), pursuant to which the lenders agreed to make available to the Company up to $
As of June 30, 2026, the Company has generated approximately $
In 2025, the Company completed an underwritten public offering and private placement resulting in aggregate net proceeds of approximately $
Based on the Company's current cash position, cash flow forecasts, and the additional financial resources obtained through the actions described above, management believes that the Company's existing cash and cash equivalents, together with anticipated cash flows, will be sufficient to fund its operations and meet its obligations as they become due for at least the next twelve months from the date these condensed consolidated financial statements are
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issued. In addition, given the Company's historical reliance upon debt and equity financing, management will continue to evaluate our funding needs against operating performance and strategic initiatives.
3. |
Summary of Significant Accounting Policies |
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information and the instructions to Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. Although the Company considers the disclosures in these unaudited condensed consolidated financial statements to be adequate to make the information presented not misleading, certain information or footnote information normally included in consolidated financial statements prepared in accordance with U.S. GAAP has been condensed or omitted as permitted under the rules and regulations of the SEC. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair statement of financial position at June 30, 2026, and December 31, 2025, results of operations, comprehensive loss, and changes in stockholders’ equity for the three and six months ended June 30, 2026 and 2025 and cash flows for the six months ended June 30, 2026 and 2025 have been included. The unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC on March 2, 2026. The interim results for June 30, 2026 are not necessarily indicative of the results to be expected for the year ending December 31, 2026, or for any future interim periods.
The consolidated financial statements reflect the accounts of Senseonics Holdings, Inc. and its consolidated subsidiaries and affiliated entities, including its VIEs. All intercompany balances and transactions are eliminated upon consolidation. The Company views its operations and manages its business in
In November 2024, Eon Management Services, LLC entered into management services agreements (the “Administrative Agreement”) for an initial fixed term of
In accordance with relevant accounting guidance, the Eon Care PCs have been determined to be VIEs of the Company, as the Company is the primary beneficiary with the ability, through the Administrative Agreement to direct the activities (excluding clinical activities) that most significantly affect the Eon Care PCs financial performance and have the obligation to absorb losses of, or the right to receive benefits from, the Eon Care PCs that could potentially be significant to it. The assets of the consolidated VIEs may only be used to settle obligations of the consolidated VIEs, if any. Our variable interest entities’ assets, liabilities, and results of operations were not material to our consolidated financial results.
Significant Accounting Policies
The accounting policies used by the Company in its presentation of interim financial results are consistent with those presented in Note 3 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
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Recent Accounting Pronouncements
In November 2024, the FASB issued Accounting Standards Update No. 2024-03, Disaggregation of Income Statement Expenses (DISE) (“ASU 2024-03”), the objective of which is to provide greater transparency about an entity’s expenses to allow investors to better understand an entity’s performance, assessing its prospects for future cash flows, and comparing its performance both over time and with that of other entities. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. The requirements will be applied prospectively with the option for retrospective application. Early adoption is permitted. The Company is currently evaluating the impact of the new standard on its financial statements and disclosures.
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenue and expenses during the reporting period. In the accompanying unaudited condensed consolidated financial statements, estimates are used for, but not limited to, stock-based compensation, recoverability of long-lived assets and definite-lived intangible assets, deferred taxes and valuation allowances, fair value of investments, derivative assets and liabilities, obsolete inventory, warranty obligations, variable consideration related to revenue, allowance for credit losses, depreciable lives of property and equipment, amortization periods for identifiable intangible assets, and accruals for clinical study costs, which are accrued based on estimates of work performed under contract. The Company bases these estimates on historical and anticipated results, trends, and various other assumptions that it believes are reasonable, including assumptions as to future events. These estimates form the basis for making judgments about the carrying values of assets and liabilities and recorded revenues and expenses. Actual results could differ from those estimates; however, management does not believe that such differences would be material.
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4.Revenue Recognition
The Company generates product revenue from sales of the Eversense system and related components and supplies to strategic fulfillment partners and through its consignment network in the United States, as well as to Ascensia Diabetes Care Holdings AG (“Ascensia”), third-party distributors and hospital systems outside the United States (each, a “Customer” and collectively “Customers”), who then resell the products to health care providers and patients. Effective January 1, 2026, in connection with the parties’ execution of a Master Asset Purchase Agreement on December 31, 2025 (the “Master Asset Purchase Agreement”), the Company reassumed primary commercialization responsibilities in the United States and began marketing and distributing Eversense products through its own sales force and strategic fulfillment partner network. In March 2026, the Company executed separate European local asset purchase agreements for Italy, Germany, Spain, and Sweden and in the second quarter assumed primary commercialization responsibilities in Spain and Sweden and initiated the transitions in Italy and Germany. Ascensia continues to support some commercialization activities in Italy and Germany, which are targeted to substantially conclude in the third quarter of 2026.
The Company is paid for its sales directly to the Customers, regardless of whether the Customers resell the products to health care providers and patients. The Company also generates product revenue from sales of the Eversense system and related components and supplies through a consignment model with its network of independent healthcare professionals in the United States and revenue is recognized when the product is consumed by a patient. The Company’s policies for recognizing sales have not changed from those described in its Annual Report on Form 10-K for the year ended December 31, 2025.
Revenue by Geographic Region
The following table sets forth net revenue derived from the Company’s
Three Months Ended |
Six Months Ended |
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June 30, 2026 |
June 30, 2026 |
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% |
% |
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(Dollars in thousands) |
Amount |
of Total |
Amount |
of Total |
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Revenue, net: |
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United States |
$ |
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% |
$ |
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% |
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Outside of the United States |
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Total |
$ |
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% |
$ |
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% |
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Three Months Ended |
Six Months Ended |
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June 30, 2025 |
June 30, 2025 |
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% |
% |
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(Dollars in thousands) |
Amount |
of Total |
Amount |
of Total |
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Revenue, net: |
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United States |
$ |
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% |
$ |
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% |
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Outside of the United States |
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Total |
$ |
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% |
$ |
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% |
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Contract Assets
Contract assets consist of unbilled receivables from Customers and are recorded at net realizable value. Included in accounts receivable, net as of June 30, 2026 and December 31, 2025 are unbilled accounts receivable of less than $
11
Commercialization Agreement. The Company expects to invoice and collect all unbilled accounts receivable within twelve months.
Concentration of Revenue and Customers
A significant portion of the Company’s revenue is derived from one Customer, Ascensia. For the three months ended June 30, 2026 and 2025, sales to Ascensia accounted for
A portion of the Company’s revenue is earned via consignment arrangements with healthcare providers. For the three months ended June 30, 2026 and 2025, sales under consignment arrangements accounted for
Termination and Modification of Commercialization Arrangements
On September 3, 2025, the Company and Ascensia entered into a memorandum of understanding related to the transition of commercial operations for Eversense from Ascensia back to the Company. On December 31, 2025, the parties executed a Master Asset Purchase Agreement and effective January 1, 2026 the parties entered into an Amended and Restated Collaboration and Commercialization Agreement (the “A&R Commercialization Agreement”), which terminated Ascensia’s rights to market Eversense products in the United States and made Ascensia’s European commercialization rights non-exclusive.
Following the A&R Commercialization Agreement, Ascensia has no further rights to revenues from sales of Eversense products in the United States, and effective January 1, 2026, the Company is entitled to 100% of revenues from sales in the European Territories, subject to transitional arrangements. In connection with the transition of U.S. commercialization activities, the Company entered into agreements with certain U.S. strategic fulfillment partners that previously distributed products on behalf of Ascensia, consistent with the Company’s historical distribution relationships.
As a result of the termination and modification of the arrangement, the Company reassessed its remaining performance obligations and adjusted related contract assets and contract liabilities in accordance with ASC 606. In connection with the termination, the Company accepted the return of certain unsold inventory previously held by Ascensia, reversed $
Additional information regarding the Master Asset Purchase Agreement and related transactions is included in Note 17 — Related Party Transactions.
5.Net Loss per Share
Basic net loss per share attributable to common stockholders is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period. An aggregate of
Diluted net loss per share is computed using the weighted average number of common shares outstanding during the period and, when dilutive, potential common share equivalents. Potentially dilutive common shares consist of
12
shares issuable from restricted stock units (“RSUs”), stock options, warrants and the Company’s convertible notes. Potentially dilutive common shares issuable upon vesting of restricted stock units, exercise of stock options and exercise of warrants are determined using the average share price for each period under the treasury stock method. Potentially dilutive common shares issuable upon conversion of the Company’s convertible notes are determined using the if-converted method. The if-converted method assumes conversion of convertible securities at the beginning of the reporting period. Interest expense, dividends, and the changes in fair value measurement recognized during the period are added back to the numerator. The denominator includes the common shares issuable upon conversion of convertible securities.
In periods of net loss, all potentially dilutive common shares are excluded from the computation of the diluted net loss per share for those periods, as the effect would be anti-dilutive.
The following table sets forth the computation of basic and diluted net loss per share for the periods shown:
(Dollars, in thousands, except per share amounts)
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||
2026 |
2025 |
2026 |
2025 |
|||||
Net loss |
$ |
( |
$ |
( |
$ |
( |
$ |
( |
Basic weighted average common shares outstanding |
|
|
|
|
||||
Net loss per share: |
||||||||
Basic and diluted |
$ |
( |
$ |
( |
$ |
( |
$ |
( |
Outstanding anti-dilutive securities not included in the diluted net loss per share calculations were as follows:
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||
|
2026 |
|
2025 |
2026 |
2025 |
|||
Stock-based awards |
|
|
|
|
||||
Warrants |
|
|
|
|
|
|||
Total anti-dilutive shares outstanding |
|
|
|
|
||||
6. |
Composition of Certain Financial Statement Items |
Cash, Cash Equivalents, and Restricted Cash
Cash, cash equivalents, and restricted cash consisted of the following (in thousands):
June 30, |
December 31, |
||||||
|
2026 |
|
2025 |
||||
Cash |
$ |
|
$ |
|
|||
Money market funds |
|
|
|||||
Restricted Cash |
|
|
|||||
Total cash, cash equivalents, and restricted cash |
$ |
|
$ |
|
|||
The Company’s restricted cash relates to collateral for procurement cards issued by a U.S. commercial bank.
Accounts receivable, net
Accounts receivable, net consisted of the following (in thousands):
13
June 30, |
December 31, |
|||||
|
2026 |
|
2025 |
|||
Accounts receivable |
$ |
|
$ |
|
||
Accounts receivable - related parties |
|
|
||||
Less: allowance for credit losses |
( |
( |
||||
Total accounts receivable, net |
$ |
|
$ |
|
||
Inventory, net
Inventory, net of reserves, consisted of the following (in thousands):
|
June 30, |
|
December 31, |
|||
2026 |
|
2025 |
||||
Finished goods |
|
$ |
|
|
$ |
|
Work-in-process |
|
|
|
|
||
Raw materials |
|
|
|
|
||
Total |
$ |
|
$ |
|
||
The Company charged $
Property, equipment and intangible assets, net
Property, equipment and intangible assets, net, consisted of the following (in thousands):
June 30, |
December 31, |
|||||
2026 |
|
2025 |
||||
Property and equipment |
||||||
Machinery and laboratory equipment |
|
$ |
|
|
$ |
|
Office furniture and equipment |
|
|
||||
Leasehold improvements |
|
|
|
|
||
Intangible assets |
||||||
Sensor insertion network assets |
|
|
||||
Less: Accumulated depreciation and amortization |
|
( |
|
( |
||
Property, equipment and intangible assets, net |
$ |
|
$ |
|
||
7. |
Marketable Securities |
Marketable securities available for sale were as follows (in thousands):
June 30, 2026 |
||||||||||||
Gross |
Gross |
Estimated |
||||||||||
Amortized |
Unrealized |
Unrealized |
Market |
|||||||||
|
Cost |
|
Gains |
|
Losses |
|
Value |
|||||
Commercial Paper |
$ |
|
$ |
— |
$ |
( |
$ |
|
||||
Corporate debt securities |
|
— |
( |
|
||||||||
Government and agency securities |
|
— |
( |
|
||||||||
Total |
$ |
|
$ |
— |
$ |
( |
$ |
|
||||
14
December 31, 2025 |
||||||||||||
Gross |
Gross |
Estimated |
||||||||||
Amortized |
Unrealized |
Unrealized |
Market |
|||||||||
|
Cost |
|
Gains |
|
Losses |
|
Value |
|||||
Commercial Paper |
$ |
|
$ |
|
$ |
— |
$ |
|
||||
Corporate debt securities |
|
|
— |
|
||||||||
Government and agency securities |
|
|
— |
|
||||||||
Total |
$ |
|
$ |
|
$ |
— |
$ |
|
||||
The following are the scheduled maturities as of June 30, 2026 (in thousands):
Net |
Fair |
|||||
Carrying Amount |
Value |
|||||
2026 (remaining six months) |
|
$ |
|
$ |
|
|
2027 |
|
|
||||
Total |
|
$ |
|
$ |
|
|
The Company periodically reviews its portfolio of debt securities to determine if any investment is impaired due to credit loss or other potential valuation concerns. For debt securities where the fair value of the investment is less than the amortized cost basis, the Company assesses at the individual security level, for various quantitative factors including, but not limited to, the nature of the investments, changes in credit ratings, interest rate fluctuations, industry analyst reports, and the severity of impairment. Unrealized losses on available-for-sale securities at June 30, 2026 were not significant and were primarily due to changes in interest rates and not due to increased credit risk associated with specific securities. The Company does not intend to sell these impaired investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases, which may be at maturity.
8. |
Prepaid Expenses and Other Current Assets |
Prepaid expenses and other current assets consisted of the following (in thousands):
June 30, |
December 31, |
|||||
2026 |
|
2025 |
||||
Contract manufacturing(1) |
$ |
|
$ |
|
||
Clinical and Preclinical |
|
|
|
|
||
Interest receivable |
|
|
||||
Sales and marketing |
|
|
||||
IT and software |
|
|
||||
Other |
|
|
||||
Total prepaid expenses and other current assets |
$ |
|
$ |
|
||
| (1) | Includes deposits to contract manufacturers for manufacturing process. |
15
9. |
Accrued Expenses and Other Current Liabilities |
Accrued expenses and other current liabilities (including related party amounts) consisted of the following (in thousands):
June 30, |
December 31, |
|||||
2026 |
|
2025 |
||||
Compensation and benefits |
$ |
|
$ |
|
||
Sales and marketing services |
|
|
||||
Research and development |
|
|
|
|
||
Professional and administrative services |
|
|
||||
Patient access and incentive programs |
|
— |
||||
|
|
|
|
|||
Contract manufacturing |
|
|
|
|
||
Other |
|
|
||||
Total accrued expenses and other current liabilities |
$ |
|
$ |
|
||
10. |
Leases |
The Company leases approximately
headquarters under a non-cancelable operating lease. The Company has
In addition, effective January 1, 2026, in connection with the acquisition of certain U.S. commercial assets under the Master Asset Purchase Agreement with Ascensia, the Company assumed operating leases for a fleet of vehicles used by its U.S. sales force. These leases are classified as operating leases and have remaining lease terms with expirations ranging from May 31, 2028 to June 30, 2030.
The rent expense is recognized on a straight-line basis through the end of the lease term, excluding option renewals. The difference between the straight-line rent amounts and amounts payable under the lease is recorded as deferred lease cost.
Operating lease expense was $
The following table summarizes the lease assets and liabilities as of June 30, 2026 and December 31, 2025 (in thousands):
June 30, |
December 31, |
|||||||
Operating Lease Assets and Liabilities |
Balance Sheet Classification |
2026 |
2025 |
|||||
Assets |
|
|||||||
Operating lease ROU assets |
$ |
|
$ |
|
||||
Liabilities |
||||||||
Current operating lease liabilities |
$ |
|
$ |
|
||||
Non-current operating lease liabilities |
Non-current operating lease liabilities |
|
|
|||||
Total operating lease liabilities |
$ |
|
$ |
|
||||
16
The following table summarizes the maturity of undiscounted payments due under operating lease liabilities and the present value of those liabilities as of June 30, 2026 (in thousands):
2026 (remaining 6 months) |
|
$ |
|
2027 |
|
||
2028 |
|
||
2029 |
|
||
2030 |
|
||
Thereafter |
|
||
Total |
|
||
Less: Present value adjustment |
( |
||
Present value of lease liabilities |
$ |
|
The following table summarizes the weighted-average lease term and weighted-average discount rate as of June 30, 2026:
Remaining lease term (years) |
2026 |
||
Operating leases |
|||
Discount rate |
|||
Operating leases |
% |
||
11. |
Product Warranty Obligations |
The Company provides a warranty of
The following table provides a reconciliation of the change in estimated warranty liabilities for the six months ended June 30, 2026, and for the twelve months ended December 31, 2025 (in thousands):
June 30, |
December 31, |
|||||
|
2026 |
|
2025 |
|||
Balance at beginning of the period |
$ |
|
$ |
|
||
Provision for warranties during the period |
|
|
||||
Settlements made during the period |
( |
( |
||||
Balance at end of the period |
$ |
|
$ |
|
||
12. |
Notes Payable, Preferred Stock and Stock Purchase Warrants |
Term Loans
Loan and Security Agreement
On September 8, 2023 (the “Effective Date”), the Company entered into a loan agreement (the “Loan and Security Agreement”) with Hercules Capital, Inc. and its managed fund (collectively, the “Lenders”), pursuant to which the Lenders agreed to make available to Senseonics up to $
17
Date”), the Company entered into the Amended Loan and Security Agreement with the Lenders and Hercules. The Amended Loan and Security Agreement increased the total loan commitment under the facility from $
On May 1, 2026, the Company entered into a Second Amendment to Loan and Security Agreement (the “Second Amendment”) with the Lenders and Hercules, which further amended the Amended Loan and Security Agreement. Pursuant to the Second Amendment, the Lenders agreed to make available to the Company up to $
The loans under the Amended Loan Agreement, as modified by the Second Amendment, bear interest at an annual rate equal to the greater of (i) the as reported in The Wall Street Journal plus
At the Company’s option, the Company may prepay all or any portion of the outstanding borrowings under the Amended Loan and Security Agreement, subject to a prepayment fee equal to (a)
The Company’s obligations under the Amended Loan and Security Agreement are secured by a first-priority security interest in substantially all of its assets. The Amended Loan and Security Agreement contains a minimum cash covenant that requires the Company to hold unrestricted cash equal to
In addition, the Amended Loan and Security Agreement contains customary representations and warranties and customary affirmative and negative covenants, including, among other things, restrictions on indebtedness, liens,
18
investments, mergers, corporate changes, dispositions, prepayment of other indebtedness, and dividends and other distributions, subject to certain exceptions. The Amended Loan and Security Agreement also contains events of default including, among other things, payment defaults, breach of covenants, material adverse effect, breach of representations and warranties, cross-default to material indebtedness, bankruptcy-related defaults, judgment defaults, revocation of certain government approvals, and the occurrence of certain adverse events. Following an event of default and any applicable cure period, a default interest rate equal to the then-applicable interest rate plus
In addition, in connection with the issuance of the Tranche 1 Loan, the Company issued warrants to the Lenders (collectively, the “Tranche 1 Warrants”) to acquire an aggregate of
In connection with the funding of the 2026 Tranche 2 Loan and the 2026 Tranche 3A Loan under the Second Amendment to the Loan and Security Agreement, the Company issued warrants to purchase an aggregate of
In connection with Loan and Security Agreement, the Company incurred $
Convertible Notes
2025 Notes
In July 2019, the Company issued $
19
Over the term of the 2025 Notes, the Company completed a series of exchanges and conversions that reduced the outstanding principal balance, including (i) the settlement of $
Following these transactions, approximately $
The following carrying amounts are outstanding under the Company’s notes payable as of June 30, 2026 and December 31, 2025 (in thousands):
June 30, 2026 |
|||||||
Principal ($) |
Debt (Discount) Premium ($)⁽¹⁾ |
Issuance Costs ($) |
Carrying Amount ($) |
||||
Amended Loan and Security Agreement |
|
|
( |
|
|||
December 31, 2025 |
|||||||
Principal ($) |
Debt (Discount) Premium ($)⁽¹⁾ |
Issuance Costs ($) |
Carrying Amount ($) |
||||
Amended Loan and Security Agreement |
|
|
( |
|
|||
| (1) | Includes accretion of end of term fees payable at maturity. |
Interest expense related to the notes payable for the periods presented below is as follows (in thousands):
Six Months Ended June 30, 2026 |
|||||||||
Interest Rate |
Interest ($) |
Debt Discount and Fees ($)⁽¹⁾ |
Issuance Costs ($) |
Total Interest Expense ($) |
|||||
Amended Loan and Security Agreement |
|
|
|
|
|||||
Total |
|
|
|
|
|||||
Six Months Ended June 30, 2025 |
|||||||||
Interest Rate |
Interest ($) |
Debt Discount and Fees ($)⁽¹⁾ |
Issuance Costs ($) |
Total Interest Expense ($) |
|||||
2025 Notes |
|
|
|
|
|||||
Loan and Security Agreement |
|
|
|
|
|||||
Total |
|
|
|
|
|||||
The following are the scheduled maturities of the Company’s notes payable (including end of term fees) as of June 30, 2026 (in thousands):
2027 |
$ |
|
|
2028 |
|
||
2029 |
|
||
Total |
|
$ |
|
13. |
Stockholders’ Equity |
Public and Registered Direct Offerings
On May 15, 2025, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with several underwriters for the sale of
20
Public Offering Price, which the underwriters exercised in full. The Company received aggregate gross proceeds from the Public Offering of $
On April 30, 2026, the Company entered into an underwriting agreement (the “April 2026 Underwriting Agreement”) with TD Securities (USA) LLC and Barclays Capital Inc., as representatives of the several underwriters named therein, pursuant to which the Company agreed to issue and sell an aggregate of
ATM Offerings
On August 6, 2025, the Company entered into an at-the-market sales agreement (the “Sales Agreement”) with TD Securities (USA) LLC (“TD Cowen”), under which the Company could offer and sell, from time to time, at its sole discretion, shares of its common stock having an aggregate offering price of up to $
In August 2023, the Company entered into an Equity Distribution Agreement (the “Equity Distribution Agreement”) with Goldman Sachs & Co. LLC (“GS”), under which the Company could offer and sell, from time to time, at its sole discretion, shares of its common stock having an aggregate offering price of up to $
Stock Purchase Warrants
The table below summarizes the warrant activity for the six months ended June 30, 2026 (in thousands). This table does not include the PHC Exchange Warrant (as defined below) or the PHC Purchase Warrant (as defined and described below). Such warrants are pre-funded and excluded from the table due to their nominal exercise price of $
21
Shares |
Exercise price (per share) |
Weighted average exercise price (per share) |
||||||
Outstanding, December 31, 2025 |
|
|
$ |
|
$ |
|
||
Granted |
|
|
|
|
|
|
||
Exercised |
|
— |
|
— |
|
— |
||
Expired |
|
( |
|
— |
|
— |
||
Outstanding and Exercisable, June 30, 2026 |
|
|
$ |
|
$ |
|
||
|
|
|||||||
Weighted Average Remaining Life, June 30, 2026 (years) |
|
|
On June 30, 2016, we entered into a loan agreement with Oxford Finance and Silicon Valley Bank (collectively, the “Lenders”) and issued to the Lenders stock purchase warrants to purchase an aggregate of
On March 13, 2023, we issued and sold to PHC a warrant to purchase
In March 2023, we entered into an exchange agreement with PHC, pursuant to which PHC exchanged $
On September 8, 2023, we entered into the Loan and Security Agreement with several lenders and issued the Tranche 1 Warrants to acquire an aggregate of
On January 2, 2024, we issued the Tranche 2 Warrants to acquire an aggregate of
On October 24, 2024, in connection with a registered direct securities offering, the Company issued to the investors in the offering warrants to purchase an aggregate of
On May 6, 2026, we executed the Second Amendment to the Amended Loan and Security Agreement with several lenders and issued the 2026 Warrants to acquire an aggregate of
22
14. |
Stock-Based Compensation |
2015 Plan
In December 2015, the Company adopted the 2015 Equity Incentive Plan (the “2015 Plan”), under which incentive stock options, non-qualified stock options and restricted stock units may be granted to the Company’s employees and certain other persons, such as officers and directors, in accordance with the 2015 Plan provisions. In February 2016, the Company’s Board of Directors adopted, and the Company’s stockholders approved, an Amended and Restated 2015 Equity Incentive Plan (the “Amended and Restated 2015 Plan”), which became effective on February 20, 2016. The Company’s Board of Directors may terminate the Amended and Restated 2015 Plan at any time. Options granted under the Amended and Restated 2015 Plan expire
Pursuant to the Amended and Restated 2015 Plan, the number of shares of the Company’s common stock reserved for issuance automatically increases on January 1 of each year, ending on January 1, 2026, by
Commercial Equity Plan
On January 30, 2023, the Company adopted the Senseonics Holdings, Inc. 2023 Commercial Equity Plan (the “Commercial Equity Plan”), pursuant to which the Company reserved
2026 Plan
In May 2026, the Company’s Board of Directors adopted, and the Company’s stockholders approved the 2026 Plan, , pursuant to which the Company reserved
Inducement Plan
On May 30, 2019, the Company adopted the Senseonics Holdings, Inc. Inducement Plan (the “Inducement Plan”), pursuant to which the Company reserved
2016 Employee Stock Purchase Plan
In February 2016, the Company adopted the 2016 Employee Stock Purchase Plan (the “2016 ESPP”). The 2016 ESPP became effective on March 17, 2016. The maximum number of shares of common stock that may be issued under the 2016 ESPP was initially
23
including January 1, 2026, by
The 2016 ESPP permits participants to purchase shares of the Company’s common stock through payroll deductions of up to
15. |
Fair Value Measurements |
The following table represents the fair value hierarchy of the Company’s financial assets and liabilities measured at fair value on a recurring basis at June 30, 2026 and December 31, 2025 (in thousands):
June 30, 2026 |
|
|||||||||||||
Asset Class |
|
Total |
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
|||||
Cash and Cash Equivalents⁽¹⁾ |
||||||||||||||
Money market funds |
$ |
|
|
— |
— |
|||||||||
Short Term Investments |
||||||||||||||
Commercial paper (>3 months) |
$ |
|
— |
|
— |
|||||||||
Corporate debt securities |
|
— |
|
— |
||||||||||
Government and agency securities (>3 months) |
|
|
— |
— |
||||||||||
Foreign corporate/sovereign debt securities |
|
— |
|
— |
||||||||||
December 31, 2025 |
|
||||||||||||
Asset Class |
|
Total |
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
||||
Cash and Cash Equivalents⁽¹⁾ |
|||||||||||||
Money market funds |
$ |
|
|
— |
— |
||||||||
Short Term Investments |
|||||||||||||
Commercial paper (>3 months) |
$ |
|
$ |
— |
|
— |
|||||||
Corporate debt securities |
|
— |
|
— |
|||||||||
Government and agency securities (>3 months) |
|
|
— |
— |
|||||||||
| (1) | Classified as cash and cash equivalents due to their short-term maturity. |
16. |
Income Taxes |
The Company has
17.Related Party Transactions
PHC has a noncontrolling ownership interest in the Company. In addition, PHC previously appointed two members on the Company’s board of directors (which appointment was terminated on January 1, 2026). The Company previously entered into a financing agreement with PHC on August 9, 2020. Ascensia is a related party through the ownership interests of its parent company, PHC.
24
Revenue from Ascensia during the six months ended June 30, 2026 and 2025 was $
The amount due from Ascensia as of June 30, 2026 and December 31, 2025 was $
As discussed in Note 4, on September 3, 2025 the Company and Ascensia signed a memorandum of understanding (“MOU”) related to the transition of commercial operations for Eversense from Ascensia back to the Company. On December 31, 2025, the parties executed a Master Asset Purchase Agreement, pursuant to which the Company acquired certain U.S. commercial assets and assumed certain related liabilities, with the initial closing on January 1, 2026. In connection with the Master Asset Purchase Agreement, the parties entered into an A&R Commercialization Agreement, which terminated Ascensia’s rights to market Eversense products in the United States and modified Ascensia’s commercialization rights in the European Territories. The parties are cooperating during a defined transition period to ensure continuity of supply, customer support, and patient access. In connection with this transition, the Company hired certain sales and support personnel previously engaged by the counterparty.
The Company paid total consideration of approximately $
As contemplated by the Master Asset Purchase Agreement, on March 12, 2026, the parties entered into separate local asset purchase agreements (the “Local Purchase Agreements”) covering the European Territories, pursuant to which the Company agreed to acquire certain additional commercial assets (the “European Purchased Assets”) and assume certain related liabilities (the “European Assumed Liabilities” and together with the European Purchased Assets, the “European Asset Purchases”) in those territories. The closings of these transactions (the “European Closings”) occurred in early June 2026. Ascensia continues to provide transition services to support certain commercialization activities in Italy and Germany. In connection with the European Closings, the Company accepted the return of certain unsold inventory previously held by Ascensia, reversed $
In connection with the Local Purchase Agreements, the parties also entered into a Transition Services Agreement (the “Transition Services Agreement”) under which Ascensia will provide certain operational and administrative support services in the European Territories during the transition period, including support in the areas of logistics and ordering, payment and collections, claims processing, IT and systems migration, personnel support, finance and operations support, regulatory compliance, and other agreed services, for which the Company will pay certain costs and service fees. The Company incurred approximately $
25
18.Segment Information
The Company views its operations and manages its business in
The CODM assesses performance for the segment based on net loss, which is reported in the consolidated statements of operations and comprehensive loss and uses the financial information in deciding on how to invest into the Company. The measure of segment assets is reported on the balance sheets as total assets.
The table below summarizes the significant expense categories regularly reviewed by the CODM for the six months ended June 30, 2026 and 2025:
Three Months Ended |
Six Months Ended |
||||||||||
June 30, |
June 30, |
||||||||||
2026 |
2025 |
2026 |
2025 |
||||||||
Total revenue |
$ |
|
$ |
|
$ |
|
$ |
|
|||
Less: |
|||||||||||
Cost of sales |
|
|
|
|
|||||||
Sales and marketing expenses |
|
|
|
|
|
|
|
||||
Research and development expenses |
|
|
|
|
|
|
|
||||
General and administrative expenses |
|
|
|
|
|||||||
Other Segment Items(1) |
|
|
|
|
|||||||
Net Loss |
$ |
( |
$ |
( |
$ |
( |
$ |
( |
|||
| (1) |
|
19.Subsequent Events
The Company has evaluated all subsequent events through the filing date of this Form 10-Q with the SEC, to ensure that this filing includes appropriate disclosure of events both recognized in the financial statements as of June 30, 2026, and events which occurred subsequently but were not recognized in the financial statements. There were no subsequent events which required recognition, adjustment to or disclosure in the financial statements.
26
ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Certain statements contained in this Quarterly Report on Form 10-Q may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The words or phrases “would be,” “will allow,” “intends to,” “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “plan,” “project,” “expect,” or similar expressions, or the negative of such words or phrases, are intended to identify “forward-looking statements.” We have based these forward-looking statements on our current expectations and projections about future events. Because such statements include risks, uncertainties, and assumptions, actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause or contribute to these differences include those described below and elsewhere in this Quarterly Report on Form 10-Q, and in our Annual Report on Form 10-K, particularly in Part I – Item 1A, “Risk Factors,” and our other filings with the Securities and Exchange Commission. Statements made herein are as of the date of the filing of this Quarterly Report on Form 10-Q with the Securities and Exchange Commission and should not be relied upon as of any subsequent date. Unless otherwise required by applicable law, we do not undertake, and we specifically disclaim, any obligation to update any forward-looking statements to reflect occurrences, developments, unanticipated events or circumstances after the date of such statement.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited financial statements and related notes that appear in Item 1 of this Quarterly Report on Form 10-Q and with our audited financial statements and related notes for the year ended December 31, 2025, which are included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 2, 2026. Unless otherwise indicated or the context otherwise requires, all references in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section to the “Company,” “we,” “our,” “ours,” “us” or similar terms refer to Senseonics Holdings, Inc. and its consolidated subsidiaries and affiliated entities, as appropriate, including its consolidated VIEs.
Unless otherwise indicated, all information in this Quarterly Report on Form 10-Q gives effect to a 1-for-20 reverse stock split of our common stock that became effective on October 17, 2025 (the “Reverse Stock Split”), and all references to historical share and per share amounts give effect to the Reverse Stock Split.
Overview
We are a medical technology company focused on the design, development and commercialization of glucose monitoring products designed to transform lives in the global diabetes community with differentiated, long-term implantable glucose management technology. Our implantable CGM systems, including the Eversense E3 system (“Eversense E3”) and the Eversense 365 system (“Eversense 365” and, together with Eversense E3, “Eversense” or the “Eversense Systems”), are designed to continually and accurately measure glucose levels in people with diabetes via an under-the-skin sensor, a removable and rechargeable smart transmitter, and a convenient app for real-time diabetes monitoring and management for a period of up to six months in the case of Eversense E3 and up to twelve months in the case of Eversense 365, as compared to seven to 15 days for non-implantable CGM systems. As described in more detail below, in August 2020, we entered into a collaboration and commercialization agreement (“Existing Commercialization Agreement”), with Ascensia Diabetes Care Holdings AG (“Ascensia”) pursuant to which we granted Ascensia the exclusive right to distribute Eversense worldwide, with certain initial exceptions. In February 2022, Eversense E3, a 180 day CGM system, was approved by the FDA and Ascensia began commercializing Eversense E3 in the United States in the second quarter of 2022. In June 2022, we affixed the CE Mark to the extended life Eversense E3 system and Ascensia began commercialization in select markets in Italy, Germany, Spain and Sweden (the “European Territories”) during the third quarter of 2022. In September 2024, Eversense 365, a 365-day extended life CGM system, was approved by the FDA and Ascensia began commercializing Eversense 365 in the United States in the fourth quarter of 2024. In January 2026, we took over full commercial responsibility for Eversense 365 in the United States and began marketing and distributing the product with our own sales force. In January 2026, we also obtained CE Mark approval for Eversense 365 and are currently in the process of launching Eversense 365 in the European Territories.
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On September 3, 2025 the Company and Ascensia signed a memorandum of understanding (“MOU”) related to the transfer of commercial operations relating to Eversense from Ascensia back to the Company. On December 31, 2025, the parties entered into the Master Asset Purchase Agreement formalizing this transfer, closed these transations in the U.S. on January 1, 2026, and entered into A&R Commercialization Agreement, which terminated Ascensia’s right to market Eversense products in the U.S. and rendered Ascensia’s right to market Eversense products in the European Territories non-exclusive. Pursuant to the A&R Commercialization Agreement, effective January 1, 2026, we are entitled to 100% of the revenues derived from the sale of Eversense products in the European Territories. As contemplated by the Master Asset Purchase Agreement, on March 12, 2026 we entered into local asset purchase agreements to facilitate the transition of Ascensia’s commercialization activities in the European Territories. The Company and Ascensia also entered into a Transition Services Agreement, under which the Company paid Ascensia for certain support and administrative services in Europe during 2026. The European transactions closed in early June 2026. Ascensia continues to provide certain transition support services, particularly related to Italy and Germany to facilitate an orderly transition of the commercialization activities in those markets following the closings.
Our net revenues are derived from sales of the Eversense CGM system which includes the Eversense Sensor Pack containing the sensor, insertion tool, and adhesive patches, the Eversense Smart Transmitter Pack containing the transmitter and charger and in some cases the procedure revenue associated with insertions and removals.
In the United States, we sell directly to our network of distributors and strategic fulfillment partners, who provide the Eversense system to healthcare providers and patients through a prescribed request and invoice insurance payors for reimbursement. In addition, we sell our product through a consignment model through arrangements with our network of healthcare professionals. In Europe, we sell primarily to hospital networks under tender agreements and through distributors, who resell the Eversense systems to hospitals. Sales of the Eversense system are widely dependent on the ability of patients to obtain coverage and adequate reimbursement from third-party payors or government agencies. We leverage and target regions where we have coverage decisions for patient device use and provider insertion and removal procedure payment. We have reached approximately 300 million covered lives in the United States through positive insurance payor coverage decisions. In June 2023, we received positive payor coverage decision from UnitedHealthcare, the largest healthcare insurance company in the United States that effective July 1, 2023, Eversense E3 would be covered. On August 3, 2020, the Center for Medicare and Medicaid Services (“CMS”) released its Calendar Year 2021 Medicare Physician Fee Schedule Proposed Rule that announces proposed policy changes for Medicare payments, including the proposed establishment of national payment amounts for the three CPT© Category III codes describing the insertion (CPT 0446T), removal (0447T), and removal and insertion (0048T) of an implantable interstitial glucose sensor, which describes our Eversense Systems, as a medical benefit, rather than as part of the Durable Medical Equipment channel that includes other CGMs. In December 2021, CMS released its Calendar Year 2022 Medicare Physician Fee Schedule that updated bundled payments for the device cost and procedure fees. In November 2022, CMS released its Calendar Year 2023 Medicare Physician Fee Schedule Proposed Rule that updates the payment amounts for the three CPT© III codes to account for the longer 6-month sensor. In February 2024, we announced that Medicare coverage was expanded for Eversense E3 to include all people with diabetes using insulin and non-insulin users who have a history of problematic hypoglycemia providing access to millions of Medicare patients. In April 2025, CMS updated the payment amounts in the Physician Fee Schedule to account for the longer duration Eversense 365 for all eligible Medicare beneficiaries. The Physician Fee Schedule was updated with similar pricing for 2026. We have been working with payors that previously supported Eversense to transition their policies to Eversense 365 and the majority of these eligible payors have now completed that transition.
In February 2020, we announced that the FDA approved a subgroup of PROMISE trial participants to continue for a total of 365 days to gather feasibility data on the safety and accuracy of a 365-day sensor. This sub-set of 30 participants was left undisturbed for 365 days with the goal of measuring accuracy and longevity over the full 365 days. Information gathered from this sub-set and additional development efforts provided us the confidence to start the ENHANCE pivotal study of Eversense 365. The ENHANCE pivotal study of Eversense 365 completed enrollment, the last patient of the adult cohort completed the study, and we completed our analysis of the data. Based on this analysis, we determined to advance to the next generation sensor platform as the underlying technology used in the 365-day and future products. In May 2024, this data supported an FDA 510(k) submission for a new product with a 365-day duration and once per week calibration. The 510(k) submission was approved by the FDA on September 17, 2024 and Eversense 365 was cleared for sale in the United States.
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We continue to expand commercialization of the Eversense brand and are focused on driving awareness of our CGM system among people with diabetes and their healthcare providers. Effective January 1, 2026, U.S. commercialization activities were returned to us. In March 2026, we executed separate European local asset purchase agreements for Italy, Germany, Spain, and Sweden, and in the second quarter assumed primary commercialization responsibilities in Spain and Sweden and initiated the transitions in Italy and Germany. Ascensia continues to support some commercialization activities in Italy and Germany, which are targeted to substantially conclude in the third quarter of 2026. In both the United States and our overseas markets we will commercialize the products with direct sales forces and distribution systems that market and promote our various Eversense Systems and future generation products, including our Gemini and Freedom product variations. The Gemini product will allow for a 2-in-1 glucose monitoring system combining the functionality of CGM and flash glucose monitoring, in an implantable sensor with battery that may be utilized with a smart transmitter to get continuous glucose readings and alerts, or be utilized through a swipe over the sensor with a smartphone to get an on-demand glucose reading without a smart transmitter. Our Freedom product variation is being designed to include Bluetooth in the sensor, eliminating the on-body component.
United States Development and Commercialization of Eversense
In 2016, we completed our PRECISE II pivotal clinical trial in the United States. This trial, which was fully enrolled with 90 subjects, was conducted at eight sites in the United States. In the trial, we measured the accuracy of the Eversense 90 system (“Eversense 90”) measurements through 90 days after insertion. We also assessed safety through 90 days after insertion or through sensor removal. In the trial, we observed a mean absolute relative difference (“MARD”), of 8.5% utilizing two calibration points for Eversense 90 across the 40-400 mg/dL range when compared to YSI blood reference values during the 90-day continuous wear period. Based on the data from this trial, in October 2016 we submitted a pre-market approval (“PMA”) application to the FDA to market Eversense 90 in the United States for 90-day use. In June 2018, we received PMA approval from the FDA for the Eversense 90 system. In July 2018, we began distributing the 90-day Eversense 90 system directly in the United States through our own direct sales and marketing organization. We have received Category III CPT codes for the insertion and removal of the Eversense 90 sensor.
In December 2018, we initiated the PROMISE pivotal clinical trial to evaluate the safety and accuracy of Eversense 90 for a period of up to six months in the United States and on September 30, 2019, we completed enrollment of the PROMISE trial. In the trial, we observed performance matching that of the then current Eversense 90 available in the United States, with a MARD of 8.5%. This result was achieved with reduced calibration, down to one per day, while also doubling the sensor life to six months. Following the results of the PROMISE trial, on September 30, 2020, a PMA supplement application to extend the wearable life of Eversense 90 to six months was submitted to the FDA. In February 2022, the extended life Eversense E3 was approved by the FDA.
On February 26, 2020, we announced that the FDA approved a subgroup of PROMISE trial participants to continue for a total of 365 days to gather feasibility data on the safety and accuracy of a 365-day sensor. This sub-set of 30 participants was left undisturbed for 365 days with the goal of measuring accuracy and longevity over the full 365 days. Information gathered from this sub-set and additional development efforts provided us with the confidence to start the Pivotal study for Eversense 365.
In April 2020, we announced that we received an extension to our CE Certificate of Conformity in the EEA such that the Eversense XL is no longer contraindicated for MRI, which means the sensor does not need to be removed from under the skin during MRI scanning. We had previously obtained this indication for Eversense 90 in the United States in 2019. This MRI approval is a first for the CGM category, as all other sensors are required to be removed during an MRI scan.
On August 9, 2020, we entered into the Commercialization Agreement pursuant to which we granted Ascensia the exclusive right to distribute Eversense 90 and Eversense E3 worldwide, with certain initial exceptions. Pursuant to the Commercialization Agreement, in the United States, Ascensia began providing sales support for the Eversense 90 product on October 1, 2020 and Ascensia ramped up sales activities and assumed commercial responsibilities for Eversense 90 during the second quarter of 2021.
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In February 2022, we received approval from the FDA for Eversense E3. The approval for our third-generation sensor, with proprietary sacrificial boronic acid (“SBA”) technology doubles the sensor life to six months with MARD of 8.5%. Ascensia began commercializing Eversense E3 in the United States during the second quarter of 2022.
The ENHANCE clinical study was initiated as a pivotal study with the purpose of gathering additional clinical data to support an integrated continuous glucose monitoring (“iCGM”) submission for Eversense E3 using the SBA technology. In March 2022, we extended the ongoing ENHANCE clinical study to evaluate the safety and accuracy of Eversense 365 for a period of up to one year in the United States. In September 2022, we completed enrollment of the ENHANCE study and the last patient of the adult cohort completed the study in the third quarter of 2023. In November 2022, we submitted and in the first quarter of 2023 we received approval of an investigational device exemption (“IDE”) for the enrollment of a pediatric cohort in the ENHANCE study. In 2023 the data gathered in the ENHANCE study supported the iCGM submission and in April 2024, Eversense 365 was authorized to be marketed as an iCGM through the FDA’s De Novo pathway, by establishing the special controls that will serve as a predicate device for 510(k) submissions in the future. Based on the analysis of the ENHANCE Pivotal study data, the decision was made to advance to the next generation sensor platform as the underlying technology used in the 365-day and future products. In May 2024, this data supported an FDA 510(k) submission for a new product with a 365-day duration and once per week calibration. The 510(k) submission was approved by the FDA on September 17, 2024 and Eversense 365 product was cleared for sale in the United States. Ascensia began commercializing Eversense 365 in the United States during the fourth quarter of 2024.
On September 3, 2025, the Company and Ascensia signed the MOU related to the transfer of commercial operations relating to Eversense from Ascensia back to the Company, including the proposed termination, orderly unwinding of, and smooth transition of the commercial relationship between the Company and Ascensia. On December 31, 2025, the Company and Ascensia entered into the Master Asset Purchase Agreement, pursuant to which, among other things, the Company agreed to acquire Ascensia’s right, title and interest in and to certain assets related to the marketing, selling and distribution of Eversense in the United States (such assets, the “U.S. Purchased Assets”).
Pursuant to the terms of the Master Asset Purchase Agreement, the Company agreed to assume certain liabilities and obligations associated with the U.S. Purchased Assets (the “U.S. Assumed Liabilities” and together with the U.S. Purchased Assets, the “U.S. Asset Purchase”), including, but not limited to, certain liabilities under the contracts transferred to the Company under the Master Asset Purchase Agreement, liabilities arising out of the use or ownership of the transferred assets after the closing, and liabilities and obligations arising from certain employees who were offered employment with Senseonics Inc. pursuant to new employment letter agreements. The U.S. Asset Purchase closed on January 1, 2026 (the “U.S. Closing”).
In connection with the execution of the Master Asset Purchase Agreement, the Company and Ascensia also entered into the A&R Commercialization Agreement on December 31, 2025, which amended and restated the Existing Commercialization Agreement. The A&R Commercialization Agreement terminated Ascensia’s right to market Eversense products in the U.S. Following the U.S. Closing, Ascensia has no further rights to revenues from the sale of Eversense products in the U.S.
In an effort to accelerate commercialization efforts and address challenges to Eversense adoption, in April 2024 and July 2024, we established new legal entities, Eon Care Services, LLC and Eon Management Services, LLC, which were formed as wholly owned subsidiaries of Senseonics, Incorporated. In November 2024, Eon Management Services, LLC entered into management services agreements (the “Administrative Agreement”) for an initial fixed term of 10 years with the Eon Care PCs, which were created to support patient access to the Eversense Systems by contracting nurse practitioners and other healthcare professionals to perform Eversense insertion procedures and other clinical activities. On April 1, 2026, Eon Management Services, LLC entered into an additional management services agreement with an additional professional corporation with an initial fixed term of 10 years. The Eon Care PCs are consolidated as VIEs.
The wholly owned entities and Eon Care PCs (collectively, “Eon Care”) were established to support patient access to the Eversense systems by providing convenient Eversense insertion and training services. We fully completed the transition of our network of inserters from the Nurse Practitioner Group to Eon Care in the second quarter of 2025, and we experienced an increase in the number of insertions since then. Once we build out and establish the Eon Care
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network, we expect established CPT codes associated with Eversense insertions to enable a self-sustaining economic model for this initiative in the future.
We have also sought to complement commercialization efforts by establishing a consignment program, whereby we sell the Eversense system and related components and supplies through a network of healthcare professionals, and supporting certain commercial programs such as direct to consumer (“DTC”) spending, certain key account activities, and market access support. We are determined to increase investment in supporting DTC spending, which we believe correlates with higher awareness and adoption of Eversense. Although the rate of Eversense adoption and lead generation has increased following these initiatives, as well as the regulatory approval of Eversense 365, we continue to work on ways to accelerate commercialization and adoption of our product.
In July 2024, we began first-in-human testing for the Gemini product. The next-generation Gemini product utilizes a fully implantable self-powering system that includes a flash glucose monitor with no on-body component for people with type 2 diabetes and traditional CGM with an on-body component for people with type 1 diabetes. The Gemini product is built on the 365-day sensor platform and the clinical and regulatory work will be focused on demonstrating the battery integration and functionality rather than the sensor life. Data gathered from this first-in-human testing was utilized for an IDE submission that was approved by the FDA in December 2025 which allowed us to begin enrolling patients in the Gemini pivotal study.
European Commercialization of Eversense
In September 2017, we affixed the CE Mark for Eversense XL which permits the product to be sold freely in any part of the EEA. Eversense XL is indicated for a sensor life of up to 180 days. Eversense XL began commercialization in Europe in the fourth quarter of 2017. All such commercialization and marketing activities remain subject to applicable government approvals.
In June 2022, we affixed the CE Mark to Eversense E3, and Ascensia began commercialization in European markets during the second half of 2022.
In February 2025, we submitted an application for the conformity assessment of Eversense 365 to our Notified Body for certification. The submission was prepared in compliance with the EU medical device regulation. In January 2026, the Company obtained CE Mark approval for Eversense 365 and are currently in the process of launching Eversense 365 in the European Territories.
The A&R Commercialization Agreement rendered Ascensia’s right to market Eversense products in the European Territories non-exclusive. Ascensia agreed to continue to sell and market the Eversense product in the European Territories to support the orderly transition of the business pending the closing of the European Asset Purchases and to allow Senseonics to transfer its local tender contracts. These rights and obligations apply from January 1, 2026 until the later of (i) January 1, 2027, (ii) the transfer of all local tender contracts, or (iii) the wind down of certain other commercial activities. Pursuant to the A&R Commercialization Agreement, effective January 1, 2026, the Company is entitled to 100% of the revenues derived from the sale of Eversense products in the European Territories. Senseonics will pay for certain transition services, and certain other costs, to maintain and achieve the orderly transition of the commercial operations in the European Territories. The Company and Ascensia executed separate local asset purchase agreements in the European Territories on March 12, 2026, in connection with the European Asset Purchases. The closings of the European Asset Purchases occurred in early June 2026. In Italy and Germany, Ascensia continues to provide certain transition support services to facilitate the orderly transition of commercial operations in those markets.
Financial Overview
A significant portion of our product revenue has historically been generated from sales of the Eversense system and related components and supplies to Ascensia, through the Commercialization Agreement, who then resells the products to health care providers and patients. Effective January 1, 2026, in connection with the transition of U.S. commercialization activities to the Company, we began generating a greater portion of our product revenue through direct sales to strategic fulfillment partners and through our consignment network in the United States. In addition,
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following the closings of the European Asset Purchases in early June 2026, revenues are now derived from the sale of Eversense products in the European Territories directly, with Ascensia continuing to provide certain transition support services in Italy and Germany during a defined transition period.
Revenue from product sales to Ascensia is recognized at a point in time when Ascensia obtains control of our product based upon the delivery terms as defined in the contract at an amount that reflects the consideration which we expect to receive in exchange for the product. Following the closings of the European Asset Purchases, our contract with Ascensia is winding down. Our contract with Ascensia contains performance obligations, mostly for the supply of goods, and are typically satisfied upon transfer of control of the product and does not include the right to return unless there is a product issue, in which case we may provide replacement product. Product conformity guarantees do not create additional performance obligations and are accounted for as warranty obligations in accordance with guarantee and loss contingency accounting guidance.
The consideration we expect to receive includes estimates of variable consideration for which reserves are established that is primarily the result of variable consideration such as patient assistance program rebates, prompt-pay discounts, tier-volume price discounts and, prior to January 1, 2026, revenue share in connection with the Commercialization Agreement. Variable consideration, such as rebates and prompt-pay incentives, are treated as a reduction in revenue and variable considerations, such as revenue share, is treated as an addition in revenue when the product sale is recognized. The amount of variable consideration that is included in the transaction price may be constrained and is included in revenue only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period, when the uncertainty associated with the variable consideration is subsequently resolved. Estimating variable consideration and the related constraint requires the use of significant management judgment. Depending on the variable consideration, we develop estimates for the expected value based on the terms of the agreements, historical data, geographic mix, reimbursement rates, and market conditions. Variances in the consideration recognized is partially mitigated by minimum price provisions for certain purchases under the contract.
Under the consignment model, small quantities of inventory are held at healthcare provider locations to ensure availability when a patient is identified. No revenue is recognized upon delivery of our products to the healthcare provider locations, as we retain the ability to control the inventory. Rather, revenue is recognized when the product is consumed by a patient.
Contract assets consist of unbilled receivables from customers and are recorded at net realizable value and relate to the timing of billings and revenue share variable consideration from the Commercialization Agreement.
Concentration of Revenue and Customers
A significant portion of the Company’s revenue has historically been derived from one customer, Ascensia. For the three months ended June 30, 2026 and 2025, sales to Ascensia accounted for 12.5% and 52.0% of total revenue, respectively. For the six months ended June 30, 2026 and 2025, sales to Ascensia accounted for 15.5% and 61.0% of total revenue, respectively.
A portion of the Company’s revenue is earned under consignment arrangements with healthcare providers. For the three months ended June 30, 2026 and 2025, sales under consignment arrangements accounted for 57.7% and 40.9% of total revenue, respectively. For the six months ended June 30, 2026 and 2025, sales under consignment arrangements accounted for 47.2% and 32.5% of total revenue, respectively. During 2025, Ascensia earned commissions on sales made through these consignment arrangements for the support provided by their sales reps and commercial organization. Revenues for these corresponding periods represent sales of sensors, transmitters and miscellaneous Eversense System components.
Termination and Modification of Commercialization Arrangements
On September 3, 2025 the Company and Ascensia signed a memorandum of understanding related to the transfer of commercial operations relating to Eversense from Ascensia back to the Company, including the proposed
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termination, orderly unwinding of, and smooth transition of the commercial relationship between the Company and Ascensia. On December 31, 2025, the parties entered into the Master Asset Purchase Agreement and the A&R Commercialization Agreement, pursuant to which commercial activities in the United States transitioned back to the Company effective January 1, 2026 and the commercialization rights in the European Territories were modified to be non-exclusive. In connection with the Master Asset Purchase Agreement, the Company and Ascensia executed local asset purchase agreements in the European Territories on March 12, 2026, the closings of which occurred in early June 2026. The parties continue to cooperate through the transition period and Ascensia continues to provide transition services in Italy and Germany to ensure continuity of supply, customer support, and patient access. As a result of these transition activities, our revenues and results of operations will not be directly comparable to our historical revenues and results of operations for periods in which the Commercialization Agreement was in place.
Revenue by Geographic Region
The following table sets forth net revenue derived from our two primary geographical markets, the United States and outside of the United States, based on the geographic location to which we deliver the product, for the three and six months ended June 30, 2026 and 2025:
Three Months Ended |
Six Months Ended |
||||||||||
June 30, 2026 |
June 30, 2026 |
||||||||||
% |
% |
||||||||||
(Dollars in thousands) |
Amount |
of Total |
Amount |
of Total |
|||||||
Revenue, net: |
|||||||||||
United States |
$ |
12,572 |
86.8 |
% |
$ |
21,902 |
83.6 |
% |
|||
Outside of the United States |
1,911 |
13.2 |
4,292 |
16.4 |
|||||||
Total |
$ |
14,483 |
100.0 |
% |
$ |
26,194 |
100.0 |
% |
|||
Three Months Ended |
Six Months Ended |
||||||||||
June 30, 2025 |
June 30, 2025 |
||||||||||
% |
% |
||||||||||
(Dollars in thousands) |
Amount |
of Total |
Amount |
of Total |
|||||||
Revenue, net: |
|||||||||||
United States |
$ |
4,946 |
74.4 |
% |
$ |
9,441 |
73.2 |
% |
|||
Outside of the United States |
1,703 |
25.6 |
3,465 |
26.8 |
|||||||
Total |
$ |
6,649 |
100.0 |
% |
$ |
12,906 |
100.0 |
% |
|||
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Results of Operations for the Three Months Ended June 30, 2026 and 2025
Three Months Ended |
|||||||||
June 30, |
Period-to- |
||||||||
2026 |
2025 |
Period Change |
|||||||
(in thousands) |
|||||||||
Revenue, net |
|
$ |
12,675 |
|
$ |
3,223 |
|
$ |
9,452 |
Revenue, net - related parties |
1,808 |
3,426 |
(1,618) |
||||||
Total revenue |
14,483 |
6,649 |
7,834 |
||||||
Cost of sales |
5,924 |
3,528 |
2,396 |
||||||
Gross profit |
8,559 |
3,121 |
5,438 |
||||||
Expenses: |
|||||||||
Research and development expenses |
|
11,639 |
|
7,715 |
|
3,924 |
|||
Selling, general and administrative expenses |
|
32,908 |
|
9,729 |
|
23,179 |
|||
Operating loss |
|
(35,988) |
|
(14,323) |
|
(21,665) |
|||
Other income (expense), net: |
|||||||||
Interest income |
1,032 |
973 |
59 |
||||||
Interest expense |
|
(1,600) |
|
(1,145) |
|
(455) |
|||
Other expense |
|
(149) |
|
(6) |
|
(143) |
|||
Total other income (expense), net |
|
(717) |
|
(178) |
|
(539) |
|||
Net Loss |
$ |
(36,705) |
$ |
(14,501) |
$ |
(22,204) |
|||
Total revenue
Our total revenue increased to $14.5 million for the three months ended June 30, 2026, compared to $6.6 million for the three months ended June 30, 2025, an increase of $7.9 million. This increase was primarily driven by sales growth in the US largely due to growth in the consignment program and 365-day product demand. The increase in total revenue was further driven by the elimination of Ascensia revenue share amounts following the termination of Ascensia’s commercialization rights in the United States and the transition of commercialization activities in the European Territories to a non-exclusive arrangement.
Cost of sales and gross profit
Our cost of sales increased to $5.9 million for the three months ended June 30, 2026 compared to $3.5 million for the three months ended June 30, 2025, an increase of $2.4 million. Our gross profit increased to $8.6 million for the three months ended June 30, 2026, compared to $3.1 million for the three months ended June 30, 2025. Gross profit as a percentage of revenue, or gross margin, was 59.1% and 46.9% for the three months ended June 30, 2026, and June 30, 2025, respectively. The improvement in gross margin is largely driven by favorable margins on the 365-day product sales, higher consignment network sales with price favorability, the elimination of the Ascensia revenue share and consistent fixed manufacturing costs.
Research and development expenses
Research and development expenses were $11.6 million for the three months ended June 30, 2026, compared to $7.7 million for the three months ended June 30, 2025, an increase of $3.9 million. This increase was primarily driven by the ramp up of our Gemini pivotal study which adds an implantable battery to power the sensor, as well as higher salary, contract fabrication, and consulting costs in support of additional product development projects to progress our freedom product to eliminate the on-body transmitter component.
Selling, general and administrative expenses
Selling, general and administrative expenses were $32.9 million for the three months ended June 30, 2026, compared to $9.7 million for the three months ended June 30, 2025, representing an increase of $23.2 million. The
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increase consisted of an $11.0 million increase in salary and related costs, largely driven by a large increase in headcount due to the transition of commercialization of Eversense back to the Company, an increase of $8.9 million in selling and marketing costs, and a $3.3 million increase in general and administrative expenses, all of which were largely driven by re-assuming commercialization activities and newly assumed operational responsibilities related to the commercial integration.
Total other income (expense), net
Total other expense, net was ($0.7) million for the three months ended June 30, 2026, compared to other expense, net of ($0.2) million for three months ended June 30, 2025, an increase in other income (expense), net of $0.5 million. The change was primarily due to a $0.5 million increase in interest expense driven by increased borrowings under the Company's amended debt facility with Hercules and a $0.1 million increase in miscellaneous gains recorded in other expense, offset by a $0.1 million increase in interest income.
Results of Operations for the Six Months Ended June 30, 2026 and 2025
Six Months Ended |
|
|||||||||
June 30, |
Period-to- |
|
||||||||
2026 |
2025 |
Period Change |
|
|||||||
(in thousands) |
(in thousands) |
|
||||||||
Revenue, net |
|
$ |
22,016 |
|
$ |
5,033 |
|
$ |
16,983 |
|
Revenue, net - related parties |
4,178 |
7,873 |
(3,695) |
|||||||
Total revenue |
26,194 |
12,906 |
13,288 |
|||||||
Cost of sales |
10,695 |
8,280 |
2,415 |
|||||||
Gross profit |
15,499 |
4,626 |
10,873 |
|||||||
Expenses: |
||||||||||
Research and development expenses |
|
20,250 |
|
15,014 |
|
5,236 |
||||
Selling, general and administrative expenses |
|
63,083 |
|
17,423 |
|
45,660 |
||||
Operating loss |
|
(67,834) |
|
(27,811) |
|
(40,023) |
||||
Other (expense) income, net: |
||||||||||
Interest income |
1,774 |
1,648 |
126 |
|||||||
Interest expense |
|
(2,792) |
|
(2,574) |
|
(218) |
||||
Other expense |
|
(186) |
|
(23) |
|
(163) |
||||
Total other income (expense), net |
|
(1,204) |
|
(949) |
|
(255) |
||||
Net Loss |
$ |
(69,038) |
$ |
(28,760) |
$ |
(40,278) |
||||
Total revenue
Our total revenue increased to $26.2 million for the six months ended June 30, 2026, compared to $12.9 million for the six months ended June 30, 2025, an increase of $13.3 million. This increase was primarily driven by sales growth in the US largely due to growth in the consignment program and 365-day product demand. The increase in total revenue was further driven by the elimination of Ascensia revenue share amounts following the termination of Ascensia’s commercialization rights in the United States and the transition of commercialization activities in the European Territories to a non-exclusive arrangement.
Cost of sales and gross profit
Our cost of sales increased to $10.7 million for the six months ended June 30, 2026 compared to $8.3 million for the six months ended June 30, 2025, an increase of $2.4 million. Our gross profit increased to $15.5 million for the six months ended June 30, 2026, compared to $4.6 million for the six months ended June 30, 2025. Gross profit as a percentage of revenue, or gross margin, was 59.2% and 35.8% for the six months ended June 30, 2026, and June 30, 2025, respectively. The improvement in gross margin is largely driven by favorable margins on the 365-day
35
product sales, higher consignment network sales with price favorability, the elimination of the Ascensia revenue share and consistent fixed manufacturing costs.
Research and development expenses
Research and development expenses were $20.3 million for the six months ended June 30, 2026, compared to $15.0 million for the six months ended June 30, 2025, an increase of $5.3 million. This increase was primarily driven by the ramp up of our Gemini pivotal study driving efforts to eliminate the on-body transmitter component and additional product development projects, as well as higher salary, contract fabrication, and consulting costs in support of the Gemini pivotal study.
Selling, general and administrative expenses
Selling, general and administrative expenses were $63.1 million for the six months ended June 30, 2026, compared to $17.4 million for the six months ended June 30, 2025, representing an increase of $45.7 million. The increase consisted of a $20.2 million increase in salary and related costs, largely driven by a large increase in headcount due to the transition of commercialization of Eversense back to the Company, an increase of $18.4 million in selling and marketing costs, and a $7.1 million increase in general and administrative expenses, all of which were largely driven by re-assuming commercialization activities and newly assumed operational responsibilities related to the commercial integration.
Total other expense, net
Total other expense, net was ($1.2) million for the six months ended June 30, 2026, compared to other expense, net of ($0.9) million for six months ended June 30, 2025, an increase in other expense, net of $0.3 million. The change was primarily due to a $0.2 million increase in interest expense consistent with increased borrowings under the Company's amended debt facility with Hercules and a $0.2 million increase in in miscellaneous gains recorded in other expense, offset by a $0.1 million increase in other income, net.
Liquidity and Capital Resources
Sources of Liquidity
From its founding in 1996 until 2010, the Company has devoted substantially all of its resources to researching various sensor technologies and platforms. Beginning in 2010, the Company narrowed its focus to developing and refining a commercially viable glucose monitoring system. The Company has incurred substantial losses and cumulative negative cash flows from operations since its inception in October 1996 and expects to incur additional losses in the near future. We incurred total net loss of $(69.1) million and $(78.6) million for the years ended December 31, 2025 and 2024, respectively. For the six months ended June 30, 2026, the Company had a net loss of $(69.0) million, and an accumulated deficit of $(1.1) billion. To date, the Company has funded its operations principally through the issuance of preferred stock, common stock, warrants, convertible notes, and debt. As of June 30, 2026, the Company had unrestricted cash, cash equivalents, and marketable securities of $142.7 million.
In the recent years, we have taken a number of measures to strengthen our financial position, including but not limited to the following actions:
Equity Offerings
In August 2025, we entered into an at-the-market sales agreement (the “Sales Agreement”) with TD Securities (USA) LLC (“TD Cowen”), under which we may offer and sell, from time to time, at our sole discretion, shares of common stock having an aggregate offering price of up to $100.0 million through TD Cowen as its sales agent in an “at the market” offering. TD Cowen will receive commissions up to 3.0% of the gross proceeds of any common stock sold through TD Cowen under the Sales Agreement. The shares will be offered and sold pursuant to an effective shelf registration statement on Form S-3, which was originally filed with the Securities and Exchange Commission on August
36
6, 2025. During the twelve months ended December 31, 2025, we received approximately $2.4 million proceeds from the sale of 334,330 shares under the Sales Agreement, after deducting sales commissions and offering expenses. During the six months ended June 30, 2026, the Company received approximately $6.2 million in proceeds from the sale of 892,380 shares under the Sales Agreement, after deducting sales commissions and offering expenses. As of June 30, 2026, an aggregate of $90.8 million remained available for issuance under the Sales Agreement.
On April 30, 2026, we entered into an underwriting agreement with TD Cowen and Barclays Capital Inc., as representatives of the several underwriters named therein, for the sale of 8,000,000 shares of Common Stock and 8,000,000 pre-funded warrants, each representing the right to purchase one share of Common Stock at an exercise price of $0.001 per share (the “May 2026 Pre-Funded Warrants”), at a price to the public of $5.00 per share (or $4.999 per May Pre-Funded Warrant) (the “May 2026 Offering”). The May 2026 Offering closed on May 4, 2026, and the underwriters exercised in full their option to purchase 2,400,000 additional shares of Common Stock. In the aggregate, we sold 10,400,000 shares of Common Stock and 8,000,000 May 2026 Pre-Funded Warrants in the May 2026 Offering, generating aggregate gross proceeds of approximately $92.0 million, before deducting underwriting discounts and commissions and offering expenses payable by us. The net proceeds to Senseonics were approximately $86.0 million, after deducting underwriting discounts and commissions and estimated offering expenses. The securities were offered and sold pursuant to an effective shelf registration statement on Form S-3 (File No. 333-289306).
Indebtedness
Amended Loan and Security Agreement
On September 8, 2023, the Company entered into the Loan and Security Agreement with the Lenders and Hercules. The Company and Hercules have amended this agreement on two occasions, most recently on May 1, 2026 (as amended, the “Amended Loan and Security Agreement”). Under the Amended Loan and Security Agreement, the Lenders have agreed to make available to the Company the Term Loan Facility, providing for an aggregate of up to $140.0 million of loans. To date, Hercules and the Lenders have extended term loans to the Company in the aggregate amount of $55.0 million. The Amended Loan and Security Agreement provides for additional potential borrowings in the aggregate amount of up to $85 million, which may be extended in three tranches of up to $10.0 million, up to $15.0 million, and up to $60.0 million, respectively, which will become available to the Company upon the Company’s satisfaction of certain terms and conditions set forth in the Amended Loan and Security Agreement and, in the case of the $60 million tranche, the Lenders’ investment committee approval. The loans under the Amended Loan and Security Agreement mature on September 3, 2029. The Company received proceeds from the Tranche 2 Loan and an additional $10.0 million tranche (the “2026 Tranche 3A Loan”) upon the closing of the Second Amendment to the Loan and Security Agreement (the “Second Amendment”) on May 6, 2026.
Convertible Notes
The 2025 Notes were repaid in full on January 15, 2025. See Note 12 in the accompanying notes to our consolidated financial statements included elsewhere in this 10-Q for further discussion of the 2025 Notes.
Funding Requirements and Outlook
Our ability to grow revenues and achieve profitability depends on the successful commercialization and adoption of our Eversense System by diabetes patients and healthcare providers, along with future product development and regulatory approvals. Successful completion of the transfer of commercial operations relating to Eversense from Ascensia back to the Company may provide opportunities to have greater influence on revenue generation and market adoption of Eversense. These activities, including our ongoing focus to grow Eversense awareness, initiatives to support patient access, and continued development of Eversense 365, will require significant uses of working capital through 2026 and beyond.
We believe that our transition to in-house commercialization of Eversense, including direct sales to distributors and through tenders, along with our growing consignment arrangements in the U.S. supported by our network of inserters, provide the operational foundation and financial resources necessary for the manufacturing and distribution of Eversense and continued product development. We expect that existing cash, cash equivalents and cash flows from our
37
future operations will be sufficient to meet the Company's current operating plans into 2028. As part of our liquidity strategy, we will continue to monitor our capital structure and market conditions going forward and we may access the debt and equity or equity linked markets for additional funding if the opportunity arises to enhance our capital structure, for changes to our operating plans, for financing strategic initiatives and to provide financial flexibility.
Cash Flows
The following is a summary of cash flows for each of the periods set forth below (in thousands).
|
Six Months Ended |
||||||
|
June 30, |
||||||
|
2026 |
2025 |
|||||
Net cash used in operating activities |
|
$ |
(62,163) |
|
$ |
(25,347) |
|
Net cash used in investing activities |
|
(45,380) |
|
(94,956) |
|||
Net cash provided by financing activities |
|
112,062 |
|
77,224 |
|||
Net increase (decrease) in cash, cash equivalents and restricted cash |
$ |
4,519 |
$ |
(43,079) |
|||
Net cash used in operating activities
Net cash used in operating activities was $62.1 million for the six months ended June 30, 2026, and consisted of a net loss of $69.0 million and a net change in operating assets and liabilities of $1.0 million (primarily driven by increases in inventory of $1.3 million), partially offset by a $5.8 million increase of stock-based compensation, $1.1 million increase related to depreciation/amortization expense, and $1.0 million for the allowance for credit losses.
Net cash used in operating activities was $25.3 million for the six months ended June 30, 2025, and consisted of a net loss of $28.8 million and a net change in operating assets and liabilities of $3.0 million (most notably decreases in accrued expenses and other liabilities of $2.5 million), partially offset by $4.7 million of stock-based compensation and $1.8 million related to depreciation/amortization and other non-cash items.
Net cash used in investing activities
Net cash used in investing activities was $45.3 million for the six months ended June 30, 2026, and consisted of $98.4 million in purchases of marketable securities, $0.3 million in capital expenditures, and $1.3 million for cash paid in connection with the asset acquisition, partially offset by $54.7 million in proceeds from the sale of marketable securities.
Net cash used in investing activities was $95.0 million for the six months ended June 30, 2025, and consisted of $94.4 million in purchase of marketable securities and $0.6 million of capital expenditures.
Net cash provided by financing activities
Net cash provided by financing activities was $112.0 million for the six months ended June 30, 2026, and primarily consisted of $93.5 million in proceeds from the issuance of common stock and prefunded warrants and $19.8 million in borrowings under the Loan and Security Agreement, partially offset by $1.3 million in taxes paid related to net share settlement of equity awards.
Net cash provided by financing activities was $77.2 million for the six months ended June 30, 2025, and primarily consisted of $72.3 million in net proceeds from the Public Offering and Private Placement, $26.5 million in net proceeds from issuances of common stock under the Equity Distribution Agreement, offset by $20.4 million used to repay the remaining outstanding 2025 Notes and $1.2 million from taxes paid related to net share settlement of equity awards.
38
ITEM 3: Quantitative and Qualitative Disclosures About Market Risk
Under SEC rules and regulations, because we are considered to be a “smaller reporting company”, we are not required to provide the information required by this item in this Quarterly Report on Form 10-Q.
ITEM 4: Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the assistance of our chief executive officer, who is our principal executive officer, and our chief financial officer, who is our principal financial officer, has reviewed and evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of June 30, 2026. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed by us in the periodic reports filed with the SEC is accumulated and communicated to our management, including our principal executive, financial and accounting officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving such control objectives. Based on the evaluation of our disclosure controls and procedures as of June 30, 2026, our chief executive officer and chief financial officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended June 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II: OTHER INFORMATION
ITEM 1: Legal Proceedings
From time to time, we are subject to litigation and claims arising in the ordinary course of business. Although the results of litigation and claims cannot be predicted with certainty, we currently believe that the final outcome of these ordinary course matters will not have a material adverse effect on our business. Legal proceedings, including litigation, government investigations and enforcement actions could result in material costs, occupy significant management resources and entail civil and criminal penalties.
In May 2024, the Company received notice and accepted service of a civil complaint that had been filed in the Eastern District of Texas and styled Cellspin Soft, Inc. vs. Senseonics Holdings, Inc., and Ascensia Diabetes Care Holdings AG Case No. 2:24-cv 263. The case was resolved on June 24, 2026 and has been dismissed with prejudice.
The case was filed by a non-practicing entity alleging patent infringement of three patents. The validity of all three of these patents was challenged in Inter Partes Review proceedings at the U.S. Patent and Trademark Office by another party, TikTok Inc., (the “TikTok IPR”) and on September 30, 2024, the Patent Trial and Appeal Board instituted a review with respect to each of the asserted claims in these three patents. Together with LifeScan, Inc. and Ascensia, on October 30, 2024, we filed a joint motion to join the TikTok IPR as well as our own joint independent, similar Inter Partes Review (the “Senseonics IPR”) petitions challenging these patents. On February 5, 2025, the court issued an order staying the proceedings in the Eastern District of Texas pending resolution of the Inter Partes Reviews. On June 5, 2025, prior to the imminent TikTok IPR final hearings, the Acting Director of the U.S. Patent and Trademark Office ordered a sua sponte review by the Acting Director of whether the TikTok IPR could proceed based on certain issues relating to TikTok’s Chinese ownership status. On January 23, 2026, the Director of the U.S. Patent and Trademark Office issued an order stating that, in view of a recent order by the Patent Trial and Appeal Board and TikTok Inc.’s announced Joint
39
Venture (and the referenced ownership attributes thereof), the parties were authorized to file an additional brief addressing whether the evidence Cellspin Soft, Inc. submitted is sufficient to put TikTok Inc.’s real party in interest identification into dispute, and what effect, if any, the announced Joint Venture has on the TikTok IPR proceedings. TikTok, Inc. and Cellspin Soft, Inc. filed additional briefs on February 2, 2026. On March 30, 2026, the Director of the U.S. Patent and Trademark Office issued an order vacating the Board’s decisions granting institution of the TikTok IPR and denied the TikTok IPR petitions. The Director also vacated the Board’s order joining the Senseonics IPR to the TikTok IPR, and ordered the Board to determine whether the Senseonics IPR should be instituted on their own. On April 15, 2026, the Board granted institution of the Senseonics IPR on all three patents involved in the district court litigation. The Board further ordered that a final hearing will be held on June 30, 2026 on the Senseonics IPR. On April 20, 2026, Cellspin requested rehearing of the Board’s April 15, 2026 institution decisions. On April 28, 2026, the Board denied Cellspin’s requests for rehearing.
Prior to the hearing on Senseonics’ invalidity challenge to the three patents in the Senseonics IPR proceedings, on June 24, 2026, the parties entered into a Settlement and Field Limited Covenant Not to Sue, pursuant to which the Senseonics IPR proceedings were terminated and the Cellspin complaint in the Eastern District of Texas was dismissed with prejudice. The Company considers this matter fully resolved.
Except as described above, we are not currently a party to any material legal proceedings, and we are not aware of any pending or threatened legal proceeding against us that we believe could have a material adverse effect on our business, operating results or financial condition.
ITEM 1A: Risk Factors
Our business is subject to risks and events that, if they occur, could adversely affect our financial condition and results of operations and the trading price of our securities. Except as set forth below, there have been no material changes from our risk factors described in “Part I, Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC on March 2, 2026, except for the following:
Risks Related to our Financial Results and Need for Financing
Future borrowings under the Second Amendment to our Amended Loan and Security Agreement with Hercules Capital, Inc. are subject to conditions that may not be satisfied, and we may not have access to the full amount of the facility.
On May 1, 2026, we entered into the Second Amendment to our Amended Loan and Security Agreement with Hercules (the “Second Amendment”), which increased the total loan potential borrowings under the agreement from $100.0 million to $140.0 million. As of the date of this report, we have drawn an aggregate of $55 million of borrowings under the Hercules facility. However, future borrowings under the agreement are subject to the satisfaction of certain terms and conditions and, with respect to the final $60.0 million, the approval of Hercules’s investment committee. There can be no assurance that such conditions to funding will be satisfied. If we are unable to access the full amount of the facility, we may not have sufficient liquidity to fund our operations and may need to seek additional financing on terms that may be less favorable, or we may not be able to obtain additional financing at all.
Our increased indebtedness under the amended Hercules facility may adversely affect our financial condition, and we may not be able to maintain compliance with the financial covenants contained therein.
As a result of the Second Amendment, we have the potential to incur significantly greater indebtedness under the amended Hercules facility. Increased indebtedness could, among other things, increase our vulnerability to general adverse economic and industry conditions, limit our flexibility in planning for or reacting to changes in our business and the industry in which we operate, and place us at a competitive disadvantage compared to our competitors that have less debt. In addition, we will be required to comply with financial and other covenants in the amended facility and our ability to comply with these covenants will depend on our future operating performance, which is subject to prevailing economic conditions and other factors, many of which are beyond our control. If we fail to comply with these covenants, we could be in default under the facility, which could result in the acceleration of all outstanding indebtedness thereunder and materially adversely affect our financial condition and ability to continue as a going concern.
40
ITEM 2: Unregistered Sales of Equity Securities and Use of Proceeds
Not applicable.
ITEM 3: Defaults Upon Senior Securities
Not applicable.
ITEM 4: Mine Safety Disclosures
Not applicable.
ITEM 5: Other Information
During the fiscal quarter ended June 30, 2026, none of our officers or directors, as defined in Rule 16a-1(f),
41
ITEM 6: Exhibits
The exhibits listed on the Exhibit Index hereto are filed or incorporated by reference (as stated therein) as part of this Quarterly Report on Form 10-Q.
Exhibit No. |
Document |
|
3.1 |
||
3.2 |
||
3.3 |
||
3.4 |
|
|
3.5 |
||
3.6 |
||
3.7 |
||
3.8 |
||
3.9 |
||
3.10 |
||
10.1*# |
|
|
31.1* |
Certification of Principal Executive Officer under Section 302 of the Sarbanes-Oxley Act. |
|
31.2* |
Certification of Principal Financial Officer under Section 302 of the Sarbanes-Oxley Act. |
|
32.1** |
||
101.INS* |
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the inline XBRL document) |
|
101.SCH* |
Inline XBRL Taxonomy Extension Schema Document |
|
101.CAL* |
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
|
101.DEF* |
Inline XBRL Taxonomy Extension Definition Linkbase Document |
|
101.LAB* |
Inline XBRL Taxonomy Extension Label Linkbase Document |
|
101.PRE* |
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
|
42
104 |
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
* |
Filed herewith. |
** |
These certifications are being furnished solely to accompany this quarterly report pursuant to 18 U.S.C. Section 1350, and are not being filed for purposes of Section 18 of the Exchange Act and are not to be incorporated by reference into any filing of the registrant, whether made before or after the date hereof, regardless of any general incorporation language in such filing. |
# |
Certain portions of this exhibit, indicated by asterisks, have been omitted because they are not material and are the type that the registrant treats as private and confidential. |
43
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
SENSEONICS HOLDINGS, INC. |
||
Date: August 6, 2026 |
By: |
/s/ Rick Sullivan |
Rick Sullivan |
||
Chief Financial Officer |
||
(Principal Financial Officer) |
||
44
EXECUTION VERSION
Certain information has been omitted from this document in accordance with Regulation S-K, Item 601(b)(10).
Second AMENDMENT
TO
LOAN AND SECURITY AGREEMENT
This Second Amendment to Loan and Security Agreement (this “Amendment”) is dated as of May 1, 2026 and is entered into by and among (a) (i) SENSEONICS HOLDINGS, INC., a Delaware corporation (“Company”), SENSEONICS, INCORPORATED, a Delaware corporation (“Senseonics Inc”), EON MANAGEMENT SERVICES, LLC, a Delaware limited liability company (“EON MS”) and EON CARE SERVICES, LLC, a Delaware limited liability corporate (“EON Care” and, together with Company, Senseonics Inc and EON MS, individually or collectively, as the context may require the “Borrower”), (b) the several banks and other financial institutions or entities from time to time parties to the Loan Agreement (collectively, referred to as “Lender”) and (c) HERCULES CAPITAL, INC., a Maryland corporation, in its capacity as administrative agent and collateral agent for itself and Lender (in such capacity, “Agent”). Capitalized terms used herein without definition shall have the same meanings given them in the Loan Agreement (as defined below).
Recitals
Agreement
NOW, THEREFORE, in consideration of the foregoing Recitals and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, and intending to be legally bound, the parties hereto agree as follows:
Borrower understands and acknowledges that each of Agent and Lender is entering into this Amendment in reliance upon, and in partial consideration for, the above representations and warranties, and agrees that such reliance is reasonable and appropriate.
2
3
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE AND THAT IF KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY.
[Signature Page Follows]
4
In Witness Whereof, the parties have duly authorized and caused this Amendment to be executed as of the date first written above.
|
BORROWERS: SENSEONICS HOLDINGS, INC. Signature: /s/ Rick Sullivan Print Name: Rick Sullivan Title:Chief Financial Officer SENSEONICS, INCORPORATED Signature: /s/ Rick Sullivan Print Name: Rick Sullivan Title:Chief Financial Officer EON MANAGEMENT SERVICES, LLC Signature: /s/ Rick Sullivan Print Name: Rick Sullivan Title:Chief Financial Officer EON CARE SERVICES, LLC Signature: /s/ Rick Sullivan Print Name: Rick Sullivan Title:Chief Financial Officer |
|
Accepted in San Mateo, California:
AGENT:
HERCULES CAPITAL, INC.
Signature:/s/ Seth Meyer
Print Name: Seth Meyer
Title: |
CFO |
LENDERS:
HERCULES CAPITAL, INC.
Signature:/s/ Seth Meyer
Print Name: Seth Meyer
Title: |
CFO |
HERCULES PRIVATE GLOBAL VENTURE GROWTH FUND I L.P.
By: Hercules Adviser LLC, its Investment Adviser
Signature: /s/ Seth Meyer
Print Name: Seth Meyer
Title: |
Authorized Signatory |
HERCULES GROWTH LENDING FUND IV LP
By: Hercules Growth Lending Fund IV GP LLC, its general partner
Signature: /s/ Seth Meyer
Print Name: Seth Meyer
Title: |
Authorized Signatory |
HERCULES EVERGREEN FUND LP
By: Hercules Evergreen Fund GP LLC, its general partner
Signature: /s/ Seth Meyer
Print Name: Seth Meyer
Title: |
Authorized Signatory |
EXECUTION VERSION
Conformed through Second Amendment Closing Date
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT is made and dated as of September 8, 2023 and is entered into by and among SENSEONICS HOLDINGS, INC., a Delaware corporation (“Company”), SENSEONICS, INCORPORATED, a Delaware corporation (“Senseonics Inc”) and each other Person that has delivered a Joinder Agreement pursuant to Section 7.13 from time to time party hereto as borrower (together with Company and Senseonics Inc, individually or collectively, as the context may require, “Borrower”), the several banks and other financial institutions or entities from time to time party hereto (each, a “Lender”, and collectively referred to as “Lenders”) and HERCULES CAPITAL, INC., a Maryland corporation, in its capacity as administrative agent and collateral agent for itself and Lenders (in such capacity, including any successors or assigns, “Agent”).
A.Borrower has requested Lenders make available to Borrower up to fourfive (45) tranches of term loans in an aggregate principal amount of up to One Hundred Forty Million Dollars ($100,000,000140,000,000) (the “Term Loans”); and
B.Lenders are willing to make the Term Loans on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, Borrower, Agent and Lenders agree as follows:
DEFINITIONS AND RULES OF CONSTRUCTION
Unless otherwise defined herein, the following capitalized terms shall have the following meanings:
“2025 Term Loan” means any 2025 Term Loan Advance made under this Agreement.
“2025 Term Loan Advance” means each 2025 Tranche 1 Advance, 2025 Tranche 2 Advance, 2025 Tranche 33A Advance, 2025 Tranche 3B Advance, 2026 Tranche 4 Advance, 2026 Tranche 5 Advance and any other funds advanced under Section 2.2.1(a).
“2025 Term Loan Amortization Date” means October 1, 2027; provided however, (a) if the 2025 Tranche 2 Milestone occurs, then October 2, 2028 and (b) if both the 2025 Tranche 2 Milestone and 2025 Tranche 33B Milestone occur, then the 2025 Term Loan Maturity Date.
“2025 Term Loan Interest Rate” means for any day a per annum rate of interest equal to the greater of either (i) (x) the Prime Rate plus (y) 2.40%, and (ii) 9.90%.
“2025 Term Loan Maturity Date” means September 3, 2029; provided that if such day is not a Business Day, the 2025 Term Loan Maturity Date shall be the immediately preceding Business Day.
“2025 Tranche 1 Commitment” means as to any Lender, the obligation of such Lender, if any, to make a 2025 Term Loan Advance to Borrower in a principal amount not to exceed the amount set forth under the heading “Tranche 1 Commitment” opposite such Lender’s name on Schedule 1.1.
“2025 Tranche 1 Facility Charge” is Four Hundred Twelve Thousand Five Hundred Dollars ($412,500), which is payable to the Lenders in accordance with Section 4.2(f).
“2025 Tranche 2 Commitment” means as to any Lender, the obligation of such Lender, if any, to make a 2025 Term Loan Advance to Borrower in a principal amount not to exceed the amount set forth under the heading “Tranche 2 Commitment” opposite such Lender’s name on Schedule 1.1.
“2025 Tranche 2 Milestone” means [***]. For the avoidance of doubt, the parties agree that the 2025 Tranche 2 Milestone has occurred as of the Second Amendment Closing Date.
“2025 Tranche 33A Commitment” means as to any Lender, the obligation of such Lender, if any, to make a 2025 Term Loan Advance to Borrower in a principal amount not to exceed the amount set forth under the heading “Tranche 33A Commitment” opposite such Lender’s name on Schedule 1.1.
“2025 Tranche 3A Milestone” means [***].
“2025 Tranche 3B Commitment” means as to any Lender, the obligation of such Lender, if any, to make a 2025 Term Loan Advance to Borrower in a principal amount not to exceed the amount set forth under the heading “Tranche 3B Commitment” opposite such Lender’s name on Schedule 1.1.
“2025 Tranche 33B Milestone” means [***].
“2025 Tranche 4 Commitment” means as to any Lender, the obligation of such Lender, if any, to make a 2025 Term Loan Advance to Borrower in a principal amount not to exceed the amount set forth under the heading “Tranche 4 Commitment” opposite such Lender’s name on Schedule 1.1.
“2025 Tranche 4 Milestone” means [***].
“20252026 Tranche 45 Commitment” means as to any Lender, the obligation of such Lender, if any, to make a 2025 Term Loan Advance to Borrower in a principal amount not to exceed the amount set forth under the heading “Tranche 45 Commitment” opposite such Lender’s name on Schedule 1.1.
“Account Control Agreement(s)” means any agreement entered into by and among Agent, Borrower and a third-party bank or other institution (including a Securities Intermediary) in which Borrower maintains a Deposit Account or an account holding Investment Property and which perfects Agent’s first priority security interest in the subject account or accounts.
“ACH Authorization” means the ACH Debit Authorization Agreement in substantially the form of Exhibit H, which account numbers shall be redacted for security purposes if and when filed publicly by Borrower.
“Acquisition” means any transaction or series of related transactions for the purpose of or resulting, directly or indirectly, in (a) the acquisition of all or substantially all of the assets of a Person, or of any business, line of business or division or other unit of operation of a Person, (b) the acquisition of fifty percent (50%) or more of the Equity Interests of any Person, whether or not involving a merger, consolidation or similar transaction with such other Person, or otherwise causing any Person to become a Subsidiary of
Borrower, or (c) the acquisition of any product, product line or intellectual property of or from or exclusive licensing of intellectual property of or from any other Person.
“Adjusted Gross Margin” means, for any period, the ratio, expressed as a percentage, of (a) the Adjusted Gross Profit for such period to (b) Revenue for such period, determined in accordance with GAAP and consistent with past practice, subject to the Revenue Adjustments.
“Adjusted Gross Profit” means, for any period, an amount equal to (i) Revenue for such period, determined in accordance with GAAP and consistent with past practice, less (ii) costs of Revenue for such period, in each case, to the extent applicable, subject to the Revenue Adjustments.
“Advance(s)” means a 2025 Term Loan Advance.
“Advance Date” means the funding date of any Advance.
“Advance Request” means a request for an Advance submitted by Borrower to Agent in substantially the form of Exhibit A, which account numbers shall be redacted for security purposes if and when filed publicly by Borrower.
“Affiliate” means (a) any Person that directly or indirectly controls, is controlled by, or is under common control with the Person in question, (b) any Person directly or indirectly owning, controlling or holding with power to vote fifteen percent (15%) or more of the outstanding voting securities of another Person, or (c) any Person fifteen percent (15%) or more of whose outstanding voting securities are directly or indirectly owned, controlled or held by another Person with power to vote such securities. As used in the definition of “Affiliate,” the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.
“Agreement” means this Loan and Security Agreement, as amended, restated, amended and restated, supplemented or otherwise modified from time to time.
“Anti-Corruption Laws” means all laws, rules, and regulations of any jurisdiction applicable to Borrower or any of its Affiliates from time to time concerning or relating to bribery or corruption, including without limitation the United States Foreign Corrupt Practices Act of 1977, as amended, the UK Bribery Act 2010 and other similar legislation in any other jurisdictions.
“Anti-Terrorism Laws” means any laws, rules, regulations or orders relating to terrorism or money laundering, including without limitation Executive Order No. 13224 (effective September 24, 2001), the USA PATRIOT Act, the laws comprising or implementing the Bank Secrecy Act, and the laws administered by OFAC.
“Bankruptcy Code” means the federal bankruptcy law of the United States as from time to time in effect, currently as Title 11 of the United States Code. Section references to current sections of the Bankruptcy Code shall refer to comparable sections of any revised version thereof if section numbering is changed.
“Blocked Person” means any Person: (a) listed in the annex to, or is otherwise subject to the provisions of, Executive Order No. 13224, (b) a Person owned or controlled by, or acting for or on behalf of, any Person that is listed in the annex to, or is otherwise subject to the provisions of, Executive Order No. 13224, (c) a Person with which any Lender is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law, (d) a Person that commits, threatens or conspires to commit or
supports “terrorism” as defined in Executive Order No. 13224, or (e) a Person that is named a “specially designated national” or “blocked person” on the most current list published by OFAC or other similar list.
“Board of Directors” means, with respect to any Person that is a corporation, its board of directors, with respect to any Person that is a limited liability company, its board of managers, board of members or similar governing body, and with respect to any other Person that is another form of a legal entity, such Person’s governing body in accordance with its Organizational Documents.
“Borrower Products” means all products, software, service offerings, technical data or technology currently being designed, manufactured or sold or that are under clinical investigation or development by Borrower or any of its Subsidiaries or which Borrower or any of its Subsidiaries intends to sell, license, or distribute in the future including any products or service offerings under development, collectively, in each case for the avoidance of doubt as of the Closing Date or at any time thereafter.
“Borrower’s Books” means Borrower’s or any of its Subsidiaries’ books and records including ledgers, federal, state, local and foreign tax returns, records regarding Borrower’s or its Subsidiaries’ assets or liabilities, the Collateral, business operations or financial condition, and all computer programs or storage or any equipment containing such information.
“Business Day” means any day other than Saturday, Sunday and any other day on which banking institutions in the State of California are closed for business.
“Cash” means all cash, cash equivalents and liquid funds, including, without limitation, those assets permitted under clause (ii) of “Permitted Investments”, in each case excluding Digital Assets.
“Change in Control” means (a) at any time, any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of Securities Exchange Act of 1934, as amended), shall become, or obtain rights (whether by means of warrants, options or otherwise) to become, the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 under Securities Exchange Act of 1934, as amended), directly or indirectly, of forty-nine (49.0%) or more of the ordinary voting power for the election of directors, partners, managers and members, as applicable, of Company (determined on a fully diluted basis); (b) “change of control”, “fundamental change”, “make-whole fundamental change” or any comparable term under and as defined in any indenture governing any Permitted Convertible Debt Financing has occurred; (c) during any period of twelve (12) consecutive months, a majority of the members of the Board of Directors of Company cease to be composed of individuals (i) who were members of that Board of Directors on the first (1st) day of such period, (ii) whose election or nomination to that Board of Directors was approved by individuals referred to in clause (i) above constituting at the time of such election or nomination at least a majority of that Board of Directors or (iii) whose election or nomination to that Board of Directors was approved by individuals referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a majority of that Board of Directors; or (d) at any time, Company shall cease to own and control, of record and beneficially, directly or indirectly, one hundred percent (100.0%) of each class of outstanding stock, partnership, membership (except for as a result of mergers, liquidations or consolidations permitted under Section 7.9), or other ownership interest or other equity securities of each Subsidiary of Company free and clear of all Liens (other than Permitted Liens).
“Charter” means, with respect to any Person, such Person’s incorporation, formation or equivalent documents, as in effect from time to time.
“Closing Date” means the date of this Agreement.
“Code” means the U.S. Internal Revenue Code of 1986, as amended.
“Collateral Claim” means any and all present and future “claims” (used in its broadest sense, as contemplated by and defined in Section 101(5) of the Bankruptcy Code, but without regard to whether such claim would be disallowed under the Bankruptcy Code) of a Lender now or hereafter arising or existing under or relating to this Agreement and related Loan Documents, whether joint, several, or joint and several, whether fixed or indeterminate, due or not yet due, contingent or non-contingent, matured or unmatured, liquidated or unliquidated, or disputed or undisputed, whether under a guaranty or a letter of credit, and whether arising under contract, in tort, by law, or otherwise, any interest or fees thereon (including interest or fees that accrue after the filing of a petition by or against Borrower under the Bankruptcy Code, irrespective of whether allowable under the Bankruptcy Code), any costs of Enforcement Actions, including reasonable attorneys’ fees and costs, and any prepayment or termination premiums.
“Common Stock” means the Common Stock, one-thousandth of a Dollar ($0.001) par value per share, of Company.
“Compliance Certificate” means a certificate in the form attached hereto as Exhibit E.
“Contingent Obligation” means, as applied to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to (i) any Indebtedness, lease (excluding operating leases in the ordinary course of business and that would not be required to be shown as a liability on a balance sheet prepared in accordance with GAAP (subject to Section 1.3)), dividend, letter of credit or other obligation of another Person, including any such obligation directly or indirectly guaranteed, endorsed, co-made or discounted or sold with recourse by that Person, or in respect of which that Person is otherwise directly or indirectly liable; (ii) any obligations with respect to undrawn letters of credit, corporate credit cards or merchant services issued for the account of that Person; and (iii) all obligations arising under any interest rate, currency or commodity swap agreement, interest rate cap agreement, interest rate collar agreement, or other agreement or arrangement designated to protect a Person against fluctuation in interest rates, currency exchange rates or commodity prices; provided, however, that the term “Contingent Obligation” shall not include endorsements for collection or deposit in the ordinary course of business. The amount of any Contingent Obligation shall be deemed, without duplication of the primary obligation, to be an amount equal to the stated or determined amount of the primary obligation in respect of which such Contingent Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by such Person in good faith; provided, however, that such amount shall not in any event exceed the maximum amount of the obligations under the guarantee or other support arrangement.
“Copyright License” means any written agreement granting any right to use any Copyright or Copyright registration, now owned or hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any interest.
“Copyrights” means all copyrights, whether registered or unregistered, held pursuant to the laws of the United States of America, any State thereof, or of any other country.
“Default” means any event, circumstance or condition that has occurred or exists, that would, with the passage of time or the requirement that notice be given or both, become an Event of Default.
“Deposit Accounts” means any “deposit accounts”, as such term is defined in the UCC, and includes any checking account, savings account, or certificate of deposit.
“Designated Agreement” means the agreements listed on Schedule 1D attached hereto.
“Digital Assets” means all cryptocurrencies, virtual currencies, coins, tokens and other digital assets.
“Disqualified Equity Interests” means any Equity Interests that, by their terms (or by the terms of any security or other Equity Interests into which they are convertible or for which they are exchangeable), or upon the happening of any event or condition (a) mature or are mandatorily redeemable by the holders (other than solely for Qualified Equity Interests) pursuant to a sinking fund obligation or otherwise (except as a result of a change of control or similar fundamental change or asset sale so long as any rights of the holders thereof upon the occurrence of a change of control or fundamental change or asset sale event shall be subject to the prior repayment in full of the Secured Obligations), (b) are redeemable at the option (except as a result of a change of control or similar fundamental change or asset sale so long as any rights of the holders thereof upon the occurrence of a change of control or fundamental change or asset sale event shall be subject to the prior repayment in full of the Secured Obligations) of the holder thereof (other than solely for Qualified Equity Interests), in whole or in part, (c) provide for scheduled payments of dividends in Cash, or (d) are or become convertible into or exchangeable for Indebtedness or any other Equity Interests that would constitute Disqualified Equity Interests, in each case, prior to the date that is one hundred eighty (180) days after the 2025 Term Loan Maturity Date; provided that if such Equity Interests are issued to any employee or to any plan for the benefit of employees of Company or its Subsidiaries or by any such plan to such employees, such Equity Interests shall not constitute Disqualified Equity Interests solely because it may be required to be repurchased by Company or its Subsidiaries in order to satisfy applicable statutory or regulatory obligations or as a result of such employee’s termination, death or disability.
“Division” means, in reference to any Person which is an entity, the division of such Person into two (2) or more separate Persons, with the dividing Person either continuing or terminating its existence as part of such division, including, without limitation, as contemplated under Section 18-217 of the Delaware Limited Liability Company Act for limited liability companies formed under Delaware law, Section 17-220 of the Delaware Revised Uniform Limited Partnership Act for limited partnerships formed under Delaware law, or any analogous action taken pursuant to any other applicable law with respect to any corporation, limited liability company, partnership or other entity.
“Domestic Subsidiary” means any Subsidiary organized under the laws of the United States of America, any State thereof, the District of Columbia, or any other jurisdiction within the United States of America.
“Due Diligence Fee” means Fifty Thousand Dollars ($50,000), which fee has been paid to Agent and received by Agent prior to the Closing Date, and shall be deemed fully earned on such date regardless of the early termination of this Agreement.
“End of Term Charge Percentage” means, for any prepayment or repayment of a 2025 Term Loan Advance occurring (a) prior to the date that is twelve (12) months from the First Amendment Closing Date, three and ninety five-hundredths of one percent (3.95%), (b) on or after the date that is twelve (12) months from the First Amendment Closing Date but prior to the date that is twenty-four (24) months from the First Amendment Closing Date, four and ninety five-hundredths of one percent (4.95%), and (c) on or after the date that is twenty-four (24) months from the First Amendment Closing Date, six and forty five-hundredths of one percent (6.45%).
“Enforcement Action” means, with respect to any Lender and with respect to any Collateral Claim of such Lender or any item of Collateral in which such Lender has or claims a security interest, lien or right of offset, any action, whether judicial or nonjudicial, to repossess, collect, accelerate, offset, recoup, give notification to third parties with respect to, sell, dispose of, foreclose upon, give notice of sale, disposition, or foreclosure with respect to, or obtain equitable or injunctive relief with respect to, such Collateral Claim or Collateral. The filing, or the joining in the filing, by any Lender of an involuntary bankruptcy or Insolvency Proceeding against Borrower also is an Enforcement Action.
“Equity Interests” means, with respect to any Person, the capital stock, partnership or limited liability company interest, or other equity securities or equity ownership interests of such Person.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder.
“First Amendment Closing Date” means September 3, 2025.
“Foreign Subsidiary” means a Subsidiary other than any Domestic Subsidiary.
“GAAP” means generally accepted accounting principles in the United States of America, as in effect from time to time.
“Governmental Approval” means any consent, authorization, approval, order, license, franchise, permit, certificate, accreditation, registration, filing or notice, of, issued by, from or to, or other act by or in respect of, any Governmental Authority.
“Governmental Authority” means any federal, state, municipal, national or other government, governmental department, commission, board, bureau, court, agency or instrumentality or political subdivision thereof (including the FDA) or any entity or officer exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to any government or any court, in each case whether associated with a state or locality of the United States, the United States, or a foreign government.
“Guarantor” means any Subsidiary of Borrower that enters into a Guaranty.
“Guaranty” means a guaranty with respect to the Secured Obligations, in form and substance satisfactory to Agent that may be entered into from time to time, as the same may from time to time be amended, restated, modified or otherwise supplemented.
“Immaterial Subsidiary” means, on any date of determination, any Foreign Subsidiary that has (a) revenues less than two and half percent (2.5%) of the consolidated revenues of Company and its
Subsidiaries in each fiscal quarter and (b) assets less than two and half percent (2.5%) of the consolidated assets of Company and its Subsidiaries; provided, that collectively, the Immaterial Subsidiaries in the aggregate shall not have (x) revenues in an aggregate amount that is equal to or greater than five percent (5%) of Company’s and its Subsidiaries’ consolidated revenues tested at the end of each fiscal quarter nor (y) assets in an aggregate amount that is equal to or greater than five percent (5%) of Company’s and its Subsidiaries’ consolidated assets tested at the end of each fiscal quarter; provided, that no Immaterial Subsidiary shall own any material Intellectual Property.
“Indebtedness” means indebtedness of any kind, including (a) all indebtedness for borrowed money or the deferred purchase price of property or services (excluding trade credit entered into in the ordinary course of business due within one-hundred twenty (120) days), including reimbursement and other obligations with respect to surety bonds and letters of credit, (b) all obligations evidenced by notes, bonds, debentures or similar instruments, (c) all capital lease obligations, (d) all equity securities of any Person subject to repurchase or redemption other than at the sole option of such Person (except as a result of a change of control, fundamental change or asset sale so long as any rights of the holders thereof upon the occurrence of a change of control, fundamental change or asset sale event shall be subject to the prior repayment in full of the Secured Obligations), (e) “earnouts”, deferred purchase price adjustments, profit sharing arrangements, deferred purchase money amounts and similar payment obligations or continuing obligations of any nature arising out of purchase and sale contracts, in each case, to the extent the same would be required to be shown as a liability on a balance sheet prepared in accordance with GAAP, (f) obligations arising under bonus, deferred compensation, incentive compensation or similar arrangements (other than those arising in the ordinary course of business), (g) non-contingent obligations to reimburse any bank or Person in respect of amounts paid under a letter of credit, banker’s acceptance or similar instrument, and (h) all Contingent Obligations.
“Initial Facility Charge” is Three Hundred Seventy-Five Thousand Dollars ($375,000), which is payable to the Lenders in accordance with Section 4.1(i).
“Insolvency Proceeding” means any proceeding by or against any Person under the United States Bankruptcy Code, or any other bankruptcy, liquidation, moratorium, receivership, or insolvency law (including, without limitation, such laws of other countries), including assignments for the benefit of creditors, compositions, extensions generally with its creditors, or proceedings seeking reorganization, administration, winding-up, arrangement, receivership or other similar relief proceedings in the applicable jurisdiction from time to time in effect and affecting the rights of creditors generally.
“Intellectual Property” means all of Borrower’s Copyrights; Trademarks; Patents; Licenses; trade secrets and inventions; mask works; Borrower’s applications therefor and reissues, extensions, or renewals thereof; and Borrower’s goodwill associated with any of the foregoing, together with Borrower’s rights to sue for past, present and future infringement of Intellectual Property and the goodwill associated therewith.
“Intellectual Property Security Agreement” means the Intellectual Property Security Agreement dated as of the Closing Date between Loan Parties and Agent, as the same may from time to time be amended, restated, modified or otherwise supplemented.
“Interest Only Extension Conditions” means satisfaction of each of the following events: (a) no Default or Event of Default shall have occurred and is continuing; and (b) the Performance Milestone shall have occurred.
“Investment” means (a) any beneficial ownership (including stock, partnership interests, limited liability company interests, or other equity securities or ownership interests) of or in any Person, (b) any loan, advance or capital contribution to any Person, or (c) any Acquisition.
“IRS” means the U.S. Internal Revenue Service.
“Joinder Agreements” means for each Subsidiary required to join as a Borrower or as a Guarantor pursuant to Section 7.13, a completed and executed Joinder Agreement in substantially the form attached hereto as Exhibit F.
“License” means any Copyright License, Patent License, Trademark License or other Intellectual Property license of rights or interests.
“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment for security, security interest, encumbrance, levy, lien or charge of any kind, whether voluntarily incurred or arising by operation of law or otherwise, against any property, any conditional sale or other title retention agreement, and any lease in the nature of a security interest.
“Loan” means the Advances made under this Agreement.
“Loan Documents” means this Agreement, the promissory notes (if any), the ACH Authorization, the Account Control Agreements, any Joinder Agreement, all UCC Financing Statements, any Guaranty, any Warrant, any subordination agreement in favor of Agent and/or Lenders, the Pledge Agreement, the Intellectual Property Security Agreement, and any other documents executed in connection with the Secured Obligations or the transactions contemplated hereby, as the same may from time to time be amended, modified, supplemented or restated.
“Loan Party” means Borrower or any Guarantor.
“Market Capitalization” means, for any given date of determination, an amount equal to (a) the average of the daily volume weighted average price of Company’s common Equity Interests as reported for each of the five (5) Trading Days preceding such date of determination multiplied by (b) the total number of issued and outstanding shares of Company’s common Equity Interests that are issued and outstanding on the date of the determination and listed on the Principal Stock Exchange, subject to appropriate adjustment for any stock dividend, stock split, stock combination, reclassification or other similar transaction during the applicable calculation period.
“Market Disruption Event” means any of the following events: (a) any suspension of, or limitation imposed on, trading by the Principal Stock Exchange in shares of common Equity Interests during any period or periods aggregating one hour or longer and whether by reason of movements in price exceeding limits permitted by the Principal Stock Exchange or otherwise relating to the common Equity Interests; or (b) the failure to open of the exchange or quotation system on which the common Equity Interests are traded or the closure of such exchange or quotation system prior to its respective scheduled closing time for the regular trading session on such day (without regard to after hours or other trading outside the regular trading session hours).
“Material Adverse Effect” means a material adverse effect upon: (i) the business, operations, properties, assets or financial condition of the Loan Parties and their respective Subsidiaries taken as a whole; or (ii) the ability of Borrower to perform or pay the Secured Obligations in accordance with the terms of the Loan Documents, or the ability of Agent or Lenders to enforce any of its rights or remedies with
respect to the Secured Obligations; or (iii) the Collateral or Agent’s Liens on the Collateral or the priority of such Liens.
“Material Agreement” means (a) the Designated Agreements and (b) any license, agreement or other contractual arrangement required to be disclosed (including amendments thereto) under regulations promulgated under the Securities Act of 1933 or Securities Exchange Act of 1934, as may be amended; provided, however, that “Material Agreements” shall exclude all real estate leases, management contracts and compensatory plans, contracts or arrangements.
“Maximum Term Loan Amount” means One Hundred Forty Million Dollars ($100,000,000140,000,000).
“Non-Disclosure Agreement” means that certain Non-Disclosure Agreement by and between Senseonics Inc and Agent dated as of May 30, 2023.
“OFAC” means the Office of Foreign Assets Control of the U.S. Department of Treasury.
“OFAC Lists” means, collectively, the Specially Designated Nationals and Blocked Persons List maintained by OFAC pursuant to Executive Order No. 13224, 66 Fed. Reg. 49079 (Sept. 25, 2001) and/or any other list of terrorists or other restricted Persons maintained pursuant to any of the rules and regulations of OFAC or pursuant to any other applicable Executive Orders.
“Organizational Documents” means with respect to any Person, such Person’s Charter, and (a) if such Person is a corporation, its bylaws, (b) if such Person is a limited liability company, its limited liability company agreement (or similar agreement), and (c) if such Person is a partnership, its partnership agreement (or similar agreement), each of the foregoing with all current amendments or modifications thereto.
“Patent License” means any written agreement granting any right with respect to any invention on which a Patent is in existence or a Patent application is pending, in which agreement Borrower now holds or hereafter acquires any interest.
“Patents” means all letters patent of, or rights corresponding thereto, in the United States of America or in any other country, all registrations and recordings thereof, and all applications for letters patent of, or rights corresponding thereto, in the United States of America or any other country.
“Perfection Certificate” means a completed certificate entitled “Perfection Certificate”, dated as of the Closing Date, delivered by Company to Agent and Lenders, signed by Company (as amended pursuant to the terms of this Agreement).
“Performance Milestone” means the satisfaction of each of the following events: (a) [***], (b) [***]; and (c) [***].
“Permitted Business” means, collectively, (i) any business engaged in by Borrower or any of its Subsidiaries as of the Closing Date or (ii) any business or other activities that are reasonably similar, ancillary, complementary or related to, or a reasonable extension, development or expansion of, the businesses described in the immediately preceding clause (i).
“Permitted Investment” means:
“Permitted License” means:
“Permitted Liens” means:
| (i) | Liens in favor of Agent or Lenders; |
“Permitted Transfers” means:
“Person” means any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation, limited liability company, institution, other entity or government.
“Pledge Agreement” means the Pledge Agreement dated as of the Closing Date between each Borrower party thereto and Agent, as the same may from time to time be amended, restated, modified or otherwise supplemented.
“Prime Rate” means the “prime rate” as reported in The Wall Street Journal or any successor publication thereto.
“Principal Stock Exchange” means NYSE or, if the common Equity Interests are not listed on NYSE, the principal national securities exchange or public quotation system on which the common Equity Interests are then listed for trading or quoted.
“Qualified Equity Interests” means any Equity Interests that are not Disqualified Equity Interests.
“Qualified Equity Issuance Net Proceeds” means the net proceeds in Cash (excluding any conversion of existing notes, share repurchases, or other holdbacks or discounts) received by Company as consideration for any (a) public or private sale or issuance of any Qualified Equity Interests of Company, (b) contribution to the equity capital of Company (other than in exchange for Disqualified Equity Interests), (c) sale or issuance of Indebtedness of Company (other than intercompany Indebtedness) pursuant to a Permitted Convertible Debt Financing, (d) sale or issuance of Subordinated Indebtedness, or (e) entry into a development, collaboration and/or commercialization agreement relating to a product candidate of Borrower; provided that the amount of Cash received by Company is, (i) in the case of clauses (a) and (b) above, measured at the time made and without adjustment for subsequent changes in value, payable for the fair market value of sale, issuance or contribution and any other property received in connection with such sale, issuance or contribution, and paid by any Person that is not a Loan Party or an Affiliate thereof, and (ii) in the case of clause (c) above, the aggregate principal amount of such Indebtedness.
“Receivables” means (i) all of Borrower’s Accounts, Instruments, Documents, Chattel Paper, Supporting Obligations, letters of credit, proceeds of any letter of credit, and Letter of Credit Rights, and (ii) all customer lists, software, and business records related thereto.
“Registration” means any registration, authorization, approval, license, permit, clearance, certificate, and exemption issued or allowed by the FDA or state pharmacy licensing authorities (including, without limitation, new drug applications, abbreviated new drug applications, investigational new drug applications, pricing and reimbursement approvals, labelling approvals or their foreign equivalent, and wholesale distributor permits).
“Required Lenders” means at any time, the holders of more than fifty percent (50%) of the sum of the aggregate unpaid principal amount of the Term Loans then outstanding.
“Restricted License” means any material License or other agreement with respect to which Borrower is the licensee (a) that prohibits or otherwise restricts Borrower from granting a security interest in Borrower’s interest in such License or agreement or any other property, or (b) for which a default under or termination of could interfere with Agent’s right to sell any Collateral.
“Revenue” means the Company’s consolidated revenue, as determined in accordance with GAAP.
“Revenue Adjustments”: means, for purposes of calculating Adjusted Gross Margin or Adjusted Gross Profit (as applicable) for any period, the following adjustments: (a) one-time receipts under business development transactions or other extraordinary receipts outside the ordinary course of business (including without limitation, receipts under litigation settlements, tax refunds and insurance policies), plus (b) one-time inventory write-off charges associated with obsolescence of inventory due solely to the transition from the 180-day Eversense system to the 365-day Eversense system, plus (c) other non-cash adjustments approved by Agent in its sole discretion.
“Sanctioned Country” means, at any time, a country or territory which is the subject or target of any Sanctions.
“Sanctioned Person” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State, or by the United Nations Security Council, the European Union or any EU member state, (b) any Person operating, organized or resident in a Sanctioned Country or (c) any Person controlled by any such Person.
“Sanctions” means economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State, or (b) the United Nations Security Council, the European Union or Her Majesty’s Treasury of the United Kingdom.
“Second Amendment Closing Date” means May 6, 2026.
“Secured Obligations” means Borrower’s obligations under this Agreement and any Loan Document (other than the Warrant), including any obligation to pay any amount now owing or later arising.
“Subordinated Indebtedness” means Indebtedness subordinated to the Secured Obligations in amounts and on terms and conditions satisfactory to Agent in its reasonable discretion and subject to a subordination agreement in form and substance satisfactory to Agent in its sole discretion.
“Subsequent Financing” means the closing of any Borrower financing involving the sale and issuance of Company’s Equity Interests that is broadly marketed to multiple investors and which becomes effective after the Closing Date.
“Subsequent 2025 Tranche 2 Facility Charge” means zero point five percent (0.50%) of each 2025 Tranche 2 Advance, which is payable to the Lenders in accordance with Section 4.2(g).
“Subsequent 2025 Tranche 3 Facility Charge” means zero point five percent (0.50%) of eachthe 2025 Tranche 33A Advance and 2025 Tranche 3B Advance, which is payable to the Lenders in accordance with Section 4.2(h).
“Subsequent 2025 Tranche 4 Facility Charge” means one percent (1.0%) of each 2025 Tranche 4 Advance, which is payable to the Lenders in accordance with Section 4.2(i).
“Subsequent 2026 Tranche 5 Facility Charge” means one percent (1.0%) of each 2026 Tranche 5 Advance, which is payable to the Lenders in accordance with Section 4.2(j).
“Subsequent Tranche 2 Facility Charge” means zero point five percent (0.50%) of each Tranche 2 Advance, which is payable to the Lenders in accordance with Section 4.2(d).
“Subsequent Tranche 3 Facility Charge” means zero point five percent (0.50%) of each Tranche 3 Advance, which is payable to the Lenders in accordance with Section 4.2(e).
“Subsidiary” means an entity, whether a corporation, partnership, limited liability company, joint venture or otherwise, in which Borrower owns or controls, either directly or indirectly, fifty percent (50%) or more of the outstanding voting securities including each entity listed on Schedule 1.
“T6M Gross Revenue” means revenue of the Borrower and its Subsidiaries, as determined in accordance with GAAP, measured on a trailing six-month basis as of the date of the most recently delivered monthly financial statements in accordance with Section 7.1(a) subject to any quarterly adjustment reflected in the quarterly financial statements delivered in accordance with Section 7.1(b).
“T6M Net Revenue” means revenue of the Borrower and its Subsidiaries, as determined in accordance with GAAP, net of adjustments related to returned Ascensia inventory that has been recognized as revenue prior to the applicable tested 6-month period, measured on a trailing six-month basis as of the date of the most recently delivered monthly financial statements in accordance with Section 7.1(a) subject to any quarterly adjustment reflected in the quarterly financial statements delivered in accordance with Section 7.1(b).
“T6M Net Product Revenue” means the net product revenue of the Borrower and its Subsidiaries, as determined in accordance with GAAP, from the sale of Eversense system (which, for the avoidance of doubt, may include royalty or profit sharing revenue recognized in accordance with GAAP, but which shall not include any upfront or milestone-based payments under business development or licensing transactions) in the United States of America, measured on a trailing six-month basis as of the date of the most recently delivered monthly financial statements in accordance with Section 7.1(a) subject to any quarterly adjustment reflected in the quarterly financial statements delivered in accordance with Section 7.1(b)
“Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
“Term Commitment” means as to any Lender, the obligation of such Lender, if any, to make a 2025 Term Loan Advance to Borrower in a principal amount not to exceed the amount set forth under the heading “Tranche 1 Commitment”, “Tranche 2 Commitment”, “Tranche 33A Commitment” or, “Tranche 3B Commitment”, “Tranche 4 Commitment” or “Tranche 5 Commitment”, as the case may be, opposite such Lender’s name on Schedule 1.1.
“Term Loan” means any 2025 Term Loan Advance made under this Agreement.
“Term Loan Advance” means each Tranche 1 Advance, Tranche 2 Advance, Tranche 3 Advance and any other funds advanced under Section 2.2(a).
“Term Loan Interest Rate” means for any day a per annum rate of interest equal to the greater of either (i) (x) the Prime Rate plus (y) 1.40%, and (ii) 9.90%.
“Term Loan Maturity Date” means September 1, 2027; provided that if such day is not a Business Day, the Term Loan Maturity Date shall be the immediately preceding Business Day.
“Trademark License” means any written agreement granting any right to use any Trademark or Trademark registration, now owned or hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any interest.
“Trademarks” means all trademarks (registered, common law or otherwise) and any applications in connection therewith, including registrations, recordings and applications in the United States Patent and Trademark Office or in any similar office or agency of the United States of America, any State thereof or any other country or any political subdivision thereof.
“Trading Day” means any day on which (a) there is no Market Disruption Event with respect to the Company’s common Equity Interests and (b) the Principal Stock Exchange is open for trading; provided that a “Trading Day” only includes those days that have a scheduled closing time of 4:00 p.m. (Eastern time) or the then standard closing time for regular trading on the relevant exchange or trading system.
“Tranche” means the 2025 Tranche 1 Advance, 2025 Tranche 2 Advance, 2025 Tranche 33A Advance and/or, 2025 Tranche 3B Advance, the 2025 Tranche 4 Advance and/or 2026 Tranche 5 Advance, as applicable.
“Tranche 1 Commitment” means as to any Lender, the obligation of such Lender, if any, to make a Term Loan Advance to Borrower in a principal amount not to exceed the amount set forth under the heading “Tranche 1 Commitment” opposite such Lender’s name on Schedule 1.1.
“Tranche 2 Commitment” means as to any Lender, the obligation of such Lender, if any, to make a Term Loan Advance to Borrower in a principal amount not to exceed the amount set forth under the heading “Tranche 2 Commitment” opposite such Lender’s name on Schedule 1.1.
“Tranche 2 Milestone” means [***].
“Tranche 33A Commitment” means as to any Lender, the obligation of such Lender, if any, to make a Term Loan Advance to Borrower in a principal amount not to exceed the amount set forth under the heading Tranche 33A Commitment opposite such Lender’s name on Schedule 1.1.
“Tranche 3B Commitment” means as to any Lender, the obligation of such Lender, if any, to make a Term Loan Advance to Borrower in a principal amount not to exceed the amount set forth under the heading Tranche 3B Commitment opposite such Lender’s name on Schedule 1.1.
“Tranche 3 Milestone” means [***].
“U.S. Person” means any Person that is a “United States person” as defined in Section 7701(a)(30) of the Code.
“UCC” means the Uniform Commercial Code as the same is, from time to time, in effect in the State of California; provided, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of, or remedies with respect to, Agent’s Lien on any Collateral is
governed by the Uniform Commercial Code as the same is, from time to time, in effect in a jurisdiction other than the State of California, then the term “UCC” shall mean the Uniform Commercial Code as in effect, from time to time, in such other jurisdiction solely for purposes of the provisions thereof relating to such attachment, perfection, priority or remedies and for purposes of definitions related to such provisions.
“Unrestricted Cash” means unrestricted Cash of Borrower maintained in Deposit Accounts or other accounts in the name of a Loan Party subject to an Account Control Agreement in favor of Agent.
“Warrant” means any warrant entered into in connection with the Loan, as may be amended, restated or modified from time to time.
The following terms are defined in the Sections or subsections referenced opposite such terms:
Defined Term |
Section |
1940 Act |
5.6(b) |
2025 End of Term Charge |
2.6 |
2025 Tranche 1 Advance |
2.2.1(a)(i) |
2025 Tranche 2 Advance |
2.2.1(a)(ii) |
2.2.1(a)(iii) |
|
2.2.1(a)(iv) |
|
2.2.1(a)(v) |
|
2.2.1(a)(vi) |
|
Agent |
Preamble |
Assignee |
11.14 |
Borrower |
Preamble |
Claims |
11.11(a) |
Collateral |
3.1 |
Company |
Preamble |
Confidential Information |
11.13 |
Event of Default |
9 |
Existing End of Term Charge |
2.6 |
Financial Statements |
7.1 |
Indemnified Person |
6.3 |
Lenders |
Preamble |
Liabilities |
6.3 |
Maximum Rate |
2.3 |
Participant Register |
11.8 |
Payment Date |
2.2(e) |
Prepayment Charge |
2.5 |
Publicity Materials |
11.19 |
Register |
11.7 |
Rights to Payment |
3.1 |
Tranche 1 Advance |
2.2(a)(i) |
Tranche 2 Advance |
2.2(a)(ii) |
Tranche 3 Advance |
2.2(a)(iii) |
Transfer |
7.8 |
Unless otherwise specified, all references in this Agreement or any Annex or Schedule hereto to a “Section,” “subsection,” “Exhibit,” “Annex,” or “Schedule” shall refer to the corresponding Section, subsection, Exhibit, Annex, or Schedule in or to this Agreement. Unless otherwise specifically provided herein, any accounting term used in this Agreement or the other Loan Documents shall have the meaning customarily given such term in accordance with GAAP as in effect on the date hereof, and all financial computations hereunder shall be computed in accordance with GAAP as in effect on the date hereof, consistently applied. Unless otherwise defined herein or in the other Loan Documents, terms that are used herein or in the other Loan Documents and defined in the UCC shall have the meanings given to them in the UCC. For all purposes under the Loan Documents, in connection with any Division or plan of Division under Delaware law (or any comparable event under a different jurisdiction’s laws): (a) if any asset, right, obligation or liability of any Person becomes the asset, right, obligation or liability of a different Person, then it shall be deemed to have been transferred from the original Person to the subsequent Person and (b) if any new Person comes into existence, such new Person shall be deemed to have been organized on the first date of its existence by the holders of its Equity Interests at such time. Notwithstanding anything to the contrary herein or in any other Loan Document, any change in accounting for leases pursuant to GAAP resulting from the adoption of Financial Accounting Standards Board Accounting Standards Update No. 2016-02, Leases (Topic 842) (“FAS 842”), to the extent such adoption would require treating any lease (or similar arrangement conveying the right to use) as a capital lease where such lease (or similar arrangement) would not have been required to be so treated under GAAP as in effect on December 31, 2015, such lease shall not be considered a capital lease, and all calculations under this Agreement or any other Loan Document shall be made in accordance therewith.
If at any time any change in GAAP would affect the computation of any financial requirement set forth in any Loan Document in any material manner, and either Borrower or the Required Lenders shall so request, Agent, Lenders and Borrower shall negotiate in good faith to amend such requirement to preserve the original intent thereof in light of such change in GAAP; provided that, until so amended, such requirement shall continue to be computed in accordance with GAAP prior to such change.
Any reference in any Loan Document to a merger, transfer, consolidation, amalgamation, consolidation, assignment, sale, disposition or transfer, or similar term, shall be deemed to apply to a Division of or by a limited liability company, or an allocation of assets to a series of a limited liability company (or the unwinding of such a Division or allocation), as if it were a merger, transfer, consolidation, amalgamation, consolidation, assignment, sale or transfer, or similar term, as applicable, to, of or with a separate Person. Any Division of a limited liability company shall constitute a separate Person under the Loan Documents (and each Division of any limited liability company that is a Subsidiary, joint venture or any other like term shall also constitute such a Person or entity) on the first date of its existence. In connection with any Division, if any asset, right, obligation or liability of any Person becomes the asset, right, obligation or liability of a different Person, then such asset shall be deemed to have been transferred from the original Person to the subsequent Person.
THE LOAN
[Reserved]
Term Loan Advances.
Advances.
Tranche 1. Subject to the terms and conditions of this Agreement, on the Closing Date, Lenders will severally (and not jointly) make, and Borrower agrees to draw, a Term Loan Advance in an aggregate principal amount equal to Twenty-Five Million Dollars ($25,000,000) (such Term Loan Advance, the “Tranche 1 Advance”).
Tranche 2. Subject to the terms and conditions of this Agreement, Borrower may request, and the Lenders shall severally (and not jointly) make, in each case, following the satisfaction of the Tranche 2 Milestone and on or prior to June 15, 2024, not more than two (2) additional Term Loan Advances in minimum increments of Five Million Dollars ($5,000,000) (or if less, the remaining amount of Term Loan Advances available to be drawn pursuant to this Section 2.2(a)(ii)) in an aggregate principal amount of up to Ten Million Dollars ($10,000,000) (such Term Loan Advances, the “Tranche 2 Advances”)l.
Tranche 3. Subject to the terms and conditions of this Agreement, Borrower may request, and the Lenders shall severally (and not jointly) make, in each case, following the satisfaction of the Tranche 3 Milestone and on or prior to June 15, 2025, additional Term Loan Advances in an aggregate principal amount of up to Fifteen Million Dollars ($15,000,000) plus, solely if the Tranche 2 Milestone was not achieved on or prior to June 15, 2024 and therefore no Tranche 2 Advance has been made, additional Term Loan Advances in an aggregate principal amount up to Ten Million Dollars ($10,000,000) in minimum increments of Five Million Dollars ($5,000,000) (or if less, the remaining amount of Term Loan Advances available to be drawn pursuant to this Section 2.2(a)(iii)) (each, a “Tranche 3 Advance”).
Maximum Term Loan Amount. The aggregate outstanding Term Loan Advances shall not exceed the Maximum Term Loan Amount. Each Term Loan Advance of each Lender shall not exceed its respective Term Commitment. After repayment, no Term Loan Advance (or any portion thereof) may be reborrowed.
Advance Request. To obtain a Term Loan Advance, Borrower shall complete, sign and deliver an Advance Request (at least one (1) Business Day before the Closing Date and at least five (5) Business Days before each Advance Date other than the Closing Date) to Agent. Lenders shall fund the Term Loan Advance in the manner requested by the Advance Request provided that each of the conditions precedent set forth in Section 4 and applicable to such Term Loan Advance is satisfied as of the requested Advance Date. Unless otherwise agreed in writing by the Agent on behalf of Lenders, the proceeds of any Term Loan Advance shall be deposited into an account that is subject to an Account Control Agreement.
Interest. The principal balance shall bear interest thereon from such Advance Date at the Term Loan Interest Rate based on a year consisting of three hundred sixty (360) days, with interest computed daily based on the actual number of days elapsed. The Term Loan Interest Rate will float and change on the day the Prime Rate changes from time to time.
Payment. Borrower will pay accrued but unpaid interest on each Term Loan Advance on the first Business Day of each month (each such date, a “Payment Date”), beginning the month after the Advance Date. Borrower shall repay the aggregate principal balance of the Term Loan Advances that is outstanding on the day immediately preceding the Amortization Date, in equal monthly installments of principal and interest (mortgage style) beginning on the Amortization Date and continuing on the first Business Day of each month thereafter until the Secured Obligations (other than inchoate indemnity obligations which, by their terms, survive termination of this Agreement) are repaid. The entire principal balance of the Term Loan Advances and all accrued but unpaid interest hereunder, shall be due and payable on the Term Loan Maturity Date. Borrower shall make all payments under this Agreement without setoff, recoupment or deduction and regardless of any counterclaim or defense. If a payment hereunder becomes due and payable on a day that is not a Business Day, the due date thereof shall be the immediately preceding Business Day. Agent or Lenders will initiate debit entries to Borrower’s account as authorized on the ACH Authorization (i) on each Payment Date of all periodic obligations payable to Lenders under each Term Loan Advance and (ii) out-of-pocket legal fees and costs incurred by Agent or Lenders in connection with Section 11.12; provided that, with respect to clause (i) above, in the event that Lenders or Agent informs Borrower in writing that Lenders will not initiate a debit entry to Borrower’s account for a certain amount of the periodic obligations due on a specific Payment Date, Borrower shall pay to Lenders (or to Agent, for the ratable benefit of Lenders), such amount of periodic obligations in full in immediately available funds on such Payment Date; provided, further, that, with respect to clause (i) above, if Lenders or Agent informs Borrower in writing that Lenders will not initiate a debit entry as described above later than the date that is three (3) Business Days prior to such Payment Date, Borrower shall pay to Lenders (or to Agent, for the ratable benefit of Lenders) such amount of periodic obligations in full in immediately available funds on the date that is three (3) Business Days after the date on which Lenders or Agent notifies Borrower of such; provided, further, that, with respect to clause (ii) above, in the event that Lenders or Agent informs Borrower in writing that Lenders will not initiate a debit entry to Borrower’s account for specified out-of-pocket legal fees and costs incurred by Agent or Lenders, Borrower shall pay to Lenders such amount in full in immediately available funds within three (3) Business Days of Agent or Lenders furnishing to Borrower an invoice for such out-of-pocket legal fees and costs incurred by Agent or Lenders.
2.2.1 2025 Term Loan Advances.
Advances.
Tranche 1. Subject to the terms and conditions of this Agreement, on the First Amendment Closing Date, Lenders will severally (and not jointly) make, and Borrower agrees to draw, a 2025 Term Loan Advance in an aggregate principal amount equal to Thirty-Five Million Dollars ($35,000,000) (such 2025 Term Loan Advance, the “2025 Tranche 1 Advance”). Borrower shall be required to use the proceeds of the 2025 Tranche 1 Advance to pay in full all Secured Obligations in connection with the Term Loan Advances (other than any Prepayment Charge (as such term was defined in this Agreement prior to the First Amendment Closing Date) with respect to the Tranche 1 Advance or the Tranche 2 Advance, which Agent and Lenders hereby agree is waived in full).
Maximum Term Loan Amount. The aggregate outstanding 2025 Term Loan Advances shall not exceed the Maximum Term Loan Amount. Each 2025 Term Loan Advance of each Lender shall not exceed its respective Term Commitment. After repayment, no 2025 Term Loan Advance (or any portion thereof) may be reborrowed.
Advance Request. To obtain a 2025 Term Loan Advance, Borrower shall complete, sign and deliver an Advance Request (at least one (1) Business Day before the First Amendment Closing Date and at least five (5) Business Days before each Advance Date other than the First Amendment Closing Date) to Agent. The 2025 Tranche 1 Advance will be made on or about the First Amendment Closing Date. Lenders shall fund the 2025 Term Loan Advance in the manner requested by the Advance Request provided that each of the conditions precedent set forth in Section 4 and applicable to such 2025 Term Loan Advance is satisfied as of the requested Advance Date. Unless otherwise agreed in writing by the Agent on behalf of Lenders, the proceeds of any 2025 Term Loan Advance shall be deposited into an account that is subject to an Account Control Agreement.
Interest. The principal balance shall bear interest thereon from such Advance Date at the 2025 Term Loan Interest Rate based on a year consisting of three hundred sixty (360) days, with interest computed daily based on the actual number of days elapsed. The 2025 Term Loan Interest Rate will float and change on the day the Prime Rate changes from time to time.
Payment. Borrower will pay accrued but unpaid interest on each 2025 Term Loan Advance on the first Business Day of each month (each such date, a “Payment Date”), beginning the month after the Advance Date. Borrower shall repay the aggregate principal balance of the 2025 Term Loan Advances that is outstanding on the day immediately preceding the 2025 Term Loan Amortization Date, in equal monthly installments of principal and interest (mortgage style) beginning on the 2025 Term Loan Amortization Date and continuing on the first Business Day of each month thereafter until the Secured Obligations (other than inchoate indemnity obligations which, by their terms, survive termination of this Agreement) are repaid. The entire principal balance of the 2025 Term Loan Advances and all accrued but unpaid interest hereunder, shall be due and payable on the 2025 Term Loan Maturity Date. Borrower shall make all payments under this Agreement without setoff, recoupment or deduction and regardless of any counterclaim or defense. If a payment hereunder becomes due and payable on a day that is not a Business Day, the due date thereof shall be the immediately preceding Business Day. Agent or Lenders will initiate debit entries to Borrower’s account as authorized on the ACH Authorization (i) on each Payment Date of all periodic obligations payable to Lenders under each 2025 Term Loan Advance and (ii) out-of-pocket legal fees and costs incurred by Agent or Lenders in connection with Section 11.12; provided that, with respect to clause (i) above, in the event that Lenders or Agent informs Borrower in writing that Lenders will not initiate a debit entry to Borrower’s account for a certain amount of the periodic obligations due on a specific Payment Date, Borrower shall pay to Lenders (or to Agent, for the ratable benefit of Lenders), such amount of periodic obligations in full in immediately available funds on such Payment Date; provided, further, that, with respect to clause (i) above, if Lenders or Agent informs Borrower in writing that Lenders will not initiate a debit entry as described above later than the date that is three (3) Business Days prior to such Payment Date, Borrower shall pay to Lenders (or to Agent, for the ratable benefit of Lenders) such amount of periodic obligations in full in immediately available funds on the date that is three (3) Business Days after the date on which Lenders or Agent notifies Borrower of such; provided, further, that, with respect to clause (ii) above, in the event that Lenders or Agent informs Borrower in writing that Lenders will not initiate a debit entry to Borrower’s account for specified out-of-pocket legal fees and costs incurred by Agent or Lenders, Borrower shall pay to Lenders such amount in full in immediately available funds
within three (3) Business Days of Agent or Lenders furnishing to Borrower an invoice for such out-of-pocket legal fees and costs incurred by Agent or Lenders.
Maximum Interest. Notwithstanding any provision in this Agreement or any other Loan Document, it is the parties’ intent not to contract for, charge or receive interest at a rate that is greater than the maximum rate permissible by law that a court of competent jurisdiction shall deem applicable hereto (which under the laws of the State of California shall be deemed to be the laws relating to permissible rates of interest on commercial loans) (the “Maximum Rate”). If a court of competent jurisdiction shall finally determine that Borrower has actually paid to Lenders an amount of interest in excess of the amount that would have been payable if all of the Secured Obligations had at all times borne interest at the Maximum Rate, then such excess interest actually paid by Borrower shall be applied as follows: first, to the payment of the Secured Obligations consisting of the outstanding principal; second, after all principal is repaid, to the payment of Lenders’ accrued interest, costs, expenses, professional fees and any other Secured Obligations; and third, after all Secured Obligations are repaid, the excess (if any) shall be refunded to Borrower.
Default Interest. In the event any payment is not paid on the scheduled payment date (other than a failure to pay due solely to an administrative or operational error of Agent or Lenders or Borrower’s bank if Borrower had the funds to make the payment when due and makes the payment within three (3) Business Days following Borrower’s knowledge of such failure to pay), an amount equal to four percent (4%) of such past due amount shall be payable on demand. In addition, upon the occurrence and during the continuation of an Event of Default hereunder, all outstanding Secured Obligations, including principal, interest, compounded interest, and professional fees, shall bear interest at a rate per annum equal to the rate set forth in Section 2.2(d) plus four percent (4%) per annum. In the event any interest is not paid when due hereunder, delinquent interest shall be added to principal and shall bear interest on interest, compounded at the rate set forth in Section 2.2(d) or 2.4, as applicable.
Prepayment. At its option upon at least seven (7) Business Days prior written notice (which such notice may be conditioned upon the consummation of a transaction constituting a Change in Control, other transformative transaction or a refinancing of the Loans) to Agent, Borrower may prepay all or a portion of the outstanding 2025 Term Loan Advances by paying the entire principal balance (or such portion thereof) of all accrued and unpaid interest thereon, all unpaid Lender’s fees and expenses due hereunder accrued to the date of the repayment (including, without limitation, the portion of the 2025 Term Loan End of Term Charge applicable to the aggregate original principal amount of the 2025 Term Loan Advances being prepaid in accordance with Section 2.6(a)), together with a prepayment charge equal to the following percentage of the outstanding principal amount of such 2025 Term Loan Advance amount being so prepaid: with respect to each 2025 Term Loan Advance if the principal amount of such Advance amounts are prepaid (a) on or prior to the date which is twelve (12) months following the FirstSecond Amendment Closing Date, three percent (3.00%); (b) after the date which is twelve (12) months following the FirstSecond Amendment Closing Date and on or prior to the date which is twenty-four (24) months following the FirstSecond Amendment Closing Date, two percent (2.00%); and (c) thereafter, one percent (1.00%) (each, a “Prepayment Charge”). If at any time Borrower elects to make a prepayment, and at such time, there are outstanding 2025 Term Loan Advances under multiple Tranches, the Prepayment Charge shall be determined by applying the amount of such prepayment in the following order: first, to the outstanding principal amount (and accrued but unpaid interest thereon) of 2025 Term Loan Advances outstanding under the Tranche with the latest initial funding date; second, to the outstanding principal amount (and accrued but unpaid interest thereon) of 2025 Term Loan Advances outstanding under the Tranche with the next latest initial
funding date and so on until the entire principal balance of all Advances made hereunder (and all accrued but unpaid interest thereon) is paid in full. Borrower agrees that each Prepayment Charge is a reasonable calculation of Lenders’ lost profits in view of the difficulties and impracticality of determining actual damages resulting from an early repayment of the 2025 Term Loan Advances. Borrower shall prepay the outstanding amount of all principal and accrued interest through the prepayment date and each Prepayment Charge upon the occurrence of a Change in Control or any other prepayment hereunder. Notwithstanding the foregoing, Agent and Lenders agree to waive the Prepayment Charge if Agent, Lenders and/or their controlled Affiliates (in their sole and absolute discretion) agree in writing to refinance the 2025 Term Loan Advances prior to the 2025 Term Loan Maturity Date. Any amounts paid under this Section shall be applied by Agent to the then unpaid amount of any outstanding Secured Obligations (including principal and interest) in such order and priority as Agent may choose in its sole discretion. For the avoidance of doubt, if a payment hereunder becomes due and payable on a day that is not a Business Day, the due date thereof shall be the immediately preceding Business Day.
End of Term Charges.
2025 Term Loan End of Term Charge.
On any date that Borrower partially prepays the outstanding Secured Obligations pursuant to Section 2.5, Borrower shall pay Lenders a charge equal to the applicable End of Term Charge Percentage multiplied by the principal amount of such 2025 Term Loan Advances being prepaid.
On the earliest to occur of (i) the 2025 Term Loan Maturity Date, (ii) the date that Borrower prepays the outstanding Secured Obligations (other than any inchoate indemnity obligations and any other obligations which, by their terms, are to survive the termination of this Agreement) in full, or (iii) the date that the outstanding Secured Obligations become due and payable, Borrower shall pay Lenders a charge equal to (x) the applicable End of Term Charge Percentage multiplied by the aggregate original principal amount of such 2025 Term Loan Advances made hereunder minus (y) the aggregate amount of payments made pursuant to Section 2.6(a) (the “2025 Term Loan End of Term Charge”).
Notwithstanding the required payment date of such 2025 Term Loan End of Term Charge, the applicable pro rata portion of the 2025 Term Loan End of Term Charge shall be deemed earned by Lenders as of each date that an applicable 2025 Term Loan Advance is made. For the avoidance of doubt, if a payment hereunder becomes due and payable on a day that is not a Business Day, the due date thereof shall be the immediately preceding Business Day.
Existing End of Term Charge.
On the earliest to occur of (i) September 1, 2027, (ii) the date that Borrower prepays the outstanding Secured Obligations (other than any inchoate indemnity obligations and any other obligations which, by their terms, are to survive the termination of this Agreement) in full, or (iii) the date that the outstanding Secured Obligations become due and payable, Borrower shall pay Lenders a charge equal to Two Million Four Hundred Thirty Two Thousand Five Hundred Dollars ($2,432,500) (the “Existing End of Term Charge”).
For the avoidance of doubt, if a payment hereunder becomes due and payable on a day that is not a Business Day, the due date thereof shall be the immediately preceding Business Day.
Pro Rata Treatment. Each payment (including prepayment) on account of any fee and any reduction of the 2025 Term Loan Advances shall be made pro rata according to the Term Commitments of the relevant Lender.
Taxes; Increased Costs. Borrower, Agent and Lenders each hereby agree to the terms and conditions set forth on Addendum 1 attached hereto.
Treatment of Prepayment Charge and End of Term Charges. Borrower agrees that any Prepayment Charge or any 2025 Term Loan End of Term Charge payable and the Existing End of Term Charge shall be presumed to be the liquidated damages sustained by each Lender as the result of the early termination, and Borrower agrees that it is reasonable under the circumstances currently existing and existing as of the Closing Date. The Prepayment Charge, the 2025 Term Loan End of Term Charge and the Existing End of Term Charge shall also be payable in the event the Secured Obligations (and/or this Agreement) are satisfied or released by foreclosure (whether by power of judicial proceeding), deed in lieu of foreclosure, or by any other means. Each Loan Party expressly waives (to the fullest extent it may lawfully do so) the provisions of any present or future statute or law that prohibits or may prohibit the collection of the foregoing Prepayment Charge and End of Term Charge in connection with any such acceleration. Borrower agrees (to the fullest extent that each may lawfully do so): (a) each of the Prepayment Charge, the 2025 Term Loan End of Term Charge and the existing End of Term Charge is reasonable and is the product of an arm’s length transaction between sophisticated business people, ably represented by counsel; (b) each of the Prepayment Charge, the 2025 Term Loan End of Term Charge and the Existing End of Term Charge shall be payable notwithstanding the then prevailing market rates at the time payment is made; (c) there has been a course of conduct between Lenders and Borrower giving specific consideration in this transaction for such agreement to pay the Prepayment Charge, the 2025 Term Loan End of Term Charge and the Existing End of Term Charge as a charge (and not interest) in the event of prepayment or acceleration; and (d) Borrower shall be estopped from claiming differently than as agreed to in this Section. Borrower expressly acknowledges that its agreement to pay each of the Prepayment Charge, the 2025 Term Loan End of Term Charge and the Existing End of Term Charge to Lenders as herein described was on the Closing Date and continues to be a material inducement to Lenders to provide the 2025 Term Loan Advances.
SECURITY INTEREST
Grant of Security Interest. As security for the prompt and complete payment when due (whether on the payment dates or otherwise) of all the Secured Obligations, each Borrower grants to Agent a security interest in all of such Borrower’s right, title, and interest in, to and under all of such Borrower’s personal property and other assets including without limitation the following (except as set forth herein) whether now owned or hereafter acquired (collectively, the “Collateral”): (a) Receivables; (b) Equipment; (c) Fixtures; (d) General Intangibles; (e) Inventory; (f) Investment Property; (g) Deposit Accounts; (h) Cash; (i) Goods; and all other tangible and intangible personal property of such Borrower whether now or hereafter owned or existing, leased, consigned by or to, or acquired by, Borrower and wherever located, and any of such Borrower’s property in the possession or under the control of Agent; and, to the extent not otherwise included, all Proceeds of each of the foregoing and all accessions to, substitutions and replacements for, and rents, profits and products of each of the foregoing.
Notwithstanding the broad grant of the security interest set forth in Section 3.1, above, the Collateral shall not include (a) any “intent to use” trademarks at all times prior to the first use thereof, whether by the actual use thereof in commerce, the recording of a statement of use with the United States Patent and Trademark Office or otherwise, provided, that upon submission and acceptance by the United States Patent and Trademark Office of an amendment to allege use of an intent-to-use trademark application pursuant to 15 U.S.C. Section 1060(a) (or any successor provision) such intent-to-use application shall constitute Collateral, (b) licenses or contracts, which by their terms require the consent of the licensor thereof or another party or provide that an assignment or grant of a security interest therein would violate or invalidate such license or contract or create a right of termination in favor of any other party thereto (but only to the extent such prohibition on transfer is enforceable under applicable law, including, without limitation, Sections 9406, 9407 and 9408 of the UCC), (c) any property, right or asset held by Borrower to the extent that a grant of a security interest therein is prohibited by applicable law, and (d) any Excluded Account.
CONDITIONS PRECEDENT TO LOAN
The obligations of Lenders to make the Loan hereunder are subject to the satisfaction by Borrower of the following conditions:
Initial Advance. On or prior to the Closing Date, Borrower shall have delivered to Agent the following:
duly executed copies of the Loan Documents, and all other documents and instruments reasonably required by Agent to effectuate the transactions contemplated hereby or to create and perfect the Liens of Agent with respect to all Collateral, in all cases in form and substance reasonably acceptable to Agent;
other than those listed in Section 7.24, duly executed Account Control Agreement(s) with respect to each Deposit Account and account holding Investment Property maintained by Borrower or any Subsidiary (other than Excluded Account);
a legal opinion of Borrower’s counsel in form and substance reasonably acceptable to Agent;
copy of resolutions of each Borrower’s Board of Directors, certified by an officer of such Borrower, evidencing (i) approval of the Loan and other transactions evidenced by the Loan Documents, (ii) authorizing a specified person or persons to execute the Loan Documents to which it is a party on its behalf, (iii) authorizing a specified person or persons, on its behalf, to sign and/or dispatch all documents and notices (including, if relevant, any Advance Request or other relevant notice) to be signed and/or dispatched by it under or in connection with the Loan Documents to which it is a party, and (iv) acknowledging that the Board of Directors are acting for a proper purpose and that the Loan Documents are in the best interests of that Borrower and for its commercial benefit;
certified copies of the Charter of Borrower, certified by the Secretary of State of the applicable jurisdiction of organization and the other Organizational Documents, as amended through the Closing Date, of Borrower;
a certificate of good standing for Borrower from its jurisdiction of organization and similar certificates from all other jurisdictions in which it does business and where the failure to be qualified could have a Material Adverse Effect;
certified copies, dated as of a recent date, of searches for financing statements;
filed in the central filing office of the State of Delaware, accompanied by written evidence (including any UCC termination statements) that the Liens on any Collateral indicated in any such financing statements (other than those constituting Permitted Liens) have been or, in connection with the initial Term Loan Advance, will be terminated or released;
payment of the Due Diligence Fee (which has been paid prior to the Closing Date), Initial Facility Charge and reimbursement of Agent’s and Lenders’ current expenses reimbursable pursuant to this Agreement, which amounts may be deducted from the initial Advance;
a duly executed copy of the Perfection Certificate and each exhibit and addendum thereto;
all certificates of insurance and copies of each insurance policy required hereunder;
[Reserved];
[Reserved];
[Reserved]; and
such other documents as Agent may reasonably request.
All Advances. On each Advance Date:
Agent shall have received (i) an Advance Request for the relevant Advance as required by Section 2.2(c), duly executed by Borrower’s Chief Executive Officer or Chief Financial Officer, and (ii) any other documents Agent may reasonably request;
The representations and warranties set forth in this Agreement shall be true and correct in all material respects on and as of the applicable Advance Date with the same effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date;
Borrower shall be in compliance with all the terms and provisions set forth herein and in each other Loan Document on its part to be observed or performed;
With respect to any Tranche 2 Advance, the Loan Parties shall have paid the Subsequent Tranche 2 Facility Charge (which amount may be deducted from such Tranche 2 Advance);
With respect to any Tranche 3 Advance, the Loan Parties shall have paid the Subsequent Tranche 3 Facility Charge (which amount may be deducted from such Tranche 3 Advance);
With respect to the 2025 Tranche 1 Advance, the Loan Parties shall have paid the 2025 Tranche 1 Facility Charge (which amount may be deducted from the 2025 Tranche 1 Advance);
With respect to any 2025 Tranche 2 Advance, the Loan Parties shall have paid the Subsequent 2025 Tranche 2 Facility Charge (which amount may be deducted from such 2025 Tranche 2 Advance);
With respect to any 2025 Tranche 33A Advance or 2025 Tranche 3B Advance, the Loan Parties shall have paid the Subsequent 2025 Tranche 3 Facility Charge (which amount may be deducted from such 2025 Tranche 33A Advance or 2025 Tranche 3B Advance, as applicable);
With respect to any 2025 Tranche 4 Advance, the Loan Parties shall have paid the Subsequent 2025 Tranche 4 Facility Charge (which amount may be deducted from such 2025 Tranche 4 Advance);
With respect to any 2026 Tranche 5 Advance, the Loan Parties shall have paid the Subsequent 2026 Tranche 5 Facility Charge (which amount may be deducted from such 2026 Tranche 5 Advance);
(j) With respect to each 2025 Tranche 2 Advance, 2025 Tranche 3 Advances and3A Advance, 2025 Tranche 3B Advance, 2025 Tranche 4 AdvancesAdvance and 2026 Tranche 5 Advance, on the applicable Advance Date, the Borrower shall (i) issue to each Lender that is making such Advance a Warrant, in each case substantially in the form of the Warrants issued in respect of the 2025 Tranche 1 Advance that is to be delivered on or after the First Amendment Closing Date (the “Closing Date Warrants”), except that that the per-share exercise price for each such Warrant will be equal to the volume-weighted average price for a share of the Borrower’s Common Stock reported on the principal exchange or market on which shares of the Borrower’s Common Stock are then traded, for the three (3) consecutive trading days ending on the trading day immediately prior to the date such Warrant is issued; provided that any other changes or deviations from the terms of such Closing Date Warrants shall be in form and substance reasonably acceptable to Agent, and (ii) deliver to Agent each such Warrant issued to a Lender; and
(k) Each Advance Request shall be deemed to constitute a representation and warranty by Borrower on the relevant Advance Date as to the matters specified in Section 4.2(b), Section 4.2(c) and Section 4.4 and as to the matters set forth in the Advance Request.
[Reserved].
No Default. As of the Closing Date and at the time of and immediately after each Advance Date, (i) no fact or condition exists that could (or could, with the passage of time, the giving of notice, or both) constitute an Event of Default and (ii) no event that has had or could reasonably be expected to have a Material Adverse Effect has occurred and is continuing.
REPRESENTATIONS AND WARRANTIES OF BORROWER
Borrower represents and warrants that:
Corporate Status; Execution and Delivery; Binding Effect. Each Borrower is a corporation, limited liability company or partnership, as applicable, duly organized, legally existing and in good standing under the laws of its jurisdiction of organization, and is duly qualified as a foreign corporation, limited liability company or partnership, as the case may be, in all jurisdictions in which the nature of its business or location of its properties require such qualifications and where the failure to be qualified could reasonably be expected to have a
Material Adverse Effect. Borrower’s present name, former names (if any), locations, place of formation, tax identification number, organizational identification number and other information are correctly set forth in Exhibit B, as may be updated by Borrower in a written notice (including any Compliance Certificate) provided to Agent after the Closing Date in accordance with this Agreement. This Agreement has been, and each other Loan Document, when delivered hereunder, will have been, duly executed and delivered by the Borrower. This Agreement constitutes, and each other Loan Document when so delivered will constitute, a legal, valid and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, receivership, moratorium or other laws affecting creditors’ rights generally and by general principles of equity.
Collateral. Borrower owns or otherwise has the rights to use the Collateral, free of all Liens, except for Permitted Liens. Borrower has the power and authority to grant to Agent a Lien in the Collateral as security for the Secured Obligations.
Consents. Borrower’s execution, delivery and performance of this Agreement and all other Loan Documents to which it is a party, (i) have been duly authorized by all necessary action of Borrower in accordance with its Organizational Documents and, if any, applicable law, (ii) will not result in the creation or imposition of any Lien upon the Collateral, other than Permitted Liens, (iii) do not violate any provisions of Borrower’s Organizational Documents or any, law, regulation, order, injunction, judgment, decree or writ to which Borrower is subject and (iv) except as described on Schedule 5.3, do not violate any contract or agreement or require the consent or approval of any other Person or Governmental Authority which has not already been obtained. The individual or individuals executing the Loan Documents are duly authorized to do so.
Material Adverse Effect. Since December 31, 2022, no event that has had or could reasonably be expected to have a Material Adverse Effect has occurred and is continuing.
Actions Before Governmental Authorities. There are no actions, suits, claims, disputes or proceedings at law or in equity or by or before any Governmental Authority now pending or, to the knowledge of Borrower, threatened in writing against or affecting Borrower or its property, that are reasonably expected to result in a Material Adverse Effect.
Laws.
Neither Borrower nor any of its Subsidiaries is in violation of any law, rule or regulation, or in default with respect to any judgment, writ, injunction or decree of any Governmental Authority to which Borrower or such Subsidiaries are subject, where such violation or default could reasonably be expected to result in a Material Adverse Effect. Borrower is not in default in any manner under any provision of any agreement or instrument evidencing material Indebtedness, or any other Material Agreement to which it is a party or by which it is bound, in each case, where such default could reasonably be expected to result in a Material Adverse Effect.
Neither Borrower nor any of its Subsidiaries is an “investment company,” a company that would be an “investment company” except for the exclusion from the definition of “investment company” in Section 3(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), or a company “controlled” by an “investment company” under the 1940 Act. Neither Borrower nor any of its Subsidiaries is engaged as one of its important activities in extending credit for margin stock (under Regulations X, T and U of the Federal Reserve Board of Governors). Borrower and each of its Subsidiaries has complied in all material respects with the Federal Fair Labor Standards Act. Neither Borrower nor any of its Subsidiaries is a “holding company” or an
“affiliate” of a “holding company” or a “subsidiary company” of a “holding company” as each term is defined and used in the Public Utility Holding Company Act of 2005. Neither Borrower’s nor any of its Subsidiaries’ properties or assets have been used by Borrower or such Subsidiary or, to Borrower’s knowledge, by previous Persons, in disposing, producing, storing, treating, or transporting any hazardous substance other than in material compliance with applicable laws. Borrower and each of its Subsidiaries has obtained all consents, approvals and authorizations of, made all declarations or filings with, and given all notices to, all Governmental Authorities that are necessary to continue their respective businesses as currently conducted.
None of Borrower, any of its Subsidiaries, or (to Borrower’s knowledge) any of Borrower’s or its Subsidiaries’ Affiliates or any of their respective agents acting or benefiting in any capacity in connection with the transactions contemplated by this Agreement is (i) in violation of any Anti-Terrorism Law, (ii) engaging in or conspiring to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law, or (iii) is a Blocked Person. None of Borrower, any of its Subsidiaries, or (to the knowledge of Borrower) any of their Affiliates or agents acting or benefiting in any capacity in connection with the transactions contemplated by this Agreement, (x) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any Blocked Person, or (y) deals in, or otherwise engages in any transaction relating to, any property or interest in property blocked pursuant to Executive Order No. 13224, any similar executive order or other Anti-Terrorism Law. None of the funds to be provided under this Agreement will be used, directly or indirectly, (a) for any activities in violation of any applicable anti-money laundering, economic sanctions and anti-bribery laws and regulations or (b) for any payment to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.
Information Correct and Current. No written information, report, Advance Request, financial statement, exhibit or schedule furnished, by or on behalf of Borrower to Agent in connection with any Loan Document or included therein or delivered pursuant thereto (in each case, other than forecasts, projections and other forward-looking statements and information of a general economic or industry nature) contained, or, when taken as a whole, contains or will contain any material misstatement of fact or, when taken together with all other such information or documents, omitted, omits or will omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were, are or will be made, not materially misleading at the time such statement was made or deemed made. Additionally, any and all financial or business projections provided by Borrower to Agent, whether prior to or after the Closing Date, shall be (i) provided in good faith and based on the most current data and information available to Borrower at the time delivered, and (ii) the most current of such projections provided to Borrower’s Board of Directors, provided that it is understood that the forecasts, projections and other forward-looking statements and information of a general economic or industry nature are based on assumptions made in good faith but are subject to significant uncertainties and contingencies, many of which are beyond the control of Borrower, and that actual results may differ significantly and no assurances are provided by Borrower for any projections made or given.
Tax Matters. Except as set forth on Schedule 5.8, (a) Borrower and its Subsidiaries have filed all federal and state income Tax returns and other material Tax returns that they are required to file (taking into account any timely filed extensions), (b) Borrower and its Subsidiaries have duly paid all federal and state income Taxes and other material Taxes that they are required to pay,
except Taxes being contested in good faith by appropriate proceedings and for which Borrower and its Subsidiaries maintain adequate reserves in accordance with GAAP, and (c) to the best of Borrower’s knowledge, no proposed or pending Tax assessments, deficiencies, audits or other proceedings with respect to Borrower or any Subsidiary have had, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
Intellectual Property Claims. Borrower is the sole owner of, or otherwise has the right to use, the Intellectual Property material to Borrower’s business. Except as described on Schedule 5.9, (i) each of the material registered Copyrights, registered Trademarks and issued Patents is valid and enforceable, (ii) no material part of the Intellectual Property has been judged invalid or unenforceable, in whole or in part, and (iii) no claim has been made to Borrower that the ownership of or use of any material part of the Intellectual Property violates the rights of any third party. Exhibit C is a true, correct and complete list of each of Borrower’s Patents, registered Trademarks, registered Copyrights, and material agreements under which Borrower licenses Intellectual Property from third parties (other than shrink-wrap software licenses or other than “off-the-shelf” licenses or open-source software), together with application or registration numbers, as applicable, owned by Borrower or any Subsidiary, in each case as of the Closing Date. Borrower is not in material breach of, nor has Borrower failed to perform any material obligations under, any of the foregoing contracts, licenses or agreements and, to Borrower’s knowledge, no third party to any such contract, license or agreement is in material breach thereof or has failed to perform any material obligations thereunder.
Intellectual Property.
Except as described on Schedule 5.10 (as may be amended or supplemented by Borrower from time to time by written notice to Agent; it being understood that such amendment or supplement shall not cure any default arising from any false or misleading misrepresentations and warranties when made or when deemed made), Borrower has all material rights with respect to intellectual property necessary or material in the operation or conduct of Borrower’s business as currently conducted and proposed to be conducted by Borrower. Without limiting the generality of the foregoing, except for restrictions that are unenforceable under Division 9 of the UCC or otherwise permitted under this Agreement with respect to Licenses, Borrower has the right, to the extent required to operate Borrower’s business, to freely transfer, license or assign Intellectual Property necessary or material in the operation or conduct of Borrower’s business as currently conducted and proposed to be conducted by Borrower, without condition, restriction or payment of any kind (other than license payments in the ordinary course of business) to any third party, and Borrower owns or has the right to use, pursuant to valid licenses, all software development tools, library functions, compilers and all other third-party software and other items that are material in the operation or conduct of Borrower’s business and used in the design, development, promotion, sale, license, manufacture, import, export, use or distribution of Borrower Products except customary covenants in inbound license agreements and equipment leases where Borrower is the licensee or lessee. Except as disclosed on Schedule 5.10, or in the most recently delivered Compliance Certificate in accordance with Section 7.1(d) (provided that such disclosure made in such Compliance Certificate shall not apply to a period covered by a prior Compliance Certificate and shall not cure any default arising from any false or misleading misrepresentations and warranties when made or when deemed made), Borrower is not a party to, nor is it bound by, any Restricted License.
No material software or other materials used by Borrower or any of its Subsidiaries (or used in any Borrower Products or any Subsidiaries’ products) are subject to an open-source or similar license (including but not limited to the General Public License, Lesser General Public License, Mozilla Public License, or Affero License) in a manner that would cause such software
or other materials to have to be (i) distributed to third parties at no charge or a minimal charge (royalty-free basis); (ii) licensed to third parties to modify, make derivative works based on, decompile, disassemble, or reverse engineer; or (iii) used in a manner that requires disclosure or distribution in source code form.
There are no material unpaid fees or royalties under any Material Agreements that have become overdue. Each Material Agreement is in full force and effect and is legal, valid, binding, and enforceable in accordance with its respective terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors’ rights generally or by equitable principles relating to enforceability. Except as set forth on Schedule 5.10(c), to the knowledge of Borrower, neither Borrower nor any of its Subsidiaries, as applicable, is in breach of or default in any manner that could reasonably be expected to materially and adversely affect the Borrower Products under any Material Agreement to which it is a party, and no circumstances or grounds exist that would give rise to a claim of breach or right of rescission, termination or nonrenewal of any of the Material Agreements, including the execution, delivery and performance of this Agreement and the other Loan Documents, that could reasonably be expected to be materially adverse to Agent and Lenders’ interest hereunder.
Borrower Products. Except as set forth on Schedule 5.11, no material Intellectual Property owned by Borrower or Borrower Product has been or is subject to any actual or, to the knowledge of Borrower, threatened litigation in writing, proceeding (including any proceeding in the United States Patent and Trademark Office or any corresponding foreign office or agency) or outstanding decree, order, judgment, settlement agreement or stipulation that restricts in any material manner Borrower’s use, transfer or licensing thereof or that could reasonably be expected to adversely affect the validity, use or enforceability thereof. There is no decree, order, judgment, agreement, stipulation, arbitral award or other provision entered into in connection with any litigation or proceeding that obligates Borrower to grant licenses or ownership interest in any future material Intellectual Property related to the operation or conduct of the business of Borrower or Borrower Products. Borrower has not received any written notice or claim, or, to the knowledge of Borrower, notice or claim, challenging or questioning Borrower’s ownership in any material Intellectual Property (or written notice of any claim challenging or questioning the ownership in any licensed Intellectual Property of the owner thereof) or suggesting that any third party has any claim of legal or beneficial ownership with respect thereto nor, to Borrower’s knowledge, is there a reasonable basis for any such claim, in each case to the extent such notice or claim could reasonably be expected to be material and adverse in any respect. Neither Borrower’s use of its Intellectual Property nor the production and sale of Borrower Products infringes the Intellectual Property or other rights of others in any material respect.
Financial Accounts. Exhibit D, as may be updated by Borrower in a written notice provided to Agent after the Closing Date, is a true, correct and complete list of (a) all banks and other financial institutions at which Borrower or any Subsidiary maintains Deposit Accounts and (b) all institutions at which Borrower or any Subsidiary maintains an account holding Investment Property, and such exhibit correctly identifies the name and address of each bank or other institution, the name in which the account is held, a description of the purpose of the account, and the complete account number therefor. Neither Borrower nor any Subsidiary owns or holds any Digital Assets.
Employee Loans. Except for loans constituting Permitted Investments or as described on Schedule 5.13, Borrower has no outstanding loans to any employee, officer or director of Borrower nor has Borrower guaranteed the payment of any loan made to an employee, officer or director of Borrower by a third party.
Investments and Subsidiaries. As of the Closing Date, Senseonics Inc. is a wholly owned subsidiary of the Company. As of the First Amendment Closing Date, each of Eon Management Services, LLC and Eon Care Services, LLC is a wholly owned subsidiary of Senseonics, Inc. Borrower does not own any stock, partnership interest or other securities of any Person, except for Permitted Investments. Attached as Schedule 5.14, as may be updated by Borrower in a written notice provided after the Closing Date, is a true, correct and complete list of each Subsidiary.
Solvency. The fair salable value of the Company’s consolidated assets (including goodwill minus disposition costs) exceeds the fair value of the Company’s consolidated liabilities; Borrower is not left with unreasonably small capital after the transactions in this Agreement; and Borrower and each of its Subsidiaries are able to pay their debts (including trade debts) as they mature. The amount of any contingent liability at any time shall be computed in accordance with GAAP.
INSURANCE; INDEMNIFICATION
Coverage. Borrower shall cause to be carried and maintained commercial general liability insurance covering Borrower and its Subsidiaries, on an occurrence form, against risks and in such amounts customarily insured against by business of Borrower’s size in Borrower’s line of business in similar locations. Such risks shall include the risks of bodily injury, including death, property damage, personal injury, advertising injury, and contractual liability per the terms of the indemnification agreement found in Section 6.3. Borrower must maintain a minimum of Two Million Dollars ($2,000,000) of commercial general liability insurance for each occurrence. Borrower maintains and shall continue to maintain a minimum of Two Million Five Hundred Thousand Dollars ($2,500,000) of directors’ and officers’ insurance for each occurrence and Five Million Dollars ($5,000,000) in the aggregate. So long as there are any Secured Obligations outstanding (other than inchoate indemnity obligations and any other obligations which, by their terms, survive termination of this Agreement), Borrower shall also cause to be carried and maintained insurance upon the business and assets of Borrower and its Subsidiaries, insuring against all risks of physical loss or damage howsoever caused, in an amount not less than the full replacement cost of the Collateral, provided that such insurance may be subject to standard exceptions and deductibles. If Borrower fails to obtain the insurance called for by this Section 6.1 or fails to pay any premium thereon or fails to pay any other amount which Borrower is obligated to pay under this Agreement or any other Loan Document or which may be required to preserve the Collateral, Agent may obtain such insurance or make such payment, and all amounts so paid by Agent are immediately due and payable, bearing interest at the then highest rate applicable to the Secured Obligations, and secured by the Collateral. Agent will make reasonable efforts to provide Borrower with notice of Agent obtaining such insurance at the time it is obtained or within a reasonable time thereafter. No payments by Agent are deemed an agreement to make similar payments in the future or Agent’s waiver of any Event of Default.
Certificates. Borrower shall deliver to Agent certificates of insurance that evidence Borrower’s compliance with its insurance obligations in Section 6.1 and the obligations contained in this Section 6.2. Borrower’s insurance certificate shall reflect Agent (shown as “Hercules Capital, Inc., as Agent, and its successors and/or assigns”) is an additional insured for commercial general liability, a lender’s loss payable for all risk property damage insurance, subject to the insurer’s approval, and a lender’s loss payable for property insurance and an additional insured for liability insurance for any future insurance that Borrower may acquire from such insurer and any other designations as requested by Agent with respect to any other insurance policies of Borrower (including cybersecurity policies). Attached to the certificates of insurance will be additional insured endorsements for liability and lender’s loss payable endorsements for all risk property
damage insurance and any other endorsements as requested by Agent with respect to any other insurance policies (including cybersecurity policies) of Borrower. All certificates of insurance will provide for a minimum of thirty (30) days advance written notice to Agent of cancellation (other than cancellation for non-payment of premiums, for which ten (10) days’ advance written notice shall be sufficient). Any failure of Agent to scrutinize such insurance certificates for compliance is not a waiver of any of Agent’s rights, all of which are reserved. Borrower shall provide Agent with copies of each insurance policy, and upon entering or amending any insurance policy required hereunder, Borrower shall provide Agent with copies of such policies and shall promptly deliver to Agent updated insurance certificates with respect to such policies.
Indemnity. Borrower agrees to indemnify and hold Agent, Lenders and their officers, directors, employees, agents, in-house attorneys, representatives and shareholders (each, an “Indemnified Person”) harmless from and against any and all third-party claims, reasonable and documented out-of-pocket costs, expenses, damages and liabilities (including such claims, costs, expenses, damages and liabilities based on liability in tort, including strict liability in tort), including reasonable and documented out-of-pocket attorneys’ fees and disbursements and other costs of investigation or defense (including those incurred upon any appeal) (collectively, “Liabilities”), that may be instituted or asserted against or incurred by such Indemnified Person as the result of credit having been extended, suspended or terminated under this Agreement and the other Loan Documents or the administration of such credit, or in connection with or arising out of the transactions contemplated hereunder and thereunder, or any actions or failures to act in connection therewith, or arising out of the disposition or utilization of the Collateral, excluding in all cases Liabilities to the extent such Liabilities arise solely out of gross negligence or willful misconduct of any Indemnified Person. This Section 6.3 shall not apply with respect to Taxes other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim. In no event shall any Indemnified Person be liable on any theory of liability for any special, indirect, consequential or punitive damages (including any loss of profits, business or anticipated savings). This Section 6.3 shall survive the repayment of indebtedness under, and otherwise shall survive the expiration or other termination of, this Agreement, in each case, subject to the applicable statute of limitations.
COVENANTS OF BORROWER
Borrower agrees as follows:
Financial Reports. Borrower shall furnish to Agent the financial statements and reports listed hereinafter (the “Financial Statements”):
as soon as practicable (and in any event within thirty (30) days) after the end of each month, unaudited interim and year-to-date financial statements as of the end of such month (prepared on a consolidated basis), including balance sheet and related statements of income and cash flows accompanied by report detailing an material contingencies (including the commencement of any material contingencies (including the commencement of an material litigation by or against Borrower) or any other occurrence that could reasonably be expected to have a Material Adverse Effect, all certified by Borrower’s Chief Executive Officer or Chief Financial Officer to the effect that they have been prepared in accordance with GAAP, except (i) for the absence of footnotes, (ii) that they are subject to normal year-end adjustments, and (iii) they do not contain certain non-cash items that are customarily included in quarterly and annual financial statements;
with respect to the first three fiscal quarters of any fiscal year, as soon as practicable (and in any event within forty-five (45) days after the end of each calendar quarter), unaudited interim and year-to-date financial statements as of the end of such calendar quarter (prepared on a consolidated basis), including balance sheet and related statements of income and cash flows accompanied by report detailing an material contingencies (including the commencement of any material contingencies (including the commencement of an material litigation by or against Borrower) or any other occurrence that could reasonably be expected to have a Material Adverse Effect, certified by Borrower’s Chief Executive Officer or Chief Financial Officer to the effect that they have been prepared in accordance with GAAP, except (i) for the absence of footnotes, and (ii) that they are subject to normal year-end adjustments;
as soon as practicable (and in any event within ninety (90) days after the end of each fiscal year), audited financial statements as of the end of such year (prepared on a consolidated basis), including balance sheet and related statements of income and cash flows, and setting forth in comparative form the corresponding figures for the preceding fiscal year, certified without qualification (other than any such qualification arising solely from the upcoming maturity date of the Loans) by a firm of independent certified public accountants selected by Borrower and reasonably acceptable to Agent (provided that Borrowers’ accounting firm as of the Closing Date, and any other nationally recognized accounting firm, shall be acceptable), accompanied by any management report from such accountants;
as soon as practicable (and in any event within thirty (30) days) after the end of each month, a Compliance Certificate;
as soon as practicable (and in any event within thirty (30) days) after the end of each month, a report showing agings of accounts receivable and accounts payable;
promptly after the sending or filing thereof, as the case may be, copies of any proxy statements, financial statements, information or reports that Company has made available to holders of its Common Stock and copies of any regular, periodic and special reports or registration statements that Company files with the Securities and Exchange Commission or any Governmental Authority that may be substituted therefor, or any national securities exchange;
upon request, copies of any material Governmental Approvals obtained by Borrower or any of its Subsidiaries;
at the same time and in the same manner as provided to the investors of Borrower that are not members of Borrower’s Board of Directors, such materials prepared and provided by Borrower on a quarterly basis to such investors;
financial and business projections promptly following their approval by Company’s Board of Directors, and in any event, within sixty (60) days after the end of Borrower’s fiscal year, as well as budgets, operating plans and other financial information reasonably requested by Agent;
[Reserved]
insurance renewal statements, annually or otherwise promptly upon renewal of insurance policies required to be maintained in accordance with Section 6.1;
prompt notice of any legal process that could reasonably be expected to result in damages, expenses or liabilities in excess of Five Hundred Thousand Dollars ($500,000); and
prompt (but in any event no more than two (2) Business Days’) notice if Borrower or any Subsidiary has knowledge that Borrower, or any Subsidiary or Affiliate of Borrower, is listed on the OFAC Lists or (a) is convicted on, (b) pleads nolo contendere to, (c) is indicted on, or (d) is arraigned and held over on charges involving money laundering or predicate crimes to money laundering.
Borrower shall not (without the consent of Agent, such consent not to be unreasonably withheld or delayed), make any change in its (a) accounting policies or reporting practices, except as required by GAAP or (b) fiscal years or fiscal quarters. The fiscal year of Borrower shall end on December 31.
The executed Compliance Certificate and all Financial Statements required to be delivered hereunder shall be sent via e-mail to [***] with a copy to [***], [***], and [***] provided, that if e-mail is not available or sending such Financial Statements via e-mail is not possible, they shall be faxed to Agent at: ([***], attention Account Manager: Senseonics Holdings, Inc.
Notwithstanding the foregoing, documents required to be delivered under Sections 7.1(a), (b), (c) (f) or (h) (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date on which (i) Borrower emails a link thereto to Agent or (ii) Borrower files any such documents with the SEC and such documents are publicly available on the SEC’s EDGAR filing system or any successor thereto.
Management Rights. Borrower shall permit any representative that Agent or Lenders authorizes, including its attorneys and accountants, to inspect the Collateral and examine and make copies and abstracts of the books of account and records of Borrower at reasonable times and upon reasonable notice during normal business hours; provided, however, that so long as no Event of Default has occurred and is continuing, such examinations shall be limited to no more often than once per fiscal year. In addition, in connection with such inspections and upon seven (7) Business Days’ prior written notice, any such representative shall have the right to meet with management and officers of Borrower to discuss such books of account and records. In addition, Agent or Lenders shall be entitled at reasonable times and intervals and upon seven (7) Business Days’ prior written notice to consult with and advise the management and officers of Borrower concerning significant business issues affecting Borrower. Such consultations shall not unreasonably interfere with Borrower’s business operations. The parties intend that the rights granted Agent and Lenders shall constitute “management rights” within the meaning of 29 C.F.R. Section 2510.3-101(d)(3)(ii), but that any advice, recommendations or participation by Agent or Lenders with respect to any business issues shall not be deemed to give Agent or Lenders, nor be deemed an exercise by Agent or Lenders of, control over Borrower’s management or policies.
Further Assurances. Borrower shall, and shall cause each other Loan Party to, from time to time execute, deliver and file, alone or with Agent, any financing statements, security agreements, collateral assignments, notices, control agreements, promissory notes or other documents to perfect, give the highest priority to Agent’s Lien on the Collateral (subject to Permitted Liens) or otherwise evidence Agent’s rights herein. Borrower shall from time to time procure any instruments or documents as may be reasonably requested by Agent, and take all further action that may be necessary, or that Agent may reasonably request, to perfect and protect the Liens granted hereby or pursuant to applicable Loan Documents. In addition, and for such purposes only, Borrower hereby authorizes Agent to execute and deliver on behalf of Borrower and to file such financing statements (including an indication that the financing statement covers
“all assets or all personal property” of Borrower in accordance with Section 9504 of the UCC), collateral assignments, notices, control agreements, security agreements and other documents without the signature of Borrower either in Agent’s name or in the name of Agent as agent and attorney-in-fact for Borrower. Borrower shall protect and defend Borrower’s title to the Collateral and Agent’s Lien thereon against all Persons claiming any interest adverse to Borrower or Agent other than Permitted Liens.
Indebtedness. Borrower shall not create, incur, assume, guarantee or be or remain liable with respect to any Indebtedness, or permit any Subsidiary so to do, other than Permitted Indebtedness, or prepay any Indebtedness or take any actions which impose on Borrower an obligation to prepay any Indebtedness, except for (a) the conversion of Indebtedness into or the exchange of Indebtedness for, equity securities and the payment of cash in lieu of fractional shares in connection with such conversion or exchange, (b) purchase money Indebtedness pursuant to its then applicable payment schedule, (c) prepayment by any Subsidiary of (i) inter-company Indebtedness owed by such Subsidiary to any Loan Party, or (ii) if such Subsidiary is not a Loan Party, intercompany Indebtedness owed by such Subsidiary to another Subsidiary that is not a Loan Party, (d) payments made on Subordinated Indebtedness to the extent permitted under the relevant subordination agreement, (e) prepayment of Indebtedness permitted under clauses (i), (iii), (iv), (ix), and (xii) of the definition of Permitted Indebtedness, (f) payment or prepayment on the account of the Company’s 5.25% Convertible Senior Notes due 2025 (including, without limitation, payments at or prior to maturity, upon redemptions or in connection with privately negotiated exchange transactions) using solely cash proceeds of any offering of Equity Interests of the Borrower after the Closing Date; or (g) as otherwise permitted hereunder or approved in writing by Agent.
Collateral. Borrower shall at all times (a) keep the Collateral and all other property and assets used in Borrower’s business or in which Borrower now or hereafter holds any interest free and clear from any legal process or Liens whatsoever (except for Permitted Liens), and (b) shall give Agent prompt written notice of any legal process adverse to the Collateral to the extent such legal process could reasonably be expected to be material and adverse in any respect, such other property and assets, or any Liens thereon, provided however, that the Collateral and such other property or assets may be subject to Permitted Liens. Borrower shall not agree with any Person other than Agent or Lenders not to encumber its property other than in connection with Permitted Liens. Borrower shall not enter into or suffer to exist or become effective any agreement that prohibits or limits the ability of any Borrower to create, incur, assume or suffer to exist any Lien upon any of its property (including Intellectual Property), whether now owned or hereafter acquired, to secure its obligations under the Loan Documents to which it is a party other than (i) this Agreement and the other Loan Documents, (ii) any agreements governing any purchase money Liens or capital lease obligations otherwise permitted hereby (in which case, any prohibition or limitation shall only be effective against the assets financed thereby), (iii) customary restrictions on the assignment, sublicense or sublease of leases, licenses and other agreements and (iv) Permitted Licenses. Borrower shall cause its Subsidiaries to protect and defend such Subsidiary’s title to its assets from and against all Persons claiming any interest adverse to such Subsidiary, and Borrower shall cause its Subsidiaries at all times to keep such Subsidiary’s property and assets free and clear from any legal process or Liens whatsoever (except for Permitted Liens), and shall give Agent prompt written notice of any legal process affecting such Subsidiary’s assets to the extent such legal process could reasonably be expected to be material and adverse in any respect.
Investments. Borrower shall not directly or indirectly acquire or own, or make any Investment in or to any Person, or permit any of its Subsidiaries to do so, other than Permitted
Investments. Neither Borrower nor any Subsidiary shall directly or indirectly acquire or own, nor make any Investment in Digital Assets, nor permit any Subsidiary so to do.
Distributions. Borrower shall not, and shall not allow any Subsidiary to, (a) repurchase or redeem any class of stock or other Equity Interest other than (i) pursuant to employee, officer, director or consultant repurchase plans or other similar agreements, provided, however, in each case the repurchase or redemption price does not exceed the original consideration paid for such stock or Equity Interest, (ii) repurchases of such shares, stock or Equity Interest deemed to occur upon exercise of stock options or warrants if such repurchased shares, stock or Equity Interest represents a portion of the exercise price of such options or warrants, (iii) repurchases of such shares, stock or Equity Interest deemed to occur upon the withholding of a portion of such shares, stock or Equity Interest granted or awarded to a current or former officer, director, employee or consultant to pay for the Taxes payable by such Person upon such grant or award (or upon vesting thereof), (iv) purchases of capital stock pledged as collateral for loans to employees, provided that such purchases do not exceed One Hundred Thousand Dollars ($100,000) in the aggregate and (v) purchases of fractional shares of capital stock arising out of stock dividends, splits or combinations or business combinations or in connection with exercises or conversions or exchange of options, warrants and other convertible securities, or (b) declare or pay any cash dividend or make any other cash distribution on any class of stock or other Equity Interest, except that a Subsidiary may pay dividends or make other distributions to Borrower or any Subsidiary of Borrower, or (c) except for Permitted Investments, lend money to any employees, officers or directors or guarantee the payment of any such loans granted by a third party in excess of One Hundred Thousand Dollars ($100,000) in the aggregate, or (d) the conversion or exchange of any of its convertible securities into other securities, or (e) waive, release or forgive any Indebtedness owed by any employees, officers or directors in excess of One Hundred Thousand Dollars ($100,000) in the aggregate; provided that the aggregate repurchase under clauses (ii) and (iii) above shall not exceed Five Million Dollars ($5,000,000) in any fiscal year. Notwithstanding the foregoing, and for the avoidance of doubt, this Section 7.7 shall not prohibit (i) the conversion or exchange by holders of any Permitted Convertible Debt Financing in accordance with the terms of the indenture governing such Permitted Convertible Debt Financing or Borrower’s delivery of the conversion consideration in connection therewith or the delivery of Common Stock and Cash in lieu of fractional shares of Common Stock in exchange for, or to induce the conversion of or exchange for, Permitted Convertible Debt Financing; provided that the conversion consideration (or exchange or inducement consideration) paid to such holders is limited to (A) Common Stock and (B) Cash in lieu of fractional shares of Common Stock (provided further that the amount of Cash in lieu of fractional shares of Common Stock paid to holders of Permitted Convertible Debt Financing in connection with the conversion or exchange thereof, or the inducement to convert Permitted Convertible Debt Financing, shall not exceed Two Hundred Thousand Dollars ($200,000) in the aggregate in any fiscal year of Borrower), or (ii) the making of any interest payments with respect to any Permitted Convertible Debt Financing to the extent not otherwise prohibited by this Agreement.
Transfers. Except for Permitted Transfers, Borrower shall not, and shall not permit any Subsidiary to, voluntarily or involuntarily transfer, sell, lease, license, lend or in any other manner convey (“Transfer”) any equitable, beneficial or legal interest in any material portion of its assets (including, without limitation, pursuant to a Division). Notwithstanding the foregoing, and for the avoidance of doubt, this Section 7.8 shall not prohibit (i) the conversion or exchange by holders of any Permitted Convertible Debt Financing in accordance with the terms of the indenture governing such Permitted Convertible Debt Financing or Borrower’s delivery of the conversion consideration in connection therewith or the delivery of Common Stock, and Cash in lieu of fractional shares of Common Stock in exchange for, or to induce conversions of or exchange for, Permitted
Convertible Debt Financing; provided that the conversion consideration (or exchange or inducement consideration) paid to such holders is limited to (A) Common Stock and (B) Cash in lieu of fractional shares of Common Stock (provided further that the amount of Cash in lieu of fractional shares of Common Stock paid to holders of Permitted Convertible Debt Financing in connection with the conversion or exchange thereof, or the inducement to convert Permitted Convertible Debt Financing, shall not exceed Two Hundred Thousand Dollars ($200,000) in the aggregate in any fiscal year of Borrower).
Mergers and Consolidations. Borrower shall not, nor will it permit any Subsidiary to, merge, dissolve, liquidate, consolidate with or into another Person, or dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to or in favor of any Person (other than (a) mergers or consolidations of (i) a Subsidiary which is not a Loan Party into another Subsidiary or into a Loan Party or (ii) a Loan Party into another Loan Party or (b) dissolution or liquidation of any Immaterial Subsidiary so long as all assets of such Immaterial Subsidiary are (i) transferred to a Loan Party prior to or simultaneously with such liquidation or dissolution or (ii) otherwise Transferred to the extent permitted under Section 7.8). For the avoidance of doubt, Permitted Investments are permitted under this Section 7.9.
Taxes. Borrower shall, and shall cause each of its Subsidiaries to, pay when due all material Taxes of any nature whatsoever now or hereafter imposed or assessed against Borrower or such Subsidiary or the Collateral or upon Borrower’s (or such Subsidiary’s) ownership, possession, use, operation or disposition thereof or upon Borrower’s (or such Subsidiary’s) rents, receipts or earnings arising therefrom. Borrower shall, and shall cause each of its Subsidiaries to, accurately file when due therefor (taking into account any timely filed extensions) all federal and state income Tax returns and other material Tax returns required by applicable law to be filed. Notwithstanding the foregoing, Borrower and its Subsidiaries may contest, in good faith and by appropriate proceedings diligently conducted, Taxes for which Borrower and its Subsidiaries maintain adequate reserves in accordance with GAAP.
Corporate Changes.
Neither Borrower nor any Subsidiary shall change its corporate name, legal form or jurisdiction of formation without ten (10) days’ prior written notice to Agent.
Neither Borrower nor any Subsidiary shall suffer a Change in Control.
Neither Borrower nor any Subsidiary shall relocate its chief executive office or its principal place of business unless: (i) it has provided prior written notice to Agent; and (ii) such relocation shall be within the continental United States of America.
If Borrower intends to add any new offices or business locations, including warehouses, containing any portion of Borrower’s assets or property valued, individually or in the aggregate, in excess of Three Hundred Thousand Dollars ($300,000) then Borrower will cause the landlord of any such new offices or business locations, including warehouses, to execute and deliver a landlord consent in form and substance satisfactory to Agent; provided that the foregoing requirements shall not apply to (x) locations outside the United States and (y) locations of contract manufacturing or third party logistics services providers or inventory transit locations where the inventory located therein does not exceed 90 days at a time.
If Borrower intends to deliver any portion of Borrower’s assets or property valued, individually or in the aggregate, in excess of Three Hundred Thousand Dollars ($300,000) to a bailee, and Agent and such bailee are not already parties to a bailee agreement governing both the Collateral and the location to which Borrower intends to deliver the Collateral, then Borrower will cause such bailee to execute and deliver a bailee agreement in form and substance satisfactory to Agent; provided that the foregoing requirements shall not apply to (x) locations outside the United States and (y) locations of contract manufacturing or third party logistics services providers or transit locations where the inventory located therein does not exceed 90 days at a time.
The Borrower will not, and will not permit any Subsidiary to, engage to any material extent in any business other than Permitted Businesses.
Deposit Accounts. No Loan Party shall maintain any Deposit Accounts, any accounts or sub-accounts in connection with an insured cash sweep program, or accounts holding Investment Property, except with respect to which Agent has an Account Control Agreement on terms and conditions satisfactory to Agent in its sole discretion or such account is an Excluded Account. No Loan Party shall own or hold any Digital Assets.
Joinder of Subsidiaries. Borrower shall notify Agent of (a) each Subsidiary (other than an Immaterial Subsidiary) formed or acquired subsequent to the Closing Date (including any new Subsidiary formed by Division) and (b) any Immaterial Subsidiary ceasing to be an Immaterial Subsidiary, and, within fifteen (15) Business Days of such formation, acquisition or cessation (or such longer period of time as agreed to by Agent in writing in its sole discretion), shall cause any such Subsidiary to execute and deliver to Agent a Joinder Agreement and such other documents and instruments as shall be requested by Agent to effectuate the transactions contemplated by such Joinder Agreement (in each case in form and substance acceptable to Agent), or, if requested by Agent, a Guaranty and appropriate collateral security documents to secure the obligations pursuant to such Guaranty (in each case in form and substance acceptable to Agent); it being agreed that if such new Subsidiary is formed by a Division, the foregoing requirements shall be satisfied substantially concurrently with the formation of such Subsidiary.
[Reserved]
Notification of Event of Default. Borrower shall notify Agent promptly (and in any event within two (2) Business Days) of the occurrence of any Event of Default.
[Reserved.]
Use of Proceeds. Borrower agrees that the proceeds of the Loans shall be used solely to pay related fees and expenses in connection with this Agreement and for working capital and general corporate purposes. The proceeds of the Loans will not be used in violation of Anti-Corruption Laws or applicable Sanctions.
[Reserved.]
Material Agreement. Borrower shall (a) not, without the consent of Agent, terminate any Designated Agreement or amend any Designated Agreement in a manner that is reasonably expected to have a material negative impact on Agent or Lenders, and (b) give prompt written notice to Agent of entering into a Material Agreement, or materially amending or terminating a
Material Agreement that such amendment or termination could reasonably be expected to have a material negative impact on Agent or Lenders.
Compliance with Laws.
Borrower (i) shall maintain, and shall cause its Subsidiaries to maintain, compliance in all material respects with all applicable laws, rules or regulations (including any law, rule or regulation with respect to the making or brokering of loans or financial accommodations), and (ii) shall, or cause its Subsidiaries to, obtain and maintain all required governmental authorizations, approvals, licenses, franchises, permits or registrations reasonably necessary in connection with the conduct of Borrower’s business. Borrower shall not become an “investment company,” a company that would be an “investment company” except for the exclusion from the definition of “investment company” in Section 3(c) of the 1940 Act, or a company controlled by an “investment company” under the 1940 Act, or undertake as one of its important activities extending credit to purchase or carry margin stock (as defined in Regulation X, T and U of the Federal Reserve Board of Governors).
Neither Borrower nor any of its Subsidiaries shall, nor shall Borrower or any of its Subsidiaries permit any Affiliate to, directly or indirectly, knowingly enter into any documents, instruments, agreements or contracts with any Person listed on the OFAC Lists. Neither Borrower nor any of its Subsidiaries shall, nor shall Borrower or any of its Subsidiaries, permit any Affiliate to, directly or indirectly, (i) conduct any business or engage in any transaction or dealing with any Blocked Person, including, without limitation, the making or receiving of any contribution of funds, goods or services to or for the benefit of any Blocked Person, (ii) deal in, or otherwise engage in any transaction relating to, any property or interests in property blocked pursuant to Executive Order No. 13224 or any similar executive order or other Anti-Terrorism Law, or (iii) engage in or conspire to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in Executive Order No. 13224 or other Anti-Terrorism Law.
Borrower has implemented and shall maintain in effect policies and procedures designed to ensure compliance by Borrower, its Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions, and Borrower, its Subsidiaries and their respective officers and employees and to the knowledge of Borrower its directors and agents, are in compliance with Anti-Corruption Laws and applicable Sanctions in all material respects.
None of Borrower, any of its Subsidiaries or any of their respective directors, officers or employees, or to the knowledge of Borrower, any agent for Borrower or its Subsidiaries that will act in any capacity in connection with or benefit from the credit facility established hereby, is a Sanctioned Person. No Loan, use of proceeds or other transaction contemplated by this Agreement will violate Anti-Corruption Laws or applicable Sanctions.
Financial Covenants.
Performance Covenant.Beginning on January 1, 2026, tested on a quarterly basis from and after such date, Borrower’s T6M Net Product Revenue shall be no less than the “Covenant Level” set forth on Exhibit K hereto for the applicable trailing six (6) month period (such minimum T6M Net Product Revenue requirements set forth in this sentence, the “Performance Covenant”).
Compliance with the Performance Covenant set forth in the preceding sentence of this Section 7.21(a) shall be waived for any particular quarter to the extent that Borrower maintains either (x) both (1) a minimum fully diluted Market Capitalization of at least $550,000,000 and (2) Unrestricted Cash in an amount not less than seventy-five percent (75%) of the aggregate outstanding principal amount of the Term Loans or (y) Unrestricted Cash in an amount not less than one hundred percent (100%) of the aggregate outstanding principal amount of the Term Loans, in each case, at all times during the maintenance period beginning on the first day of such quarter through and including the date on which Borrower has delivered the financial statements and the Compliance Certificate for such quarter in accordance with Sections 7.1(b) (or 7.1(c) for the last quarter of any fiscal year) and (d) to Agent (for the avoidance of doubt, if Borrower fails to so maintain both a minimum Market Capitalization and/or Unrestricted Cash (as applicable and required pursuant to clause (x) or (y)) at all times during such maintenance period in the amounts required pursuant to this sentence, then Borrower shall be required to comply with the Performance Covenant for such quarter).
Minimum Cash. Borrower shall at all times maintain Unrestricted Cash in an amount not less than eighty percent (80.0%) (provided that such percentage shall be reduced to fifty-five percent (55%) upon the occurrence of the 2025 Tranche 2 Milestone and/or reduced to thirty-five percent (35%) upon the occurrence of the 2025 Tranche 33B Milestone) of the aggregate outstanding principal amount of the Term Loans.
Compliance with the covenant set forth in the preceding sentence of this Section 7.21(b) shall be waived for any particular quarter to the extent that Borrower maintains a minimum fully diluted Market Capitalization of at least $800,000,000 at all times during the maintenance period beginning on the first day of such quarter through and including the date on which Borrower has delivered the financial statements and the Compliance Certificate for such quarter in accordance with Sections 7.1(b) (or 7.1(c) for the last quarter of any fiscal year) and (d) to Agent (for the avoidance of doubt, if Borrower fails to so maintain a minimum Market Capitalization as required by this sentence at all times during such maintenance period in the amounts required pursuant to this sentence, then Borrower shall be required to comply with the financial covenant set forth in this Section 7.21(b) for such quarter).
Intellectual Property. Each Borrower shall (i) protect, defend and maintain the validity and enforceability of its material Intellectual Property; (ii) promptly advise Agent in writing of material infringements of its Intellectual Property; and (iii) not allow any Intellectual Property material to Borrowers’ business to be abandoned, forfeited or dedicated to the public without Agent’s written consent. If a Borrower (a) obtains any Patent, registered Trademark, registered Copyright, registered mask work, or any pending application for any of the foregoing, whether as owner, licensee or otherwise, or (b) applies for any Patent or the registration of any Trademark, then such Borrower shall provide written notice thereof to Agent together with (1) the quarterly financial statements delivered pursuant to Section 7.1(b) (or Section 7.1(c) with respect to the last quarter) or (2) the monthly financial statements delivered pursuant to Section 7.1(a) to the extent that (A) any of the events described in either clause (a) or (b) have occurred prior to the date it is required to deliver such monthly financial statements or (B) Borrower has completed its review of the items described in either clause (a) or (b) prior to the date it is required to deliver such monthly financial statements, in each case for such new Intellectual Property obtained or applied for during such reporting period and shall execute such intellectual property security agreements and other documents and take such other actions as Agent may request in its good faith business judgment to perfect and maintain a first priority perfected security interest in favor of Agent in such property. If a Borrower decides to register any Copyrights or mask works in the United States Copyright Office, such Borrower shall: (x) provide Agent with at least fifteen (15) days prior written notice of such Borrower’s intent to
register such Copyrights or mask works together with a copy of the application it intends to file with the United States Copyright Office (excluding exhibits thereto); (y) execute an intellectual property security agreement and such other documents and take such other actions as Agent may request in its good faith business judgment to perfect and maintain a first priority perfected security interest in favor of Agent in the Copyrights or mask works intended to be registered with the United States Copyright Office; and (z) record such intellectual property security agreement with the United States Copyright Office contemporaneously with filing the Copyright or mask work application(s) with the United States Copyright Office. Borrowers shall, upon request, promptly provide to Agent copies of all applications that it files for Patents or for the registration of Trademarks, Copyrights or mask works, together with evidence of the recording of the intellectual property security agreement required for Agent to perfect and maintain a first priority perfected security interest in such property. Borrower shall use commercially reasonable efforts, as Agent requests, to obtain the consent of, or waiver by, any person whose consent or waiver is necessary for (1) any Restricted License to be deemed “Collateral” and for Agent to have a security interest in it that might otherwise be restricted or prohibited by law or by the terms of any such Restricted License, whether now existing or entered into in the future, and (2) Agent to have the ability in the event of a liquidation of any Collateral to dispose of such Collateral in accordance with Agent’s rights and remedies under this Agreement and the other Loan Documents.
Transactions with Affiliates. Except as otherwise described on Schedule 7.23, Borrower shall not, and shall not permit any Subsidiary to, directly or indirectly, enter into or permit to exist any transaction of any kind with any Affiliate of Borrower or such Subsidiary on terms that are less favorable to Borrower or such Subsidiary, as the case may be, than those that might be obtained in an arm’s length transaction from a Person who is not an Affiliate of Borrower or such Subsidiary, other than transactions between Borrower and its Subsidiaries entered into in the ordinary course of business, to the extent expressly permitted by this Agreement.
Post-Close Obligations. Notwithstanding any provision herein or in any other Loan Document to the contrary, to the extent not actually delivered on or prior to the Closing Date, Borrower shall deliver to Agent (or its designated agent):
Within thirty (30) days of the Closing Date (or such later date as Agent may approve in its sole discretion), insurance endorsements in accordance with the requirements of Section 6.2 of this Agreement;
Within ten (10) days of the Closing Date (or such later date as Agent may approve in its sole discretion), the original certificates representing the Equity Interests required to be pledged pursuant to the Pledge Agreement, together with an original undated stock power or similar instrument of transfer for each such certificate endorsed in blank by a duly authorized officer of the pledgor thereof;
Within one (1) Business Day of the Closing Date (or such later date as Agent may approve in its sole discretion), an Account Control Agreement with respect to the Deposit Accounts (with account numbers ending in x862 and x858) maintained by Senseonics Inc with Silicon Valley Bank;
Within three (3) Business Days of the Closing Date (or such later date as Agent may approve in its sole discretion), an Account Control Agreement with respect to the Investment Account (with account number ending in x327) maintained by Senseonics Inc with Silicon Valley Bank; provided that Borrower agrees that until such Account Control Agreement is so delivered to Agent, it shall not permit any proceeds of any 2025 Term Loan Advance to be deposited or
otherwise credited to such Investment Account and any failure to comply with such restriction shall be automatically deemed to be an Event of Default;
Within five (5) Business Days of the Closing Date (or such later date as Agent may approve in its sole discretion), an Account Control Agreement with respect to the Deposit Account (with account number ending in x359) maintained by Senseonics Inc with Silicon Valley Bank; provided that Borrower agrees that until such Account Control Agreement is so delivered to Agent or such requirement otherwise waived by the Agent in its sole discretion, it shall not permit any proceeds of any 2025 Term Loan Advance to be deposited or otherwise credited to such Deposit Account and any failure to comply with such restriction shall be automatically deemed to be an Event of Default; and
Within thirty (30) days of the Closing Date (or such later date as Agent may approve in its sole discretion), duly executed landlord consents for its (i) chief executive office or its principal place of business and (ii) offices or business locations, including warehouses, containing in excess of Three Hundred Thousand Dollars ($300,000) of Borrower’s assets or property (other than (x) locations outside the United States and (y) locations of contract manufacturing or third party logistics services providers or inventory transit locations where the inventory located therein does not exceed 90 days at a time).
7.25Permitted Convertible Debt Financing. (a) Make or permit any payment on Permitted Convertible Debt Financing except (i) interest payments to the extent not otherwise prohibited by this Agreement and (ii) Borrower’s delivery of conversion or exchange consideration in connection with the conversion or exchange by holders of any Permitted Convertible Debt Financing in accordance with the terms of the indenture governing such Permitted Convertible Debt Financing or the delivery of common stock and Cash in lieu of fractional shares of Common Stock to induce the conversion or exchange of Permitted Convertible Debt Financing; provided that the conversion or exchange consideration (or inducement consideration) paid to such holders is limited to (A) Common Stock and (B) Cash in lieu of fractional shares of Common Stock (provided further that the amount of Cash in lieu of fractional shares of Common Stock paid to holders of Permitted Convertible Debt Financing in connection with the conversion or exchange thereof, or the inducement to convert or exchange Permitted Convertible Debt Financing, shall not exceed Two Hundred Thousand Dollars ($200,000) in the aggregate in any fiscal year of Borrower), or (b) redeem or repurchase any Permitted Convertible Debt Financing (other than repurchase of Permitted Convertible Debt Financing in exchange for Common Stock and Cash in lieu of fractional shares of Common Stock); provided that the repurchase consideration paid to the holders of Permitted Convertible Debt Financing is limited to (A) Common Stock and (B) Cash in lieu of fractional shares of Common Stock (provided further that the amount of Cash in lieu of fractional shares of Common Stock paid to holders of Permitted Convertible Debt Financing in connection with the repurchase thereof shall not exceed Two Hundred Thousand Dollars ($200,000) in the aggregate in any fiscal year of Borrower). In no event shall the foregoing permit Borrower to pay holders of Permitted Convertible Debt Financing Cash in connection with mandatory repurchase rights granted to such holders upon the occurrence of a “change of control”, “fundamental change”, “make-whole fundamental change” or any comparable term unless the Secured Obligations are paid in full prior to or concurrently with such payment.
RIGHT TO invest
Borrower shall give timely prior written notice to Agent of each Subsequent Financing and shall use commercially reasonable efforts to permit the Lenders or their Affiliates, or the assignees or nominees of the Lenders or their Affiliates, to participate in such Subsequent Financings in an
aggregate amount of up to Five Million Dollars ($5,000,000) (with respect to all such Subsequent Financings) on substantially the same terms, conditions and pricing afforded to others participating in any such Subsequent Financing (subject to compliance with applicable securities laws and regulations). This Section 8.1, and all rights and obligations granted hereunder, shall terminate upon the earliest to occur of (a) termination of this Agreement and (b) such time that the Lenders or their permitted assigns or nominees have purchased Five Million Dollars ($5,000,000) of Borrower’s Equity Interests in the aggregate.
EVENTS OF DEFAULT
The occurrence of any one or more of the following events shall be an “Event of Default”:
Payments. A Loan Party fails to pay any amount due under this Agreement or any of the other Loan Documents on the due date; provided, however, that an Event of Default shall not occur on account of a failure to pay due solely to an administrative or operational error of Agent or Lenders or Borrower’s bank if Borrower had the funds to make the payment when due and makes the payment within three (3) Business Days following Borrower’s knowledge of such failure to pay; or
Covenants. A Loan Party breaches or defaults in the performance of any covenant or Secured Obligation under this Agreement, or any of the other Loan Documents, and (a) with respect to a Default under any covenant under this Agreement (other than under Sections 6, 7.4, 7.5, 7.6, 7.7, 7.8, 7.9, 7.15, 7.17, 7.19, 7.22, 7.24 and 7.25), any other Loan Document, or any other agreement among Borrower, Agent and Lenders, such default continues for more than ten (10) days after the earlier of the date on which (i) Agent or Lenders has given notice of such default to Borrower and (ii) Borrower has actual knowledge of such default or (b) with respect to a Default under any of Sections 6, 7.4, 7.5, 7.6, 7.7, 7.8, 7.9, 7.15, 7.17, 7.19, 7.22, 7.24 and 7.25, the occurrence of such Default; or
Material Adverse Effect. A circumstance has occurred that could reasonably be expected to have a Material Adverse Effect; or
Representations. Any representation or warranty made by any Loan Party in any Loan Document shall have been false or misleading in any material respect when made or when deemed made; or
Insolvency. (a) A Loan Party or any of its Subsidiaries fails to be solvent as described under Section 5.15 hereof; (b) a Loan Party or any of its Subsidiaries begins an Insolvency Proceeding; or (c) an Insolvency Proceeding is begun against a Loan Party or any of its Subsidiaries and is not dismissed or stayed within thirty (30) days (but no Advances shall be made while any of the conditions described in clause (a) exist or until any Insolvency Proceeding is dismissed); or
Judgments; Penalties. One or more fines, penalties or final judgments, orders or decrees for the payment of money in an amount, individually or in the aggregate, of at least Five Hundred Thousand Dollars ($500,000) (not (x) covered by independent third-party insurance as to which liability has been accepted by such insurance carrier or (y) otherwise indemnified) shall be rendered against any Loan Party or any of its Subsidiaries by any Governmental Authority, and the same are not, within thirty (30) days after the entry, assessment or issuance thereof, discharged, or after execution thereof, or stayed pending appeal, or such judgments are not discharged prior to the
expiration of any such stay (provided that no Advances shall be made prior to the discharge, or stay of such fine, penalty, judgment, order or decree); or
Attachment; Levy; Restraint on Business.
(i) The service of process seeking to attach, by trustee or similar process, any funds of any Loan Party or any of its Subsidiaries, or (ii) a notice of lien or levy is filed against any of any Loan Party’s or any of its Subsidiaries’ assets by any Governmental Authority, and the same under subclauses (i) and (ii) hereof are not, within ten (10) days after the occurrence thereof, discharged or stayed (whether through the posting of a bond or otherwise); provided, however, no Advances shall be made during any ten (10) day cure period; or
(i) any material portion of any Loan Party’s or any of its Subsidiaries’ assets is attached, seized, levied on, or comes into possession of a trustee or receiver, or (ii) any court order enjoins, restrains, or prevents any Loan Party from conducting all or any material part of its business, in each case, and such attachment, seizure, order or judgement remains unsatisfied, unvacated or unstayed for a period of thirty (30) days after the occurrence of such event thereof;
Other Obligations. The occurrence of any default under (i) any agreement or obligation of a Loan Party involving any Indebtedness in excess of Five Hundred Thousand Dollars ($500,000) or (ii) any other material agreement or obligation, if a Material Adverse Effect could reasonably be expected to result from such default.
Governmental Approvals; FDA Action. (a) Any Governmental Approval or Registration shall have been revoked, rescinded, suspended, modified in an adverse manner, or not renewed in the ordinary course for a full term and such revocation, rescission, suspension, modification or non renewal has resulted in or could reasonably be expected to result in a Material Adverse Effect; or (b) (i) the FDA, DOJ or other Governmental Authority initiates a regulatory action or any other enforcement action against Borrower or any of its Subsidiaries that causes Borrower or any of its Subsidiaries to recall, withdraw, remove or discontinue manufacturing, distributing, and/or marketing any of its products, even if such action is based on previously disclosed conduct, in each case, that could reasonably be expected to result in a Material Adverse Effect; (ii) the FDA or any other comparable Governmental Authority issues a warning letter to Borrower or any of its Subsidiaries with respect to any of its activities or products which could reasonably be expected to result in a Material Adverse Effect; (iii) Borrower or any of its Subsidiaries conducts a mandatory or voluntary recall which could reasonably be expected to result in liability an expense to Borrower or any of its Subsidiaries of Seven Hundred Fifty Thousand Dollars ($750,000) or more; (iv) Borrower or any of its Subsidiaries enters into a settlement agreement with the FDA, DOJ or other Governmental Authority that results in aggregate liability as to any single or related series of transactions, incidents or conditions, of Seven Hundred Fifty Thousand Dollars ($750,000) or more, or that could reasonably be expected to result in a Material Adverse Effect, even if such settlement agreement is based on previously disclosed conduct; or (iv) the FDA or any other comparable Governmental Authority revokes any authorization or permission granted under any Registration, or Borrower or any of its Subsidiaries withdraws any Registration, that could reasonably be expected to result in a Material Adverse Effect.
REMEDIES
General. Upon the occurrence and during the continuance of any one or more Events of Default, Agent may, and at the direction of the Required Lenders shall, accelerate and demand payment of all or any part of the outstanding Secured Obligations together with a Prepayment
Charge and declare them to be immediately due and payable (provided, that upon the occurrence of an Event of Default of the type described in Section 9.5, all of the Secured Obligations (including, without limitation, the Prepayment Charge, the End of Term Charge and the Existing End of Term Charge) shall automatically be accelerated and made due and payable, in each case without any further notice or act). Borrower hereby irrevocably appoints Agent as its lawful attorney-in-fact to: (a) only exercisable following the occurrence and during the continuance of an Event of Default, (i) sign Borrower’s name on any invoice or bill of lading for any account or drafts against account debtors; (ii) demand, collect, sue, and give releases to any account debtor for monies due, settle and adjust disputes and claims about the accounts directly with account debtors, and compromise, prosecute, or defend any action, claim, case, or proceeding about any Collateral (including filing a claim or voting a claim in any bankruptcy case in Agent’s or Borrower’s name, as Agent may elect); (iii) make, settle, and adjust all claims under Borrower’s insurance policies; (iv) pay, contest or settle any Lien, charge, encumbrance, security interest, or other claim in or to the Collateral, or any judgment based thereon, or otherwise take any action to terminate or discharge the same; (v) transfer the Collateral into the name of Agent or a third party as the UCC permits; and (vi) receive, open and dispose of mail addressed to Borrower; (vii) endorse Borrower’s name on any checks, payment instruments, or other forms of payment or security; and (viii) notify all account debtors to pay Agent directly. Borrower hereby appoints Agent as its lawful attorney-in-fact to sign Borrower’s name on any documents necessary to perfect or continue the perfection of Agent’s security interest in the Collateral regardless of whether an Event of Default has occurred until all Secured Obligations have been satisfied in full and the Loan Documents (other than the Warrant) have been terminated. Agent’s foregoing appointment as Borrower’s attorney in fact, and all of Agent’s rights and powers, coupled with an interest, are irrevocable until all Secured Obligations (other than inchoate indemnity obligations which, by their terms, survive termination of this Agreement) have been fully repaid and performed and the Loan Documents (other than the Warrant) have been terminated. Agent may, and at the direction of the Required Lenders shall, exercise all rights and remedies with respect to the Collateral under the Loan Documents (other than the Warrant) or otherwise available to it under the UCC and other applicable law, including the right to release, hold, sell, lease, liquidate, collect, realize upon, or otherwise dispose of all or any part of the Collateral and the right to occupy, utilize, process and commingle the Collateral. All Agent’s rights and remedies shall be cumulative and not exclusive.
Collection; Foreclosure. Upon the occurrence and during the continuance of any Event of Default, Agent may, and at the direction of the Required Lenders shall, at any time or from time to time, apply, collect, liquidate, sell in one or more sales, lease or otherwise dispose of, any or all of the Collateral, in its then condition or following any commercially reasonable preparation or processing, in such order as Agent may elect. Any such sale may be made either at public or private sale at its place of business or elsewhere. Borrower agrees that any such public or private sale may occur upon ten (10) calendar days’ prior written notice to Borrower. Agent may require Borrower to assemble the Collateral and make it available to Agent at a place designated by Agent that is reasonably convenient to Agent and Borrower. The proceeds of any sale, disposition or other realization upon all or any part of the Collateral shall be applied by Agent in the following order of priorities:
First, to Agent, in an amount equal to the sum of all fees owing to Agent hereunder and under any other Loan Document;
Second, to Agent and Lenders in an amount sufficient to pay in full Agent’s and Lenders’ reasonable costs and professionals’ and advisors’ fees and expenses as described in Section 11.12;
Third, to Lenders, ratably, in an amount equal to the sum of all accrued interest owing to Lenders on the 2025 Term Loan Advances hereunder;
Fourth, to Lenders, ratably, in an amount equal to the sum of the outstanding principal and premium, if any owing to Lenders from Borrower on the 2025 Term Loan Advances hereunder;
Fifth, to Lenders and Agent, ratably (in proportion to all remaining Secured Obligations owing to each), in an amount equal to the sum of all other outstanding and unpaid Secured Obligations (including principal, interest, and the default rate interest set forth in Section 2.4, if required under this Agreement), in such order and priority as Agent may choose in its sole discretion; and
Finally, after the full and final payment in Cash of all of the Secured Obligations (other than inchoate obligations and any other obligations which, by their terms, survive termination of this Agreement), to any creditor holding a junior Lien on the Collateral, or to Borrower or its representatives or as a court of competent jurisdiction may direct.
Agent shall be deemed to have acted reasonably in the custody, preservation and disposition of any of the Collateral if it complies with the obligations of a secured party under the UCC.
No Waiver. Agent shall be under no obligation to marshal any of the Collateral for the benefit of Borrower or any other Person, and Borrower expressly waives all rights, if any, to require Agent to marshal any Collateral.
Waivers. Borrower waives demand, notice of default or dishonor, notice of payment and nonpayment, notice of any default, nonpayment at maturity, release, compromise, settlement, extension, or renewal of accounts, documents, instruments, chattel paper, and guarantees held by Agent on which Borrower is liable.
Cumulative Remedies. The rights, powers and remedies of Agent hereunder shall be in addition to all rights, powers and remedies given by statute or rule of law and are cumulative. The exercise of any one or more of the rights, powers and remedies provided herein shall not be construed as a waiver of or election of remedies with respect to any other rights, powers and remedies of Agent.
MISCELLANEOUS
Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under such law, such provision shall be ineffective only to the extent and duration of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.
Notice. Except as otherwise provided herein, any notice, demand, request, consent, approval, declaration, service of process or other communication (including the delivery of Financial Statements) that is required, contemplated, or permitted under the Loan Documents or with respect to the subject matter hereof shall be in writing, and shall be deemed to have been validly served, given, delivered, and received upon the earlier of: (i) the day of transmission by electronic mail or hand delivery or delivery by an overnight express service or overnight mail delivery service; or (ii) the third calendar day after deposit in the United States of America mails, with proper first class postage prepaid, in each case addressed to the party to be notified as follows:
If to Agent:
HERCULES CAPITAL, INC.
Legal Department
Attention: Chief Legal Officer, Bryan Jadot and Michael McMahon
400 Hamilton Avenue, Suite 310
Palo Alto, CA 94301
email: [***]; [***] and [***]
Telephone: 650-289-3060
If to Lenders:
HERCULES CAPITAL, INC.
Legal Department
Attention: Chief Legal Officer, Bryan Jadot and Michael McMahon
400 Hamilton Avenue, Suite 310
Palo Alto, CA 94301
email: [***]; [***] and [***]
Telephone: 650-289-3060
If to Borrower:
Senseonics Holdings, Inc.
20451 Seneca Meadows Pkwy, Germantown, MD 20876
Attention: Chief Financial Officer
email: [***]
Telephone: (301) 515-7260
or to such other address as each party may designate for itself by like notice.
Entire Agreement; Amendments.
This Agreement and the other Loan Documents constitute the entire agreement and understanding of the parties hereto in respect of the subject matter hereof and thereof, and supersede and replace in their entirety any prior proposals, term sheets, non-disclosure or confidentiality agreements, letters, negotiations or other documents or agreements, whether written or oral, with respect to the subject matter hereof or thereof (including Agent’s revised proposal letter dated August 10, 2023 and the Non-Disclosure Agreement).
Neither this Agreement, any other Loan Document, nor any terms hereof or thereof may be amended, supplemented or modified except in accordance with the provisions of this Section 11.3(b). The Required Lenders and Loan Parties party to the relevant Loan Document may, or, with the written consent of the Required Lenders, Agent and Loan Parties party to the relevant Loan Document may, from time to time, (i) enter into written amendments, supplements or modifications hereto and to the other Loan Documents for the purpose of adding any provisions to this Agreement or the other Loan Documents or changing in any manner the rights of Lenders or of Loan Parties hereunder or thereunder or (ii) waive, on such terms and conditions as the Required Lenders or Agent, as the case may be, may specify in such instrument, any of the
requirements of this Agreement or the other Loan Documents or any Default or Event of Default and its consequences (and Agent or the Required Lenders may, in its or their sole discretion, provide any waiver for the benefit of the Loan Parties in the form of an electronic mail); provided, however, that no such waiver and no such amendment, supplement or modification shall (A) forgive the principal amount or extend the final scheduled date of maturity of any Loan, extend the scheduled date of any amortization payment in respect of any 2025 Term Loan Advance, reduce the stated rate of any interest (or fee payable hereunder) or extend the scheduled date of any payment thereof, in each case without the written consent of each Lender directly affected thereby; (B) eliminate or reduce the voting rights of any Lender under this Section 11.3(b) without the written consent of such Lender; (C) reduce any percentage specified in the definition of Required Lenders, consent to the assignment or transfer by Loan Parties of any of its rights and obligations under this Agreement and the other Loan Documents, release all or substantially all of the Collateral or release a Loan Party from its obligations under the Loan Documents, in each case without the written consent of all Lenders; or (D) amend, modify or waive any provision of Section 11.18 or Addendum 3 without the written consent of Agent. Any such waiver and any such amendment, supplement or modification shall apply equally to each Lender and shall be binding upon the applicable Loan Parties, Lenders, Agent and all future holders of the Loans.
No Strict Construction. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement.
No Waiver. The powers conferred upon Agent and Lenders by this Agreement are solely to protect their rights hereunder and under the other Loan Documents and their interest in the Collateral and shall not impose any duty upon Agent or Lenders to exercise any such powers. No omission or delay by Agent or Lenders at any time to enforce any right or remedy reserved to them, or to require performance of any of the terms, covenants or provisions hereof by Borrower at any time designated, shall be a waiver of any such right or remedy to which Agent or Lenders is entitled, nor shall it in any way affect the right of Agent or Lenders to enforce such provisions thereafter.
Survival. All agreements, representations and warranties contained in this Agreement and the other Loan Documents or in any document delivered pursuant hereto or thereto shall be for the benefit of Agent and Lenders and shall survive the execution and delivery of this Agreement for so long as any Secured Obligations (other than any inchoate indemnity obligations) remain outstanding. Sections 6.3, 8.1 11.9, 11.11, 11.14, 11.15, 11.17 and 11.18 shall survive the termination of this Agreement.
Successors and Assigns. The provisions of this Agreement and the other Loan Documents shall inure to the benefit of and be binding on Borrower and its permitted assigns (if any). No Loan Party shall assign its obligations under this Agreement or any of the other Loan Documents without Agent’s express prior written consent, and any such attempted assignment shall be void and of no effect. Agent and Lenders may assign, transfer, or endorse its rights hereunder and under the other Loan Documents with prior notice to Borrower (except if an Event of Default has occurred and is continuing or such assignment is to an Affiliate of Lender or Agent, in which case no notice shall be required), and all of such rights shall inure to the benefit of Agent’s and Lenders’ successors and assigns; provided that as long as no Event of Default has occurred and is continuing, neither Agent nor any Lender may assign, transfer or endorse its rights hereunder or
under the Loan Documents to any party that is a direct competitor of Borrower (as reasonably determined by Agent upon consultation with Borrower) or any investment fund specializing in distressed debt, it being acknowledged that in all cases, any transfer to an Affiliate of any Lender or Agent shall be allowed. Notwithstanding the foregoing, (x) in connection with any assignment by a Lender as a result of a forced divestiture at the request of any regulatory agency, the restrictions set forth herein shall not apply and Agent and Lenders may assign, transfer or endorse its rights hereunder and under the other Loan Documents to any Person or party and (y) in connection with a Lender’s own financing or securitization transactions, the restrictions set forth herein shall not apply and Agent and Lenders may assign, transfer or endorse its rights hereunder and under the other Loan Documents to any Person or party providing such financing or formed to undertake such securitization transaction and any transferee of such Person or party upon the occurrence of a default, event of default or similar occurrence with respect to such financing or securitization transaction; provided that no such sale, transfer, pledge or assignment under this clause (y) shall release such Lender from any of its obligations hereunder or substitute any such Person or party for such Lender as a party hereto until Agent shall have received and accepted an effective assignment agreement from such Person or party in form satisfactory to Agent executed, delivered and fully completed by the applicable parties thereto, and shall have received such other information regarding such assignee as Agent reasonably shall require. Agent, acting solely for this purpose as a non-fiduciary agent of Borrower, shall maintain at one of its offices in the United States a register for the recordation of the names and addresses of Lender(s), and the Term Commitments of, and principal amounts (and stated interest) of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive absent manifest error, and Borrower, Agent and Lender(s) shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.
Participations. Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of Borrower, maintain a register on which it enters the name and address of each participant and the principal amounts (and stated interest) of each participant’s interest in the Loans or other obligations under the Loan Documents (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any participant or any information relating to a participant’s interest in any commitments, loans, its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, Agent (in its capacity as Agent) shall have no responsibility for maintaining a Participant Register. Borrower agrees that each participant shall be entitled to the benefits of the provisions in Addendum 1 attached hereto (subject to the requirements and limitations therein, including the requirements under Section 7 of Addendum 1 attached hereto (it being understood that the documentation required under Section 7 of Addendum 1 attached hereto shall be delivered to the participating Lender)) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to Section 11.7; provided that such participant shall not be entitled to receive any greater payment under Addendum 1 attached hereto, with respect to any participation, than its participating Lender would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a change in law that occurs after the participant acquired the applicable participation.
Governing Law. This Agreement and the other Loan Documents have been negotiated and delivered to Agent and Lenders in the State of California, and shall have been accepted by Agent and Lenders in the State of California. Payment to Agent and Lenders by Borrower of the Secured Obligations is due in the State of California. This Agreement and the other Loan Documents (other than the Warrant) shall be governed by, and construed and enforced in accordance with, the laws of the State of California, excluding conflict of laws principles that would cause the application of laws of any other jurisdiction.
Consent to Jurisdiction and Venue. All judicial proceedings (to the extent that the reference requirement of Section 11.11 is not applicable) arising in or under or related to this Agreement or any of the other Loan Documents (other than the Warrant) may be brought in any state or federal court located in the State of California. By execution and delivery of this Agreement, each party hereto generally and unconditionally: (a) consents to nonexclusive personal jurisdiction in Santa Clara County, State of California; (b) waives any objection as to jurisdiction or venue in Santa Clara County, State of California; (c) agrees not to assert any defense based on lack of jurisdiction or venue in the aforesaid courts; and (d) irrevocably agrees to be bound by any judgment rendered thereby in connection with this Agreement or the other Loan Documents. Service of process on any party hereto in any action arising out of or relating to this Agreement shall be effective if given in accordance with the requirements for notice set forth in Section 11.2, and shall be deemed effective and received as set forth in Section 11.2. Nothing herein shall affect the right to serve process in any other manner permitted by law or shall limit the right of either party to bring proceedings in the courts of any other jurisdiction.
Mutual Waiver of Jury Trial / Judicial Reference.
Because disputes arising in connection with complex financial transactions are most quickly and economically resolved by an experienced and expert Person and the parties wish applicable state and federal laws to apply (rather than arbitration rules), the parties desire that their disputes be resolved by a judge applying such applicable laws. EACH OF BORROWER, AGENT AND LENDERS SPECIFICALLY WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY OF ANY CAUSE OF ACTION, CLAIM, CROSS-CLAIM, COUNTERCLAIM, THIRD PARTY CLAIM OR ANY OTHER CLAIM (COLLECTIVELY, “CLAIMS”) ASSERTED BY BORROWER AGAINST AGENT, LENDERS OR THEIR RESPECTIVE ASSIGNEE OR BY AGENT, LENDERS OR THEIR RESPECTIVE ASSIGNEE AGAINST BORROWER. This waiver extends to all such Claims, including Claims that involve Persons other than Agent, Borrower or any Lenders; Claims that arise out of or are in any way connected to the relationship among Borrower, Agent and Lenders; and any Claims for damages, breach of contract, tort, specific performance, or any equitable or legal relief of any kind, arising out of this Agreement, any other Loan Document.
If the waiver of jury trial set forth in Section 11.11(a) is ineffective or unenforceable, the parties agree that all Claims shall be resolved by reference to a private judge sitting without a jury, pursuant to Code of Civil Procedure Section 638, before a mutually acceptable referee or, if the parties cannot agree, a referee selected by the Presiding Judge of the Santa Clara County, California. Such proceeding shall be conducted in Santa Clara County, California, with California rules of evidence and discovery applicable to such proceeding.
In the event Claims are to be resolved by judicial reference, either party may seek from a court identified in Section 11.10, any prejudgment order, writ or other relief and have such prejudgment order, writ or other relief enforced to the fullest extent permitted by law notwithstanding that all Claims are otherwise subject to resolution by judicial reference.
Professional Fees. Borrower promises to pay Agent’s and Lenders’ reasonable and documented out-of-pocket fees and expenses necessary to finalize the Loan Documents, including but not limited to reasonable and documented out-of-pocket attorneys’ fees, UCC searches, filing costs, and other miscellaneous expenses. In addition, Borrower promises to pay any and all reasonable and documented out-of-pocket attorneys’ and other professionals’ fees and expenses incurred by Agent and Lenders after the Closing Date in connection with or related to: (a) the Loan; (b) the administration, collection, or enforcement of the Loan; (c) the amendment or modification of the Loan Documents; (d) any waiver, consent, release, or termination under the Loan Documents; (e) the protection, preservation, audit, field exam, sale, lease, liquidation, or disposition of Collateral or the exercise of remedies with respect to the Collateral; (f) any legal, litigation, administrative, arbitration, or out of court proceeding in connection with or related to Borrower or the Collateral, and any appeal or review thereof; and (g) any bankruptcy, restructuring, reorganization, assignment for the benefit of creditors, workout, foreclosure, or other action related to Borrower, the Collateral, the Loan Documents, including representing Agent or Lenders in any adversary proceeding or contested matter commenced or continued by or on behalf of Borrower’s estate, and any appeal or review thereof.
Confidentiality. Agent and Lenders acknowledge that certain items of Collateral and information provided to Agent and Lenders by Borrower are confidential and proprietary information of Borrower, if and to the extent such information either (x) is marked as confidential by Borrower at the time of disclosure, or (y) should reasonably be understood to be confidential (the “Confidential Information”). Accordingly, Agent and Lenders agree that any Confidential Information it may obtain in the course of acquiring, administering, or perfecting Agent’s security interest in the Collateral shall not be disclosed to any other Person or entity in any manner whatsoever, in whole or in part, without the prior written consent of Borrower, except that Agent and Lenders may disclose any such information: (a) to its Affiliates and its partners, investors, lenders, directors, officers, employees, agents, advisors, counsel, accountants, representative and other professional advisors if Agent or Lenders in their sole discretion determines that any such party should have access to such information in connection with such party’s responsibilities in connection with the Loan or this Agreement and, provided that such recipient of such Confidential Information either (i) agrees to be bound by the confidentiality provisions of this Section or (ii) is otherwise subject to confidentiality restrictions that reasonably protect against the disclosure of Confidential Information which are no less restrictive than the terms of this Section; (b) if such information is generally available to the public or to the extent such information becomes publicly available other than as a result of a breach of this Section or becomes available to Agent or any Lender, or any of their respective Affiliates on a non-confidential basis from a source other than Borrower; (c) if required or appropriate in any report, statement or testimony submitted to any Governmental Authority having or claiming to have jurisdiction over Agent or Lenders and any rating agency; (d) if required or appropriate in response to any summons or subpoena or in connection with any litigation, to the extent permitted or deemed advisable by Agent’s or Lenders’ counsel; (e) to comply with any legal requirement or law applicable to Agent or Lenders or demanded by any Governmental Authority; (f) to the extent reasonably necessary in connection with the exercise of, or preparing to exercise, or the enforcement of, or preparing to enforce, any right or remedy under any Loan Document (including Agent’s sale, lease, or other disposition of Collateral after the occurrence and during the continuance of an Event of Default), or any action or proceeding relating to any Loan Document; (g) to any participant or assignee of Agent or Lenders or any prospective participant or assignee, provided, that such participant or assignee or prospective participant or assignee is subject to confidentiality restrictions that reasonably protect against the disclosure of Confidential Information (h) to any investor or potential investor (and each of their respective Affiliates or clients) in Agent or Lenders (or each of their respective Affiliates); provided that such investor, potential investor, Affiliate or client is subject to
confidentiality obligations with respect to the Confidential Information; (i) otherwise to the extent consisting of general portfolio information that does not identify Borrower; or (j) otherwise with the prior written consent of Borrower; provided, that any disclosure made in violation of this Agreement shall not affect the obligations of Borrower or any of its Affiliates or any guarantor under this Agreement or the other Loan Documents. Agent’s and Lenders’ obligations under this Section 11.13 shall supersede all of their respective obligations under the Non-Disclosure Agreement.
Assignment of Rights. Borrower acknowledges and understands that Agent or Lenders may, subject to Section 11.7, sell and assign all or part of its interest hereunder and under the Loan Documents to any Person or entity (an “Assignee”). After such assignment the term “Agent” or “Lender” as used in the Loan Documents shall mean and include such Assignee, and such Assignee shall be vested with all rights, powers and remedies of Agent and Lenders hereunder with respect to the interest so assigned; but with respect to any such interest not so transferred, Agent and Lenders shall retain all rights, powers and remedies hereby given. No such assignment by Agent or Lenders shall relieve Borrower of any of its obligations hereunder. Lenders agree that in the event of any transfer by it of the promissory note(s) (if any), it will endorse thereon a notation as to the portion of the principal of the promissory note(s), which shall have been paid at the time of such transfer and as to the date to which interest shall have been last paid thereon.
Revival of Secured Obligations. This Agreement and the Loan Documents shall remain in full force and effect and continue to be effective if any petition is filed by or against Borrower for liquidation or reorganization, if Borrower becomes insolvent or makes an assignment for the benefit of creditors, if a receiver or trustee is appointed for all or any significant part of Borrower’s assets, or if any payment or transfer of Collateral is recovered from Agent or Lenders. The Loan Documents and the Secured Obligations and Collateral security shall continue to be effective, or shall be revived or reinstated, as the case may be, if at any time payment and performance of the Secured Obligations or any transfer of Collateral to Agent, or any part thereof is rescinded, avoided or avoidable, reduced in amount, or must otherwise be restored or returned by, or is recovered from, Agent, Lenders or by any obligee of the Secured Obligations, whether as a “voidable preference,” “fraudulent conveyance,” or otherwise, all as though such payment, performance, or transfer of Collateral had not been made. In the event that any payment, or any part thereof, is rescinded, reduced, avoided, avoidable, restored, returned, or recovered, the Loan Documents and the Secured Obligations shall be deemed, without any further action or documentation, to have been revived and reinstated except to the extent of the full, final, and indefeasible payment to Agent or Lenders in Cash.
Counterparts. This Agreement and any amendments, waivers, consents or supplements hereto may be executed in any number of counterparts, and by different parties hereto in separate counterparts, each of which when so delivered shall be deemed an original, but all of which counterparts shall constitute but one and the same instrument.
No Third-Party Beneficiaries. No provisions of the Loan Documents are intended, nor will be interpreted, to provide or create any third-party beneficiary rights or any other rights of any kind in any Person other than Agent, Lenders and Borrower unless specifically provided otherwise herein, and, except as otherwise so provided, all provisions of the Loan Documents will be personal and solely among Agent, Lenders and the Loan Parties party thereto.
Agency. Agent and each Lender hereby agree to the terms and conditions set forth on Addendum 3 attached hereto. Borrower acknowledges and agrees to the terms and conditions set forth on Addendum 3 attached hereto.
Publicity. None of the parties hereto nor any of its respective member businesses and Affiliates shall, without the other parties’ prior written consent (which shall not be unreasonably withheld or delayed), publicize or use (a) the other party’s name (including a brief description of the relationship among the parties hereto), logo or hyperlink to such other parties’ web site, separately or together, in written and oral presentations, advertising, promotional and marketing materials, client lists, public relations materials or on its web site (together, the “Publicity Materials”); (b) the names of officers of such other parties in the Publicity Materials; and (c) such other parties’ name, trademarks, servicemarks in any news or press release concerning such party; provided however, notwithstanding anything to the contrary herein, no such consent shall be required (i) to the extent necessary to comply with the requests of any regulators, legal requirements or laws applicable to such party, pursuant to any listing agreement with any national securities exchange (so long as such party provides prior notice to the other party hereto to the extent reasonably practicable) and (ii) to comply with Section 11.13.
Multiple Borrowers. Each Borrower hereby agrees to the terms and conditions set forth on Addendum 4 attached hereto.
[Reserved]
Managerial Assistance.Borrower acknowledges that Lender has elected to be regulated as a business development company under the 1940 Act, and as such is required to make available significant managerial assistance to its portfolio companies. Significant managerial assistance may include, but is not limited to, guidance and counsel concerning the portfolio company’s management, operations, business objectives and policies, arrangement of financing, management of relationships with financing sources, recruitment of management personnel and evaluation of acquisition and divestiture opportunities. Borrower hereby acknowledges and agrees that it may request such assistance at any time from Lender by contacting legal@htgc.com.
Electronic Execution of Certain Other Documents. The words “execution,” “execute”, “signed,” “signature,” and words of like import in or related to any document to be signed in connection with this Agreement and the transactions contemplated hereby (including without limitation assignments, assumptions, amendments, waivers and consents) shall be deemed to include electronic signatures, the electronic matching of assignment terms and contract formations on electronic platforms approved by Agent, or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the California Uniform Electronic Transaction Act, or any other similar state laws based on the Uniform Electronic Transactions Act.
(SIGNATURES TO FOLLOW)
IN WITNESS WHEREOF, Borrower, Agent and Lenders have duly executed and delivered this Loan and Security Agreement as of the day and year first above written.
Signature Page to Loan and Security Agreement
Accepted in Palo Alto, California:
| (xl) | Signature:_______________________ |
| (l) | Title:Authorized Signatory |
Signature Page to Loan and Security Agreement
Table of Addenda, Exhibits and Schedules
Addendum 1: Taxes; Increased Costs
Addendum 2: [Reserved]
Addendum 3:Agent and Lender Terms
Addendum 4:Multiple Borrower Terms
Exhibit A:Advance Request
Attachment to Advance Request
Exhibit B:Name, Locations, and Other Information for Borrower
Exhibit C:Borrower’s Patents, Trademarks, Copyrights and Licenses
Exhibit D:Borrower’s Deposit Accounts and Investment Accounts
Exhibit E:Compliance Certificate
Exhibit F:Joinder Agreement
Exhibit G: [Reserved]
Exhibit H:ACH Debit Authorization Agreement
Exhibit I:[Reserved]
Exhibit J-1: |
Form of U.S. Tax Compliance Certificate (For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes) |
Exhibit J-2: |
Form of U.S. Tax Compliance Certificate (For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes) |
Exhibit J-3: |
Form of U.S. Tax Compliance Certificate (For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes) |
Exhibit J-4: |
Form of U.S. Tax Compliance Certificate (For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes) |
Exhibit K: |
Performance Covenant Levels |
Schedule 1.1Commitments
Schedule 1AExisting Permitted Indebtedness
Schedule 1BExisting Permitted Investments
Schedule 1CExisting Permitted Liens
Schedule 1DDesignated Agreements
Schedule 5.3Consents, Etc.
Schedule 5.8Tax Matters
Schedule 5.9Intellectual Property Claims
Schedule 5.10Intellectual Property
Schedule 5.11Borrower Products
Schedule 5.13Employee Loans
Schedule 5.14Capitalization
Schedule 7.23Affiliate Transactions
ADDENDUM 1 to LOAN AND SECURITY AGREEMENT
TAXES; INCREASED COSTS
| 1. | Defined Terms. For purposes of this Addendum 1: |
| a. | “Connection Income Taxes” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes. |
| b. | “Excluded Taxes” means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient, (i) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (A) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (B) that are Other Connection Taxes, (ii) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Term Commitment pursuant to a law in effect on the date on which (A) such Lender acquires such interest in the Loan or Term Commitment or (B) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 2 or Section 4 of this Addendum 1, amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office, (iii) Taxes attributable to such Recipient’s failure to comply with Section 7 of this Addendum 1 and (iv) any withholding Taxes imposed under FATCA. |
| c. | “FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Code, and any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement, treaty or convention among Governmental Authorities and implementing such Sections of the Code. |
| d. | “Foreign Lender” means a Lender that is not a U.S. Person. |
| e. | “Indemnified Taxes” means (i) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of Borrower under any Loan Document and (ii) to the extent not otherwise described in clause (i), Other Taxes. |
| f. | “Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document). |
| g. | “Other Taxes” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or |
| perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment. |
| h. | “Recipient” means Agent or any Lender, as applicable. |
| i. | “Withholding Agent” means Borrower and Agent. |
| 2. | Payments Free of Taxes. Any and all payments by or on account of any obligation of Borrower under any Loan Document shall be made without deduction or withholding for any Taxes, except as required by applicable law. If any applicable law (as determined in the good faith discretion of an applicable Withholding Agent) requires the deduction or withholding of any Tax from any such payment by a Withholding Agent, then the applicable Withholding Agent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law and, if such Tax is an Indemnified Tax, then the sum payable by Borrower shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section 2 or Section 4 of this Addendum 1) the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made. |
| 3. | Payment of Other Taxes by Borrower. Borrower shall timely pay to the relevant Governmental Authority in accordance with applicable law, or at the option of Agent timely reimburse it for the payment of, any Other Taxes. |
| 4. | Indemnification by Borrower. Borrower shall indemnify each Recipient, within ten (10) days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under Section 2 of this Addendum 1 or this Section 4) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate describing the amount of such payment or liability delivered to Borrower by a Lender (with a copy to Agent), or by Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error. |
| 5. | Indemnification by Lenders. Each Lender shall severally indemnify Agent, within ten (10) days after demand therefor, for (a) any Indemnified Taxes attributable to such Lender (but only to the extent that Borrower has not already indemnified Agent for such Indemnified Taxes and without limiting the obligation of Borrower to do so), (b) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 11.8 of the Agreement relating to the maintenance of a Participant Register] and (c) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by Agent shall be conclusive absent manifest error. Each Lender hereby authorizes Agent to set off and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by Agent to Lenders from any other source against any amount due to Agent under this Section 5. |
| 6. | Evidence of Payments. As soon as practicable after any payment of Taxes by Borrower to a Governmental Authority pursuant to the provisions of this Addendum 1, Borrower shall deliver to |
| Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to Agent. |
| 7. | Status of Lenders. |
| a. | Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to Borrower and Agent, at the time or times reasonably requested by Borrower or Agent, such properly completed and executed documentation reasonably requested by Borrower or Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by Borrower or Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by Borrower or Agent as will enable Borrower or Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Sections 7(b)(i), 7(b)(ii) and 7(b)(iv) of this Addendum 1) shall not be required if in such Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender. |
| b. | Without limiting the generality of the foregoing, in the event that Borrower is a U.S. Person, |
| i. | any Lender that is a U.S. Person shall deliver to Borrower and Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of Borrower or Agent), executed copies of IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding tax; |
| ii. | any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to Borrower and Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of Borrower or Agent), whichever of the following is applicable: |
| A. | in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, executed copies of IRS Form W-8BEN or IRS Form W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN or IRS Form W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty; |
| B. | executed copies of IRS Form W-8ECI; |
| C. | in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit J-1 to the effect that such Foreign Lender |
| is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of Borrower within the meaning of Section 871(h)(3)(B) of the Code, or a “controlled foreign corporation” related to Borrower as described in Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y) executed copies of IRS Form W-8BEN or IRS Form W-8BEN-E; or |
| D. | to the extent a Foreign Lender is not the beneficial owner, executed copies of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, IRS Form W-8BEN-E, a U.S. Tax Compliance Certificate substantially in the form of Exhibit J-2 or Exhibit J-3, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit J-4 on behalf of each such direct and indirect partner; |
| iii. | any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to Borrower and Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of Borrower or Agent), executed copies of any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable law to permit Borrower or Agent to determine the withholding or deduction required to be made; and |
| iv. | if a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to Borrower and Agent at the time or times prescribed by law and at such time or times reasonably requested by Borrower or Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by Borrower or Agent as may be necessary for Borrower and Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount, if any, to deduct and withhold from such payment. Solely for purposes of this clause (iv), “FATCA” shall include any amendments made to FATCA after the date of this Agreement. |
| c. | Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify Borrower and Agent in writing of its legal inability to do so. |
| 8. | Treatment of Certain Refunds. If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to the provisions of this Addendum 1 (including by the payment of additional amounts pursuant to the provisions of this Addendum 1), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under the provisions of this Addendum 1 with |
| respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this Section 8 (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this Section 8, in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this Section 8 the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This Section 8 shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person. |
| 9. | Increased Costs. If any change in applicable law shall subject any Recipient to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses (ii) through (iv) of the definition of Excluded Taxes and (C) Connection Income Taxes) on its loans, loan principal, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto, and the result shall be to increase the cost to such Recipient of making, converting to, continuing or maintaining any 2025 Term Loan Advance or of maintaining its obligation to make any such Loan, or to reduce the amount of any sum received or receivable by such Recipient (whether of principal, interest or any other amount), then, upon the request of such Recipient, Borrower will pay to such Recipient such additional amount or amounts as will compensate such Recipient for such additional costs incurred or reduction suffered. |
| 10. | Survival. Each party’s obligations under the provisions of this Addendum 1 shall survive the resignation or replacement of Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Term Commitments and the repayment, satisfaction or discharge of all obligations under any Loan Document. |
| 11. | Tax Treatment. Each party hereto hereby acknowledges and agrees that the Term Loans are part of an investment unit within the meaning of Section 1273(c)(2) of the Code, which includes the Warrant (the “Term Loans Investment Unit”). For U.S. federal income tax purposes, Borrower, Agent and Lenders acknowledge that the issue price of the Term Loans Investment Unit shall be allocated between the Term Loans and the Warrant based on their relative fair market values as of the Closing Date, as required by Section 1273(c)(2)(B) of the Code and Treasury Regulations Section 1.1273-2(h)(1). Each of Borrower, Agent and Lenders agree (i) to use the agreed upon issue price and fair market value for U.S. federal income tax purposes with respect to the transactions contemplated hereby, and (ii) to prepare and file all Tax returns in a manner consistent with such allocation, and shall not to take any position that is inconsistent with the provision of this Section 11 on any Tax return or in any audit (unless otherwise required by a final determination by the IRS or a court of competent jurisdiction). |
ADDENDUM 3 to LOAN AND SECURITY AGREEMENT
Agent and Lender Terms
provided, however, that the Indemnified Lender shall not be reimbursed or indemnified for an Indemnified Payment, except to the extent that the Indemnified Lender paid more than its ratable share of such payment. All Indemnified Payments as set forth in this clause (e) to an Indemnified Lender are intended to be paid ratably by the other Lender.
| (i) | be subject to any fiduciary, advisory or other implied duties, regardless of whether any Default or any Event of Default has occurred and is continuing; |
| (ii) | have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that Agent is required to exercise as directed in writing by Lenders, provided that Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose Agent to liability or that is contrary to any Loan Document or applicable law; and |
| (iii) | except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and Agent shall not be liable for the failure to disclose, any information relating to Borrower or any of its Affiliates that is communicated to or obtained by any Person serving as Agent or any of its Affiliates in any capacity. |
ADDENDUM 4 to LOAN AND SECURITY AGREEMENT
Multiple Borrower Terms
SCHEDULE 1.1
COMMITMENTS
TRANCHE 1 COMMITMENT |
TRANCHE 2 COMMITMENT |
TOTAL COMMITMENT |
|||||
Hercules Capital, Inc. |
$30,625,000 |
$7,750,000 |
|||||
Hercules Private Global Venture Growth Fund I L.P. |
$4,375,000 |
$1,250,000 |
$0 |
$8,125,000 |
|||
Hercules Growth Lending Fund IV LP |
$0 |
$1,000,000 |
$0 |
||||
$0 |
$0 |
$0 |
$0 |
$1,500,000 |
$0 |
$1,500,000 |
|
TOTAL COMMITMENTS |
$35,000,000 |
$10,000,000 |
$20,000,000* |
*Tranche 33B Commitment shall be increaseddecreased by the aggregate amount of the Tranche 23A Commitment to the extent the Tranche 2 Milestone was not achieved by Juneadvanced through September 15, 2026.
**Tranche 45 Commitment shall be increased by (x) the aggregate amount of the Tranche 23B Commitment (minus the aggregate amount of the Tranche 3A Commitment advanced) to the extent the Tranche 23B Milestone was not achieved by JuneSeptember 15, 20262027 and (y) the aggregate amount of the Tranche 34 Commitment to the extent the Tranche 34 Milestone was not achieved by June 15, 20272028.
EXHIBIT 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Timothy T. Goodnow, Ph.D., certify that:
1. |
I have reviewed this quarterly report on Form 10-Q of Senseonics Holdings, Inc. (the “registrant”); |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. |
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. |
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: August 6, 2026
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/s/ Timothy T. Goodnow, Ph.D. |
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Timothy T. Goodnow, Ph.D. |
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President & Chief Executive Officer |
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(principal executive officer) |
EXHIBIT 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Rick Sullivan, certify that:
1. |
I have reviewed this quarterly report on Form 10-Q of Senseonics Holdings, Inc. (the “registrant”); |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. |
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. |
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: August 6, 2026
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/s/ Rick Sullivan |
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Rick Sullivan |
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Chief Financial Officer |
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(principal financial officer) |
EXHIBIT 32.1
CERTIFICATIONS OF
PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to the requirement set forth in Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350), Timothy T. Goodnow, Ph.D., President and Chief Executive Officer of Senseonics Holdings, Inc. (the “Company”), and Rick Sullivan, Chief Financial Officer of the Company, each hereby certifies that, to the best of his knowledge:
1. |
The Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2026 (the “Quarterly Report”), to which this Certification is attached as Exhibit 32.1, fully complies with the requirements of Section 13(a) or Section 15(d) of the Exchange Act, and |
2. |
The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
In Witness Whereof, the undersigned have set their hands hereto as of the 6th day of August 2026.
/s/ Timothy T. Goodnow, Ph.D. |
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/s/ Rick Sullivan |
Timothy T. Goodnow, Ph.D. |
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Rick Sullivan |
President & Chief Executive Officer |
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Chief Financial Officer |
(principal executive officer) |
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(principal financial officer) |
*This certification accompanies the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.