BillionToOne, Inc.BLLN
BillionToOne, Inc. Debt Disclosure
Convertible Notes
In September 2022, the Company entered into a Note Purchase Agreement for unsecured Convertible Promissory Notes (the “Notes”) to several note holders (the “Note Holders”) with a principal sum of $30.0 million together with interest thereon from the date of the Notes. The Notes accrue interest at a rate of 8.0% per annum, simple interest. The Notes were scheduled to mature on September 20, 2024, and the Company may not make prepayments without written consent of the majority Note Holders.
Due to the presence of certain embedded derivatives within the Notes, the Company elected to account for the Notes using the fair value option and changes in fair value related to the Notes are recorded in other expense, net in the Company’s statements of operations and comprehensive income (loss). Changes in fair value attributable to credit risk were immaterial to the financial statements through their conversion date. Inputs for fair value were determined by evaluating the probability of various conversion scenarios and applicable market interest rates.
During May 2024, concurrent with the issuance of Series D redeemable convertible preferred stock, and pursuant to negotiation with the Note Holders, the Company and Note Holders agreed to settle the Notes through the issuance of Series C-1 redeemable convertible preferred stock to the Note Holders instead of Series D redeemable convertible preferred stock. The Notes converted into an aggregate of 1,726,823 shares of Series C-1 redeemable convertible preferred stock at a conversion price of approximately $19.6143 per share. The change in terms of the Notes was accounted for as a debt extinguishment as the settlement was not pursuant to the original conversion terms. Immediately prior to the extinguishment, the Company recorded a mark-to-market adjustment for the Notes resulting in a loss of $0.8 million which was recorded to change in fair value of convertible notes in the Company’s statements of operations and comprehensive income (loss). Upon extinguishment, the Company derecognized the Notes on the balance sheets at their fair value immediately prior to the extinguishment of $48.5 million. The difference of $8.6 million between the fair market value of the Series C-1 redeemable convertible preferred shares received by the Note Holders of $39.9 million and the fair value of the Notes immediately prior to the extinguishment was recorded as a gain on debt extinguishment in the Company’s statements of operations and comprehensive income (loss).
The Notes were subordinated in right of payment to all indebtedness between the Company and Western Alliance Bank (“WAB”). The Note Holders agreed, that as long as any debt remains outstanding with WAB or WAB has obligations to make additional credit extensions to the Company, the Note Holders would not have received any payment other than a conversion of the Notes into equity securities, unless otherwise agreed by WAB in writing. The priority to WAB excluded payments in cash, including interest, but did not preclude conversion of the Notes and related interest in shares. As the Note was extinguished during 2024, no payments of cash were made to the Note Holders in principal or interest for the Notes.
Long-term Debt Oberland Note Purchase Agreement
In August 2024, the Company entered into a note purchase agreement (as amended from time to time, the “2024 Notes”) with BWCB SA LLC, an entity affiliated with Oberland Capital Management, LLC (“Oberland Capital”), which provided the Company with up to four tranches of capital advances totaling up to $140.0 million. The advanced principal accrues interest at a rate of 8.0% per annum. The first tranche of $50.0 million was advanced on August 5, 2024, with a Maturity Date on the seventh anniversary of the first purchase date (August 5, 2031). The first tranche requires interest-only payments through August 5, 2031, revenue participation payments, and a lump sum payment due on August 5, 2031 consisting of outstanding principal plus an amount that results in a 10% internal rate of return over the seven year term of the loan.
The second tranche of up to $35.0 million in principal was available at the Company’s option at any time prior to September 30, 2025 provided that the trailing six-month worldwide net revenue of the Company was at least $80.0 million. The Company did not elect the option to draw on the second tranche.
The Company is required to sell the third tranche of notes in the principal amount of $30.0 million prior to March 31, 2026 as the Company has achieved the thresholds triggering this tranche during the year ended December 31, 2025. The thresholds triggering this tranche are trailing six-month revenue of at least $112.5 million and a trailing six-month Gross Margin of at least 45%. Gross Margin is defined as (i) net revenue minus cost of goods sold divided by (ii) net revenue, expressed as a percentage. The terms of the third tranche are identical to those of the first $50.0 million tranche.
The fourth tranche of up to $25.0 million in principal is available at the mutual agreement of the Company and Oberland Capital at any time prior to March 31, 2026.
The Company has the option at any time to prepay all of the then-outstanding notes, and Oberland Capital has the option to redeem the notes upon (i) a change in control of the Company, (ii) an event of default, or (iii) the maturity date. The redemption price of the note shall equal to the following: (1) 130% of principal amounts of notes if the payment is made within 24 months of issuance; (2) 145% of principal amounts of notes if the payment is made within 36 months of issuance; (3) if the payment is made within 48 months, an amount that would generate an internal rate of return (“IRR”) for the purchasers of 12.25%; (4) if the payment is made within 60 months of issuance, an amount that would generate an IRR for the purchasers of 11.75%; (5) if the payment is made thereafter but before maturity, an amount that would generate an IRR for the purchasers of 11.25%; and (6) if the payment is made at maturity, an amount that would generate an IRR for the purchasers of 10.0%.
Under the terms of the 2024 Notes, on the last day of each fiscal quarter commencing with the fiscal quarter ended March 31, 2025, excluding any fiscal quarter with respect to which the Company’s aggregate cash and cash equivalents is greater than 1.1 times the aggregate principal amount of the 2024 Notes issued (the “Liquidity Condition”) at all times during such fiscal quarter, the Company is required to achieve minimum thresholds for both trailing six month revenues and trailing six month gross margin. If the Liquidity Condition is not satisfied, the Company is required to have trailing six-month Net Revenue of not less than the amount shown for each applicable period in the table below, as well as a trailing six-month Gross Margin of not less than 30%, each as defined in the 2024 Notes. The Company was in compliance with all material financial covenants as of December 31, 2025.
| Period | Minimum Trailing Six-Month Net Revenue Threshold (in millions) | ||||
| Q1 2025 | $ | 56.1 | |||
| Q2 2025 | $ | 65.6 | |||
| Q3 2025 | $ | 74.8 | |||
| Q4 2025 | $ | 82.8 | |||
| Q1 2026 | $ | 87.2 | |||
| Q2 2026 | $ | 101.8 | |||
| Q3 2026 | $ | 117.2 | |||
| Q4 2026 | $ | 120.0 | |||
| Thereafter | $ | 120.0 | |||
The agreement also contains a revenue participation provision, under which, for any fiscal quarter, 0.01% of net revenue for such fiscal quarter (up to $100.0 million of net revenue for each fiscal year) per each $1.0 million principal amount of the notes outstanding will be payable to Oberland Capital. Amounts paid under the revenue participation agreement during the years ended December 31, 2025 and 2024 were interest payments on the debt. The revenue participation payments are additional financing costs of the loan and are included in the computation of the IRR measurements described above. Beginning with the fiscal year beginning January 1, 2025, the Company was required to make revenue participation payments under the agreement. As of December 31, 2025, the Company has made revenue participation payments of $0.5 million.
The Company elected to account for the 2024 Notes using the fair value option and changes in fair value related to the 2024 Notes are recorded in change in fair value of term loan on the Company’s statements of
operations and comprehensive income (loss). Changes in fair value caused by instrument-specific credit risk are presented separately in other comprehensive income (loss). The Company also elected to present interest incurred on the 2024 Notes in the change in fair value of term loan; interest expense under the Oberland Capital arrangement was $4.1 million and $1.6 million for the years ended December 31, 2025 and 2024, respectively.
The Company’s total indebtedness as of December 31, 2025 and 2024 is as follows (in thousands):
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Long-term debt | $ | 57,226 | $ | 51,481 | |||||||
| Long-term debt, net | 57,226 | 51,481 | |||||||||
| Less: current portion | - | - | |||||||||
| Long-term debt, noncurrent portion | $ | 57,226 | $ | 51,481 | |||||||
Future principal payments of the Company’s long-term debt as of December 31, 2025 and 2024 are $50.0 million and are due during the year ending December 31, 2031. The term loan advances are secured by a lien on the Company’s assets.
Redeemable Convertible Preferred Stock Warrants
The Company has issued Comerica Bank a warrant to purchase 9,660 Series A-6 redeemable convertible preferred shares at an exercise price of $2.59 per share in connection with a former loan and security agreement entered into in March 2020. The warrants are exercisable until March 15, 2030. The warrants are classified as other non-current liabilities on the Company’s balance sheet as of December 31, 2024. In connection with the IPO, the redeemable convertible preferred stock warrants became warrants to purchase common stock based on the terms of the loan and security agreement. In November 2025, the warrants were exercised, resulting in the issuance of 9,660 shares of Class A common stock.
Western Alliance Bank Debt
In October 2021, the Company entered into a loan and security agreement (the “2021 LSA”) with WAB, which provided the Company with three tranches of capital advances totaling $15.0 million. The loan was collateralized by all property of the Company other than its Intellectual Property (“IP”). The advanced principal accrued interest based on the floating prime rate per annum. The first tranche of $5.0 million was advanced on October 12, 2021 and the second tranche was advanced on December 17, 2021, both with a maturity date of October 12, 2025 and interest-only payments, at the floating rate, through May 1, 2023 and 30 equal monthly payments thereafter, of principal and interest. The Company drew down the third tranche on January 3, 2022 and elected to extend the interest only period by an additional 6 months followed by 24 months of amortization. The loans include a final payment of 3.75% of the advanced amount, or $562,500, due upon the earlier of maturity or termination of the loan. The final payment was accreted to interest expense over the term of the loan. The term loan advances are secured by a lien on the Company’s assets.
In July 2022, the Company amended the 2021 LSA with WAB, such that WAB made four tranches of capital advances available to the Company for an aggregate amount up to $35.0 million (“2022 LSA Amendment”).
Under the 2022 LSA Amendment, the first tranche of $20.0 million in principal was advanced on July 22, 2022 and was used to pay off the existing $15.0 million in principal outstanding to WAB under the 2021 LSA, resulting in net proceeds to the Company of $5.0 million. The second tranche of $5.0 million in principal was advanced on January 25, 2023 and the third tranche of $5.0 million in principal was advanced on July 7, 2023. The fourth tranche of $5.0 million was advanced on October 11, 2023. The term loans had a maturity date of July 1, 2027. The term loans were interest-only through July 31, 2025, followed by 24 equal payments of principal plus interest. The loans required a final payment of 4.25% of the total advanced amount, which resulted in an exit fee liability of $1.5 million payable at the maturity of the debt. The final payment was accreted to the debt balance and recognized as interest expense over the term of the loan.
The term loan advances were secured by a lien on the Company’s assets. The Company was subject to certain financial and reporting covenants, including a requirement for the Company to meet certain test volumes, measured quarterly on a trailing two quarter basis.
During August 2024, the Company elected to prepay the outstanding amount of the term loans of $35.0 million in principal and the $1.5 million exit fee that was due upon early loan payoff. The Company recognized a loss on the extinguishment of debt of $1.3 million in the statements of operations and comprehensive income (loss). The loss on extinguishment consisted of incremental expense of $0.8 million unaccreted exit fee liability, $0.3 million unamortized debt issuance costs and a $0.2 million prepayment fee assessed by the bank.
Common Stock Warrants
In connection with the 2021 LSA, the Company issued to WAB warrants to purchase shares of the Company’s common stock at an exercise price of $2.80 per share. The number of underlying shares of the warrants was initially 53,571 and was increased to 80,357 upon the funding of the loans in January 2022. The warrants will expire if unexercised on October 12, 2031. Upon the occurrence of an acquisition of the Company, if the acquiror shall not have assumed the warrants, WAB shall have the right to put the warrants back to the Company for cash equal to the greater of (x) $450,000 or (y) the value of the aggregate consideration payable to WAB had WAB exercised the warrants immediately prior to exercise such put right.
In connection with the 2022 LSA Amendment, the Company issued up to 41,209 warrants for common stock at an exercise price of $10.92 per share to WAB. 30,907 warrants were exercisable upon execution of the agreement; the remaining warrants became exercisable as the Company made additional draws on the 2022 LSA Amendment. As of December 31, 2023, all of the warrants were exercisable. The warrants will expire if unexercised on July 22, 2032. Upon the occurrence of an acquisition of the Company, if the acquiror shall not have assumed the warrants, WAB shall have the right to put the warrants back to the Company for cash equal to the greater of (x) $450,000 or (y) the value of the aggregate consideration payable to WAB had WAB exercised the warrants immediately prior to exercise such put right.
All the warrants issued to WAB are puttable warrants and thus are liability classified. The warrants were initially recognized at fair value, with any subsequent changes in fair value to be recorded in other expense, net in the statements of operations and comprehensive income (loss) (See Note 3).
The issuance date fair value of the warrants was determined using the option pricing model, with the following assumptions (in thousands, except percentages):
| 2021 LSA | 2022 LSA Amendment | ||||||||||
| Grant date | October 12, 2021 | July 22, 2022 | |||||||||
| Dividend yield | 0 | % | 0 | % | |||||||
| Risk-free interest rate | 1.59 | % | 2.77 | % | |||||||
| Expected volatility | 70 | % | 78 | % | |||||||
| Expected term (in years) | 10.00 | 10.00 | |||||||||
| Total grant date fair value | $ | 170 | $ | 312 | |||||||
The fair value of the warrants as of their respective issuance dates were recorded as a debt discount that is being amortized to interest expense over the term of the loan.
In connection with the Company’s IPO, WAB entered into a lock-up agreement with the Company, pursuant to which WAB may not sell, transfer, or otherwise dispose of the underlying shares of Class A common stock for a period of 180 days following the date that the Company files its final prospectus.
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About Debt Disclosures
Debt disclosures detail a company's borrowing structure — the types of instruments, interest rates, maturity schedule, and covenant restrictions that define its financial obligations and flexibility. This section is essential for assessing refinancing risk, interest rate exposure, and the margin of safety against financial distress.
Key signals: the maturity schedule reveals concentration risk — large maturities within 1-2 years during tight credit markets can force dilutive refinancing or asset sales. Compare the fair value of debt against carrying amount to gauge whether the market views the company's credit risk differently than the balance sheet suggests. Watch covenant compliance disclosures for tightening cushions, especially leverage and interest coverage ratios. Variable-rate debt exposure quantifies sensitivity to interest rate changes. Secured versus unsecured mix affects recovery rates and future borrowing capacity. Compare net debt-to-EBITDA against industry peers and covenant limits to assess financial health.