Quarterly report pursuant to Section 13 or 15(d)

Note 6 - Note Payable

v3.21.1
Note 6 - Note Payable
3 Months Ended
Mar. 31, 2021
Notes to Financial Statements  
Debt Disclosure [Text Block]
6.
Note Payable
 
On
May 22, 2017,
the Company entered into a Term Loan Agreement as amended on
December 12, 2017
and
November 29, 2018 (
collectively the
“2017
Loan Agreement”) with affiliates of CRG LP (“CRG”). The credit facility consists of
$20,000,000
drawn at closing and access to additional funding of up to an aggregate of
$10,000,000
for a total of
$30,000,000
available under the credit facility. On
December 29, 2017,
the Company accessed the remaining
$10,000,000
available under the credit facility.
 
On
November 12, 2019,
the Company and CRG amended the
2017
Loan Agreement (the “Amendment
No.
3”
). In connection with the amendment, the Company converted approximately
$28,981,000
of the outstanding principal amount under the term loan plus accrued interest, the prepayment premium and the back-end facility fee for an aggregate amount of converted debt obligations of approximately
$31,300,000.
The debt obligations converted into
31,300
shares of the newly authorized Series B convertible preferred stock and warrants to purchase up to
989,379
shares of common stock were also issued. The warrants have a term of
5
years and an exercise price equal to
120%
of the Series convertible B preferred stock conversion price of
$15.30
or
$18.36
per share. (See Note
11
– Common Stock.) CRG entered into a
one
year lock up agreement on all securities that it holds.
 
The Amendment
No.
3
to the
2017
Loan Agreement addressed, among other things:
 
 
repayment provisions were amended such that repayment is permitted only with, or after, the redemption in full of the Series B convertible preferred stock issued to CRG;
 
 
the interest only payment period and the period during which the Company
may
elect to pay the full interest in PIK interest payments was extended through the
23rd
date after the
first
payment date. Pursuant to the amendment, CRG shall consent to the payment of such interest in the form of PIK loans, provided that (i) as of such payment date,
no
default shall have occurred and be continuing, and (ii) the principal amount of each PIK loan shall accrue interest in accordance with the provisions of the
2017
Loan Agreement;
 
 
modified certain of the covenants, including (i) to permit issuance of the Series B convertible preferred stock and any preferred stock issued in the equity financing and the exercise and performance by the Company of its rights and obligations in connection with such CRG preferred stock and any preferred stock issued in the equity financing, (ii) eliminate the Company's ability to enter into permitted acquisitions, (iii) further restrict the incurrence of additional indebtedness and removal of the equity cure right, and (iv) eliminate the minimum revenue requirement; and
 
 
the back-end facility fee on the aggregate remaining principal balance on the term loan shall be increased from
5%
to
25%.
 
Pursuant to the Amendment
No.
3,
the Company paid interest in-kind of
$141,000
and
$126,000
during the
three
months ended
March 31, 2021
and
2020,
respectively, which was added to the total outstanding principal loan amount. 
 
As of
March 31, 2021,
the Company was in compliance with all covenants. 
 
As of
March 31, 2021
and
December 31, 2020,
$4,660,000
and
$4,518,000,
respectively, was recorded on the condensed consolidated balance sheets, as note payable, noncurrent portion, which is net of the remaining unamortized debt discount. The term loan has a maturity date of
March 31, 2023.
 
As of
March 31, 2021,
future minimum payments under the note payable were as follows (in thousands): 
 
 
Year Ending December 31,
 
 
 
 
2021 (remaining 9 months)
  $
-
 
2022
   
-
 
2023
   
5,992
 
Total payments
   
5,992
 
Less: Amount representing interest
   
(1,324
)
Present value of obligations
   
4,668
 
Less: Unamortized debt discount
   
(8
)
Note payable, noncurrent portion
  $
4,660