Quarterly report pursuant to Section 13 or 15(d)

Note 6 - Note Payable

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Note 6 - Note Payable
6 Months Ended
Jun. 30, 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 $148,000 and $289,000 during the three and six months ended June 30, 2021 which was added to the total outstanding principal loan amount. During the three and six months ended June 30, 2020, the Company paid interest in-kind of $130,000 and $256,000, respectively, which was added to the total outstanding principal loan amount. 

 

As of June 30, 2021, the Company was in compliance with all covenants. 

 

As of June 30, 2021 and December 31, 2020, $4,809,000 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 June 30, 2021, future minimum payments under the note payable were as follows (in thousands): 

 

Year Ending December 31,

       

2021 (remaining 6 months)

  $ -  

2022

    -  

2023

    5,992  

Total payments

    5,992  

Less: Amount representing interest

    (1,176 )

Present value of obligations

    4,816  

Less: Unamortized debt discount

    (7 )

Note payable, noncurrent portion

  $ 4,809