Quarterly report pursuant to Section 13 or 15(d)

Debt

v3.19.1
Debt
3 Months Ended
Mar. 31, 2019
Debt Disclosure [Abstract]  
DEBT

4. DEBT

 

Debt consists of the following:

  

    March 31,
2019
    December 31,
2018
 
Marathon Tranche One Loan, due December 31, 2021, interest only quarterly payments, variable interest rate of 10.4% as of March 31, 2019 (discount is based on warrant valuation of approximately 9.7%)   $ 10,000,000     $ 10,000,000  
Marathon Tranche Two Loan, due December 31, 2021, interest only quarterly payments, variable interest rate of 10.4% as of March 31, 2019 (discount is based on warrant valuation of approximately 9.7%)     4,104,140       -  
Marathon Credit Agreement unamortized discount and issuance costs     (1,558,871 )     (1,687,921 )
Net Marathon Credit Agreement     12,545,269       8,312,079  
Less current portion     4,104,140       -  
Long-term debt   $ 8,441,129     $ 8,312,079  

   

On December 31, 2018, the Company entered into a Credit Agreement (the “Credit Agreement”), among the Company, as borrower, Marathon Asset Management, LP, on behalf of certain entities it manages, as lenders (collectively, with their permitted successors and assignees, the “Lenders”), and Wilmington Trust, National Association, as the agent (“Wilmington”).  The Credit Agreement provided the Company with a $10 million tranche of term loans (the “Tranche One Loans”) which may not be re-borrowed following repayment and (ii) a $25 million tranche of revolving loans which may be re-borrowed following repayment (the “Tranche Two Loans” together with the Tranche One Loans, the “Loans”).

   

In accordance with the Credit Agreement, the Company issued each Lender a Common Stock Purchase Warrant to purchase, in the aggregate, 8,053,390 shares of common stock of the Company at an exercise price of $1.25 per share exercisable in cash only for a period of three years and then for cash or cashless thereafter (collectively, the “Initial Warrants”). Until the later of the repayment of all obligations owed to the Lenders or two years from the closing date, the Company will be required to issue additional Common Stock Purchase Warrants (the “Additional Warrants”) to the Lenders equal to 10%, in the aggregate, of any additional equity issuances, subject to certain exceptions, on substantially the same terms and conditions of the Initial Warrants, except that (i) the applicable expiration date thereof shall be five years from the issuance date of the applicable warrant, (ii) the initial exercise price shall be a price equal to the price per share of common stock used in the relevant issuance multiplied by 110% and (iii) the holder shall be entitled to exercise the warrant on a cashless exercise at any time the warrant is exercisable.

 

Principal amounts:   At
March 31,
2019
 
Tranche One - Principal   $ 10,000,000  
Tranche Two – Current amount drawn     4,104,140  
Unamortized debt discount and issuance costs (1)     (1,558,871 )
Net debt carrying amount   $ 12,545,269  
Carrying amount of warrant the liability component (2)   $ 1,295,637  

  

(1) Includes the unamortized portion of the initial warrant liability of $965,747 and issuance costs of $722,174.

 

  (2) Includes marked to market liability of initial Marathon warrant liability and subsequent warrant issuances.