Line of Credit - Related Party

12 Months Ended

Dec. 31, 2021

Line of Credit - Related Party [Member]

Debt Instrument [Line Items]

Line of Credit - Related Party

10. Line of Credit – Related Party

The Company had a $10 million Line of Credit arrangement with Richard E. Uihlein, Chairman of Board of Directors and a shareholder pursuant to an agreement established in December, 2017 and amended in December, 2018 and January, 2019.  The line of credit was terminated in conjunction with the December 2021 Convertible Note Payable (see Note   ). Under the arrangement the Company was permitted borrow up to $10 million from Mr. Uihlein on an unsecured basis and with any borrowings bearing interest at the Applicable Federal Rate for short terms loans published by the Internal Revenue Service (0.13% in June 2021). Borrowings were to be made through December 31, 2021 with repayment due on December 31, 2022. In connection with the Line of Credit agreement, the Company issued to Mr. Uihlein warrants to purchase 1 million shares of the Company’s common stock for $5 per share. Half of the warrants vested at closing of the Line of Credit, and the other half would have vested ratably with borrowings under the agreement but expired with the termination of the Line of Credit. The 500,000 warrants that vested at closing were exercised in May 2019 for cash proceeds to the Company of $2.5 million. There were no borrowings under the Line of Credit prior to its termination in December 2021.

The fair value of the 500,000 warrants vested at closing in December 2017 was $696,000 at the date of issuance based on the following assumptions: an expected life of 7 years, volatility of 98%, risk free interest rate of 2.05% and zero dividends. The fair value of the vested warrants was recorded in other current assets and other assets (non-current) as a deferred financing cost and were to be amortized on a straight-line basis from December 19, 2017 through December 31, 2019. The remaining unamortized balance of the deferred financing cost on January 11, 2019 was adjusted to be recorded as expense on a straight-line basis through December 31, 2022.  Upon termination of the Line of Credit in December 2021, all remaining unamortized costs were expensed.  Amortization for the year ended December 31, 2021 and 2020 of $174,000 and $87,000, respectively, was recorded as interest expense.