(8) Debt and capital lease obligations

Term Loan Agreements

In September 2019, the Company entered into a Loan and Security Agreement with Innovatus Life Sciences Lending Fund I, LP (the “Lender”), under which the Lender agreed to make a term loan to the Company in an aggregate principal amount of $25,000 (the “Innovatus Term Loan”). Amounts borrowed under the Loan and Security Agreement have an initial maturity date of September 1, 2024 and accrue interest at a floating annual rate equal to the sum of (a) the greater of 5.25% or the prime rate and (b) 3.75%. For each of the first 24 months, the Company will be paying 7.25% as cash interest and deferring 1.75% of interest until October 1, 2022. Principal payments (including the amortization of the accrued interest) of $1,079 per month commence on October 1, 2022. A final payment fee of $750 is due upon the earlier to occur of the maturity date or prepayment of such borrowings. For the three months ended March 31, 2021 and 2020, the Company recorded $0 and $31, respectively, related to the amortization of the final payment fee associated with the Innovatus Term Loan.

In October 2020, the Company entered into a new debt financing arrangement with Midcap Trust (the “Term Loan”), for a $37,500 credit facility, consisting of a senior, secured term loan to refinance all existing indebtedness with Innovatus. The Company received $32,500 in aggregate proceeds as a result of the debt financing, and the remaining $5,000 is available to be drawn from March 31, 2021, through June 30, 2021. In connection with its entry into the Term Loan, in October 2020, the Company paid off the full balance of the Innovatus Term Loan of $26,882, including the principal, accrued interest, prepayment fee, and final fee.

The term of the Term Loan is interest only for 36 months followed by 24‑months of straight-line amortization. Interest on the outstanding balance of the Term Loan shall be payable monthly in arrears at an annual rate of one-month LIBOR plus 6.35%, subject to a LIBOR floor of 1.50%. The interest rate was 7.85% at March 31, 2021. At the time of final payment under the Term Loan, the Company is required to pay Midcap a final payment fee of 5.00% of the amount borrowed under the Term Loan. If the Term Loan is prepaid prior to the end of the Term, the Company shall pay to Midcap a fee as compensation for the costs of being prepared to make funds available in an amount determined by multiplying the amount being prepaid by (i) three percent (3.00%) in the first year, two percent, (2.00%) in the second year and one percent (1.00%) in the third year and thereafter. A final payment fee of $1,625 is due upon the earlier to occur of the maturity date or prepayment of such borrowings. For the three ended March 31, 2021, the Company recorded $81 related to the amortization of the final payment fee associated with the Term Loan.

Paycheck Protection Program Loan

In April 2020, the Company received a $2,476 small business loan under the Payroll Protection Program, part of the Coronavirus Aid, Relief and Economic Security Act (“CARES ACT”). In December 2020, we applied for forgiveness of the full loan amount. Any such forgiveness of indebtedness, in accordance with the CARES Act, does not give rise to federal taxable income. If not forgiven, the note bears interest at a rate of 1.00% and payments are scheduled to begin the latter of March 2021, or upon response by the SBA regarding our forgiveness application.

The PPP, established as part of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), provides for loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business. Such loan provides for customary events of default, including, among others, those relating to failure to make payment when due and breaches of representations. The Company may prepay the principal of the loan at any time without incurring any prepayment charges. The loan is subject to all the terms and conditions applicable under the PPP and is subject to review by the Small Business Association (the “SBA”) for compliance with program requirements, including the Company’s certification that the current economic uncertainty made the PPP loan request necessary to support ongoing operations.

In June 2020, the Payroll Protection Program Flexibility Act (“PPPFA”) was signed into law adjusting certain key terms of loans issued under the PPP. In accordance with the PPPFA, the initial deferral period may be extended from six to up to ten months and the loan maturity may be extended from two to five years. The PPPFA also provided for certain other changes, including the extent to which the loan may be forgiven.

The loan’s principal and accrued interest are forgivable to the extent that the proceeds are used for eligible purposes, subject to certain limitations, and that the Company maintains its payroll levels over a twenty-four-week period following the loan date. The loan forgiveness amount may be reduced if the Company terminates employees or reduces salaries during the twenty -four-week period. The Company believes that it has used the proceeds for eligible purposes consistent with the provisions of the PPPFA. However, there can be no assurance that any portion of the loan will be forgiven.

As the legal form of the loan is a debt obligation, the Company is accounting for it as debt under Accounting Standards Codification (ASC) 470, Debt and recorded a short-term debt obligation of $1,200, and a long-term debt obligation of $1,300 in the consolidated balance sheet as of March 31, 2021. If any amount of the loan is ultimately forgiven, income from the extinguishment of debt would be recognized as a gain on loan extinguishment in the consolidated statement of operations.

Debt consists of the following:


	March 31,		December 31,
	2021		2020
Midcap Trust Term Loan		32,500		32,500
PPP Loan		2,476		2,476
Total debt	$	34,976	$	34,976
Unamortized debt discount		(489)		(515)
Accretion of final fee		139		59
Total debt, net	$	34,626	$	34,520
Less amount included as short-term	$	(1,238)	$	(1,032)
Long-term debt, net	$	33,388	$	33,488

As of March 31, 2021, future principal payments due under the Midcap Trust Term Loan and PPP Loan, excluding the $1,625 final payment fee, are as follows:


	Midcap Trust
Year ended:	Term Loan		PPP Loan
December 31, 2021	$	—	$	1,032
December 31, 2022	$	—	$	1,238
December 31, 2023	$	2,708	$	206
December 31, 2024	$	16,250	$	—
December 31, 2025	$	13,542	$	—
Total minimum principal payments	$	32,500	$	2,476

As a condition precedent to the Innovatus Term Loan, the Company also sold shares of Series D Preferred Stock at the same terms provided to the other investors as described in Note 9 for an aggregate amount of $2,000 to the Lender as part of the Series D Financing. Additionally, as a condition precedent to the Innovatus Term Loan, the Company agreed to receive at least $25,000 in net proceeds from the Series D Financing by December 2019, which the Company completed on September 27, 2019, as discussed below. In connection with the Loan and Security Agreement, the Company also issued the Lender a warrant to purchase 368,779 additional shares of Series D Preferred Stock (the “Series D Warrant”) at a purchase price of $ 1.53 per share. The expiration date of the warrant is September 27, 2029. The holder may at any time and from time to time exercise this Warrant, in whole or in part, and on any exercise of the Warrant, the Holder may elect to receive Shares equal to the value of the Warrant or portion. The initial warrant value of $192 was recorded as a debt discount and is being amortized over the term of the Innovatus Term Loan. See Note 4 for valuation of Warrant.

For the three months ended March 31, 2021, the Company entered into two leases for staining equipment computer equipment and furniture which are classified as capital lease obligations in the consolidated balance sheets as of March 31, 2021. In 2020, the Company entered into a lease for staining equipment which is classified as a capital lease in the consolidated balance sheets. As of March 31, 2021 and December 31, 2020 and 2019, the current portion of the lease obligations totaled $277 and $197, respectively, and the long-term portion totaled $399 and $277, respectively.