Debts

12 Months Ended

Dec. 31, 2020

Development Loans

On April 4, 2018, the Company entered into a Loan and Security Agreement (“LSA”) and Development and License Agreement (“DLA”) with Nexperia. The LSA provided for term loans in an aggregate principal amount of up to $15.0 million, which term loans were available in tranches (Tranche A, Tranche B and Tranche B-1) and subject to the satisfaction of specified conditions. The Tranche A Loan of $5.0 million initially was scheduled to mature on the earlier of the date a specified report is required to be delivered under the DLA or March 31, 2020. On

April 8, 2020, the maturity of the Tranche A loan was extended to April 30, 2020 and, on April 28, 2020, the maturity of the Tranche A Loan was further extended to June 30, 2020. On June 29, 2020, the Tranche A Loan of $5.0 million was satisfied in full when the Company transferred its Gen-4 technology development to Nexperia. The Tranche B Loan of $8.0 million and Tranche B-1 Loan of $2.0 million mature on the earlier of the date a specified report is required to be delivered under the DLA or March 31, 2021, subject to extension as provided in the LSA. See Note 3 - Nexperia Arrangement.

As of December 31, 2020 and 2019, aggregate principal amount of term loans outstanding under the LSA were $10.0 million and $15 million, respectively.

Revolving Credit Facility

The LSA also provided a $10.0 million revolving loan (Tranche C Loan) maturing at the earlier of (i) April 3, 2021, and (ii) the date a Change of Control (as defined in the LSA) of the Company occurs. Interest payable by the Company accrues on the outstanding principal amount of the loans during such period at a rate of 6% per annum. The credit facility is secured against certain of our U.S. patents not relating to MOCVD or epiwafer technology. See Note 3 - Nexperia Arrangement.

The Tranche C Loan is recorded based on principal in the amount of $10.0 million and accrued interest (6% interest per annum). The Company recorded interest expense of $610 thousand and $608 thousand for the years ended December 31, 2020 and 2019, respectively. The Company paid interest expense of $915 thousand and $496 thousand for the years ended December 31, 2020 and 2019. As of December 31, 2020 and 2019, the total balance of the revolving credit facility was $10.2 million and $10.5 million, respectively.

Promissory Note

The Company’s promissory note obligation at December 31, 2020 and 2019 consists of the following (in thousands):


			Stated Value at December 31,
	Interest Rate	Due Date	2020		2019
Yaskawa Note	1.00%	September 2022	$	15,486	$	15,336

Pursuant to ASC 825-10-15-4, the Company elected to apply the fair value option for the promissory note. As of December 31, 2020 and 2019, the Company determined the fair value for the note, as compared to the face value, including accrued interest, as follows (in thousands):


	Fair Value at December 31,
	2020		2019
Yaskawa Note	$	15,392	$	16,169

Fair value of promissory note decreased $927 thousand and increased $167 thousand for the years ended December 31, 2020 and 2019, respectively.

In October 2017, the Company issued an unsecured subordinated convertible promissory note to Yaskawa Electric Corporation (the “Yaskawa Note”) for $15.0 million. The stated interest rate of the Yaskawa Note is 1.0%, and principal plus interest is due on the earlier of September 30, 2022, or the date of the occurrence of an Event of Default, Change of Control or an Initial Public Offering (all terms as defined in the Yaskawa Note). In connection with the Merger, the Yaskawa Note was amended to be convertible at the option of the holder into a maximum of 3,076,171 shares of our common stock at a conversion price of $5.12 per share.

In connection with its promissory note obligation, the Company recorded interest expense of $150 thousand for each of the years ended December 31, 2020 and 2019. In accordance with the terms of the promissory note, interest is added to the principal balance and is reflected in the carrying value on the consolidated balance sheet. As of December 31, 2020 and 2019, accrued interest on the promissory note was $486 thousand and $336 thousand, respectively.

In December 2020, we entered into a cooperation and development agreement with Yaskawa, pursuant to which Yaskawa agreed to provide $4.0 million over approximately three years to fund development activities related to industrial power conversion applications, with an initial focus on servo motor drive applications. Yaskawa provided $1.0 million of this $4.0 million commitment in December 2020. The Company evaluated and concluded that the deliverables are the same and nature of the services to be provided to Yaskawa will be consistent over the period of approximately three years. Accordingly, the Company recognized $333 thousand as revenue during the year ended December 31, 2020. As of December 31, 2020, $667 thousand is included in deferred revenue on the consolidated balance sheet.

As of December 31, 2020, the scheduled maturity on the development loans, revolving credit facility and promissory note was as follows (in thousands):


Year Ending December 31,	Amount
2021	$	20,153
2022	15,748
Thereafter	—
Total	$	35,901