Debts

3 Months Ended

Mar. 31, 2021

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. On March 1, 2021, the maturity of the Tranche B Loan of $8.0 million and Tranche B-1 Loan of $2.0 million was extended to June 30, 2021. On May 18, 2021, Tranche B-1 Loan of $2.0 million was converted into a Tranche C-1 Loan, which Tranche C-1 Loan has the same terms and conditions as the existing Tranche C Loan. See Note 3 - Nexperia Arrangement and Note 18 - Subsequent Events.

As of March 31, 2021, December 31, 2020 and December 31, 2019, aggregate principal amount of term loans outstanding under the LSA were $10.0 million, $10.0 million and $15.0 million, respectively.

Revolving Credit Facility

The LSA also provided a $10.0 million revolving loan (Tranche C Loan) that was scheduled to mature 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. On March 1, 2021, the maturity of the Tranche C Loan of $10.0 million was extended to May 18, 2021. On May 18, 2021, the maturity of the Tranche C Loan was extended to the earlier of April 4, 2023 and the occurrence of specified change of control events. See Note 3 - Nexperia Arrangement and Note 18 - Subsequent Events.

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 $150 thousand and $152 thousand for the three months ended March 31, 2021 and 2020 (unaudited), respectively, and $610 thousand and $608 thousand for the years ended December 31, 2020 and 2019, respectively. The Company paid interest expense of $153 thousand and $0 for the three months ended March 31, 2021 and 2020 (unaudited), respectively, and $915 thousand and $496 thousand for the years ended December 31, 2020 and 2019, respectively. As of March 31, 2021, December 31, 2020 and December 31, 2019, the total balance of the revolving credit facility was $10.2 million, $10.2 million and $10.5 million, respectively.

Promissory Note

The Company’s stated value of promissory note obligation as of the dates presented consists of the following (in thousands):


					December 31,
	Interest Rate	Due Date	March 31, 2021		2020		2019
Yaskawa Note	1.00%	September 2022	$	15,523	$	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 the dates presented, the Company determined the fair value for the note, as compared to the face value, including accrued interest, as follows (in thousands):


			December 31,
	March 31, 2021		2020		2019
Yaskawa Note	$	16,128	$	15,392	$	16,169

Fair value of promissory note increased $699 thousand for the three months ended March 31, 2021, and 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 $37 thousand for each of the three months ended March 31, 2021 and 2020 (unaudited), and $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 March 31, 2021, December 31, 2020 and December 31, 2019, accrued interest on the promissory note was $523 thousand, $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 for the three months ended March 31, 2021 and for the year ended December 31, 2020. As of March 31, 2021 and December 31, 2020, $334 thousand and $667 thousand, respectively, is included in deferred revenue on the consolidated balance sheet.

As of March 31, 2021, the scheduled maturity on the development loans, revolving credit facility and promissory note was as follows (in thousands):


2022	$	20,150
2023	15,748
Thereafter	—
Total	$	35,898