Note 8 - Note Payable

12 Months Ended

Dec. 31, 2017

Notes to Financial Statements

Debt Disclosure [Text Block]

8.

NOTES PAYABLE

Hercules Credit Agreement

In

November 2013,

the Company entered into a loan agreement with Hercules Technology Growth Capital, Inc. (Hercules) which permits up to

$20

million in capital to be distributed in multiple tranches (the Hercules Credit Agreement). The Company drew the

first

tranche of

$5

million upon closing of the Hercules Credit Agreement in

November 2013

and used approximately

$4

million of the proceeds to repay the outstanding obligations under its loan agreement with Oxford Finance LLC and Horizon Technology Finance Corporation as discussed further below. On

June 10, 2014,

the Company closed the

second

$5

million tranche under the Hercules Credit Agreement. The proceeds were used to fund the

$3.0

million upfront cash payment associated with Celsion's acquisition of EGEN, as well as the Company

’s transaction costs associated with the EGEN acquisition.  Upon the closing of the

second

tranche, the Company had drawn down a total of

$10

million under the Hercules Credit Agreement. 

The obligations under the Hercules Credit Agreement are in the form of secured indebtedness bearing interest at a calculated prime-based variable rate (

11.25%

per annum since inception through

December 17, 2015,

11.50%

from

December 18, 2015

through

December 15, 2016

and

11.75%

since). Payments under the loan agreement were interest only for the

first

twelve

months after loan closing, followed by a

30

-month amortization period of principal and interest through the scheduled maturity date of

June 1, 2017.

In connection with the Hercules Credit Agreement, the Company incurred cash expenses of

$122,378

which were recorded as deferred financing fees.  These deferred financing fees are being amortized as interest expense using the effective interest method over the life of the loan.  Also, in connection with the Hercules Credit Facility, the Company paid loan origination fees of

$230,000

which has been classified as debt discount. This amount is being amortized as interest expense using the effective interest method over the life of the loan.

As a fee in connection with the Hercules Credit Agreement, the Company issued Hercules a warrant for a total of

6,963

shares of the Company

’s common stock (the Hercules Warrant) at a per share exercise price of

$50.26,

exercisable for cash or by net exercise from

November 25, 2013.

Upon the closing of the

second

tranche on

June 10, 2014,

this warrant became exercisable for an additional

6,963

shares of the Company’s common stock. The Hercules Warrant will expire

November 25, 2018.

Hercules has certain rights to register the common stock underlying the Hercules Warrant pursuant to a Registration Rights Agreement with the Company dated

November 25, 2013.

The registration rights expire on the date when such stock

may

be sold under Rule

144

without restriction or upon the

first

-year anniversary of the registration statement for such stock, whichever is earlier. The common stock issuable pursuant to the Hercules Warrant was filed pursuant to Rule 

415

under the Securities Act of

1933

on the Prospectus for Registration Statement

No.

333

-

193936

and was declared effective on

September 30, 2014.

The Company valued the Hercules Warrants issued using the Black-Scholes option pricing model and recorded a total of

$476,261

as a direct deduction from the debt liability consistent with the presentation of a debt discount and are being amortized as interest expense using the effective interest method over the life of the loan.  Also, in connection with each of the

$5.0

million tranches, the Company was required to pay an end of term charge equal to

3.5%

of each original loan amount at time of maturity. Therefore, these amounts totaling

$350,000

were amortized as interest expense using the effective interest method over the life of the loan. The loan balance and end of term charges on the Hercules Credit Agreement was paid in full in

June 2017.

For the year ended

December 31, 2017,

the Company incurred

$56,386

in interest expense and amortized

$35,370

as interest expense for deferred fees, debt discount and end of term charges in connection with the Hercules Credit Agreement. For the year ended

December 31, 2016,

the Company incurred

$486,327

in interest expense and amortized

$236,666

as interest expense for deferred fees, debt discount and end of term charges in connection with the Hercules Credit Agreement.