Note 11 - Loan Payable - Current Portion and Non-current Portion

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Short-term Debt [Text Block]

Note

11

- Loans Payable - Current Portion and Non-current Portion

Loans Payable – Current Portion

2019

Loan

On

October 24, 2019,

we entered into a loan agreement with LPH II. Under the loan agreement, LPH II agreed to lend us

$1.0

million, the

2019

Loan, to support our operations while we sought to complete a strategic transaction (as defined in the loan agreement). The

2019

Loan, which was funded in a single installment by wire transfer on

October 28, 2019,

accrued interest at a rate of

6%

per annum and matured upon the closing date of the

December 2019

private placement, which qualified as the strategic transaction under terms defined in the loan agreement. We repaid the

2019

Loan and related accrued interest in full upon consummation of the

December 2019

Private Placement.

201

8

Loan

s

In

January 2018

and

March 2018,

LPH Investments Limited (LPH), an affiliate of Lee’s, agreed to lend us

$1.5

million and

$1.0

million, respectively, or the First Quarter

2018

Loans, to support our AEROSURF development activities and sustain our operations while we sought to identify and advance

one

or more potential strategic initiatives as defined in the related loan agreements, or the Funding Event. The loans accrued interest at a rate of

6%

per annum and would mature upon the earlier of the closing date of the Funding Event or

December 31, 2018.

To secure our obligations under these loans, we granted LPH a security interest in substantially all our assets pursuant to the terms of a security agreement dated

March 1, 2018,

or the LPH Security Agreement.

During the

third

and

fourth

quarters of

2018,

LPH agreed to lend us funds, or the Third and Fourth Quarter

2018

Loans, to sustain our operations while we continued to work on a strategic transaction. Of the Third and Fourth Quarter

2018

Loans, the initial loan was funded on

August 14, 2018

in the amount of

$0.3

million, and subsequent Third and Fourth Quarter

2018

Loans were funded on the following dates and in the following amounts:

August 29, 2018,

in the amount of

$0.48

million,

September 12, 2018

in the amount of

$0.5

million;

September 27, 2018

in the amount of

$0.5

million;

October 19, 2018

in the amount of

$0.43

million;

November 2, 2018

in the amount of

$0.5

million;

November 19, 2018

in the amount of

$0.35

million; and

December 5, 2018

in the amount of

$0.6

million. The loans accrued interest at a rate of

6%

per annum and matured upon the earlier of (i) the closing date for the strategic transaction (as defined in the related loan agreements), provided that we were able to raise a minimum of

$30

million in connection with such transaction, or (ii)

March 31, 2019.

In each case, we granted to LPH a security interest in substantially all of our assets pursuant to the terms of the LPH Security Agreement. Effective

December 5, 2018,

LPH assigned all outstanding loans to us to LPH II.

On

December 21, 2018,

as part of the

December 2018

Private Placement Financing (

see

, “Private Placement Offerings”), we converted

$6.0

million of existing loan payable obligations comprised of

$2.5

million of the First Quarter

2018

Loans and

$3.5

million of the Third and Fourth Quarter

2018

Loans into equity securities on the same terms as those of the investors in the

December 2018

Private Placement Financing. The conversion of the loan payable to LPH II was treated as an extinguishment of debt and does

not

represent a capital transaction as the

December 2018

private placement financing included

third

-party investors and all investors received identical terms. We recorded a loss on extinguishment of debt approximately

$3.2

million. The loss was calculated as the difference between the aggregate fair value of the common stock and Series F and Series G Warrants on

December 21, 2018

and the carrying value of the debt liabilities. The balance of the loans payable to LPH II of

$160,000

was paid along with accrued interest of

$182,000

on

December 27, 2018.

Following this conversion of the First Quarter

2018

Loans and the conversion and payoff of the Third and Fourth Quarter

2018

Loans into equity securities, the security interest granted under the LPH Security Agreement was discharged.

Assumption of LPH II debt as part of the CVie Acquisition

As part of the CVie Acquisition, we assumed approximately

$3.5

million of debt payable to LPH II.

From

April 24, 2018

to

November 16, 2018,

CVie entered into

four

separate agreements to borrow an aggregate of approximately

$3.5

million from LPH II on the following dates and in the following amounts

$0.5

million in

April 2018,

or the

April 2018

Loan;

$0.3

million in

September 2018,

or the

September 2018

Loan;

$0.15

million in

October 2018,

or the

October 2018

Loan; and

$2.5

million in

November 2018,

or the

November 2018

Loan. The

April 2018

Loan, the

September 2018

Loan, the

October 2018

Loan and the

September 2018

Loan were subsequently assigned to LPH II. The terms of the loan agreements are identical with interest, payable in cash upon maturity, at a rate of

4%

per annum and maturing

one

year from the effective date of the respective loan agreement.

During the quarter ended

March 31, 2019,

we made payments of

$0.45

million against the

April 2018

Loan and paid the remaining

$50,000

balance plus accrued interest in

April 2019.

In

December 2019,

as part of the

December 2019

Private Placement Financing (

see

, “Private Placement Offerings”), we converted the remaining

$2.95

million related to the

September 2018

Loan,

October 2018

Loan, and

November 2018

Loan on the same terms as the Investors of the

December 2019

Private Placement Financing. In connection with the conversion of the LPH II debt, we issued:

976,821

shares of common stock based at

$3.02

per share and Series I Warrants to purchase

488,411

shares of common stock, at an exercise price equal to

$4.03

per share. The Series I Warrants are exercisable at any time after the

sixth

-month anniversary of the date of issuance and through the

5

-year anniversary of the date of issuance. The conversion of the loan payable to LPH II is treated as an extinguishment of debt and does

not

represent a capital transaction as the

December 2019

Private Placement Financing included

third

-party investors and all investors received identical terms. We recorded a loss on extinguishment of debt of approximately

$1.8

million. The loss was calculated as the difference between the aggregate fair value of the common stock and Series I Warrants on

December 6, 2019

and the carrying value of the debt liabilities. The accrued interest of

$127,000

was paid in

December 2019

and as of

December 31, 2019

there are

no

remaining amounts outstanding.

Loan payable to Bank Direct Capital Finance

In

May 2019,

we entered into an insurance premium financing and security agreement with Bank Direct Capital Finance, or Bank Direct. Under the agreement, we have financed

$0.7

million of certain premiums at a

5.35%

annual interest rate. As of

December 31, 2019,

the outstanding principal of the loan was

$0.2

million. The remaining payments were made during the

first

quarter of

2020.

Loans Payable – Non-current Portion

Assumption of bank debt as part of the CVie Acquisition

As part of the CVie Acquisition, we assumed approximately

$4.5

million in a bank credit facility.

In

September 2016,

CVie entered into a

12

-month revolving credit facility of approximately

$2.9

million with O-Bank Co., Ltd., or O-Bank, to finance operating activities, or the O-Bank Facility. The O-Bank Facility was later renewed and increased to approximately

$5.8

million in

September 2017.

The O-Bank Facility was guaranteed by Lee’s, which pledged bank deposits in the amount of

110%

of the actual borrowing amount. The guaranty was part of the O-Bank Facility; however, we do

not

have a written commitment from Lee’s to maintain the collateral. Interest, payable in cash on a monthly basis, is determined based on

90

-day TAIBOR (the Taipei Interbank Offer Rate) plus

0.91%.

The O-Bank Facility expired on

September 11, 2019

and the loans were set to mature

six

months after the expiration date, on

March 11, 2020.

In

March 2020,

the O-Bank Facility was amended including the extension of the maturity date to

March 2022.

In addition to the extension of the maturity date, the total amount of the O-Bank Facility was decreased to approximately

$5.0

million, and the interest rate was changed to the TAIBOR plus

1.17%

and the term was changed to

24

-month non-revolving. All amounts due under the O-Bank Facility will be payable upon the earlier of (i)

six

months after the expiration date or (ii)

two

years after the drawdown date.

As of

December 31, 2019,

the outstanding principal of the O-Bank Facility was approximately

$4.6

million, and has subsequently been refinanced to mature in

March 2022,

therefore, the outstanding principal has been classified in Loans Payable - Non-current Portion.