NOTE PAYABLE |
9 Months Ended | ||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||
| Note Payable | NOTE PAYABLE On January 29, 2018, the Company entered into a Note Purchase Agreement and Senior Note Payable (“Note”) with a lender. The principal amount of the Note was $4.8 million (“Original Principal”). The Note was issued at a discount of $1.8 million and net of $20,000 for financing costs, for total proceeds of $2.98 million. Interest on the Note accrued from January 29, 2018, at a rate of 12.5% per annum and quarterly payments of interest only were due beginning on March 30, 2018, and compounded quarterly. The Note was scheduled to mature on September 30, 2018 (“Maturity Date”). The Company entered into a Waiver Agreement with the noteholder that extended the Maturity Date until October 4, 2018. On October 4, 2018, the Company entered into an Amendment and Exchange Agreement (“Exchange Agreement”) with the noteholder exchanging the Note for a new Senior Convertible Note (“New Note”). The total principal and accrued and unpaid interest under the Note as of September 30, 2018 totaled $5.2 million. The principal amount of the New Note is $5.2 million, which includes additional interest accumulated between September 30, 2018 and October 4, 2018. The New Note bears interest at an interest rate of eight percent (8%) per annum payable quarterly in cash and matures on October 4, 2020. The New Note contains certain redemption features, conversion options, restrictions on specific transactions, non-financial covenants and penalties to the Company in the case of an event of default, as defined in the New Note. If an event of default occurs, the noteholder may require the Company to redeem all or any portion of the New Note (including all accrued and unpaid interest thereon), in cash, at a price equal to the greater of (i) up to 125% of the amount being redeemed, depending on the nature of the default, and (ii) the intrinsic value of the shares of Common Stock then issuable upon conversion of the New Note. The interest rate shall automatically increase if there is an event of default to 18% per annum during the default period. The Company is currently in compliance with the covenants of the New Note. All amounts due under the New Note are convertible at any time, in whole or in part, at the option of the noteholder into shares of the Company’s common stock at a fixed conversion price equal to $8.02 (the “Conversion Price”), with such Conversion Price adjusted downward to the price of any future issuances of the Company’s common stock. This Conversion Price is also subject to adjustment for stock splits, combinations or similar events. In addition, all amounts due under the New Note are alternatively convertible at any time, in whole or in part, at the option of the noteholder, into shares of the Company’s common stock at an alternate conversion price equal to the greater of (a) $3.08, which may be lowered as described below (the “Floor Price”) or (b) the lower of (I) the Conversion Price or (II) 93% of the volume weighted average price (the “VWAP”) of the Company’s common stock for the 10 days preceding the conversion, provided, that if the Company defaults then the noteholder is entitled to convert the New Note subject to an event of default redemption, in whole or in part, at the noteholder's option, at the value of such portion of the New Note subject to a potential event of default redemption (i.e., one hundred twenty percent (120%) of the amount then outstanding under the New Note). If the VWAP of the Company’s common stock is greater than $10.00 for ten consecutive days, subject to a 15 trading day written notice to the noteholder immediately thereafter and the satisfaction of certain equity conditions, the Company may, at its option, require the conversion, in whole or in part, of the New Note. If the VWAP of the Company’s common stock is less than the Floor Price, unless the Company lowers the Floor Price, for ten consecutive days, the noteholder may, at any time at its option, require the Company to redeem all or any portion of the New Note (including all accrued and unpaid interest thereon), in cash, at a price equal to 100% of the amount being redeemed. At any time the VWAP of the Company’s common stock is greater than the Floor Price for ten consecutive days, subject to a 25 trading day written notice to the noteholder immediately thereafter and the satisfaction of certain equity conditions, the Company may, at its option, redeem all, or any part, of the New Note (including all accrued and unpaid interest thereon), in cash, at a price equal to 120% of the amount being redeemed. In the event of transactions involving a change of control, the noteholder will have the right to require the Company to redeem all or any portion of the New Note it holds (including all accrued and unpaid thereon) at a price equal to the greater of 120% of the amount of the New Note being redeemed and the intrinsic value of the shares of the Company’s common stock then issuable upon conversion of the portion of the New Note being redeemed. As of September 30, 2018, the Note payable is shown as a short-term obligation due to the subjective acceleration clause in the Exchange Agreement and New Note that was signed on October 4, 2018 and consists of the following:
Amortization of debt discount recorded as interest expense was approximately $0.9 million and $2.1 million for the three and nine months ended September 30, 2018, respectively. |
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