Quarterly report pursuant to Section 13 or 15(d)

LONG-TERM LOAN

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LONG-TERM LOAN
6 Months Ended
Sep. 30, 2021
Debt Disclosure [Abstract]  
LONG-TERM LOAN

NOTE 12 LONG-TERM LOAN

 

On March 17, 2020, the Company entered into the Facility Agreement with certain lenders for up to $25.0 million in five tranches of $5.0 million per tranche. Such tranches are at the option of the Company provided, however that the Company may only utilize tranches three through five following FDA approval of the LungFit® PH product. The loan(s) are unsecured with interest at 10% per year which is to be paid quarterly. The loans may be prepaid with certain prepayment penalties. The effective interest rate for this loan is 13.3% per year. Each tranche shall be repaid in installments commencing on June 15, 2023 with all amounts outstanding under any tranche due on March 17, 2025. The Company received proceeds from the first tranche in fiscal year 2020. A lender who is an over 5% stockholder loaned the Company $3,160 thousand of the first tranche and, as such, related party interest expense for the three months ended September 30, 2021 and September 30, 2020 was $158 thousand and $158 thousand (not including amortization of debt discount and deferred offering costs), respectively.

 

In connection with the first tranche, the Company issued, in March 2020, warrants to the lenders for the purchase of 172,826 shares of the Company’s common stock at $7.26 per share. The warrants expire in five years. There are additional warrant issuances associated with each tranche. If the second tranche of $5 million is utilized by the Company, the warrants that will be issued are up to 25% of their commitment value divided by the five-day volume-weighted average price (“VWAP”) prior to the utilization date. If any of tranches three to five are utilized by the Company, the warrants that will be issued are up to 10% of their commitment value divided by the five-day VWAP. The Company allocated the fair market value of the warrants at the date of grant to stockholders’ equity and reflected a debt discount of $595 thousand. Debt discount and debt issuance costs are amortized over the life of the loan.

 

A summary of the long-term loan balance as of September 30, 2021 and March 31, 2021 is as follows:

 

(in thousands)   September 30, 2021    

March 31,

2021

 
Face value of loan   $ 5,000     $ 5,000  
Debt discount     (595 )     (595 )
Accretion of debt discount     183       123  
Amortization of debt offering costs     22       15  
Debt offering costs     (71 )     (71 )
Total   $ 4,539     $ 4,472  

 

 

Maturity of Long-Term Loan (in thousands)   September 30, 2021  
       
2022   $ -  
2023     500  
2024     2,250  
2025     2,250  
Total   $ 5,000  

 

During October 2021, the Company amended the Facility agreement to offer the lenders the ability to accept redemption of all amounts outstanding from the first tranche of $5.0 million and to terminate the Facility Agreement without penalty. The Facility Agreement was terminated on November 10, 2021. See Note 15.