Line of Credit - Related Party |
9 Months Ended |
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Sep. 30, 2022 | |
| Line of Credit - Related Party [Member] | |
| Debt Instrument [Line Items] | |
| Line of Credit - Related Party |
5. Line of Credit – Related Party
On July 25, 2022, the Company and Richard E. Uihlein (the “Lender”) entered into a Line of Credit Letter Agreement
(the “Credit Agreement”), pursuant to which the Lender shall provide the Company a line of credit of up to $60.0 million (the “Line of
Credit”) to finance the Company’s working capital needs. The Company may draw upon the Line of Credit through July 31, 2024.
Each advance made pursuant to the Credit Agreement shall be evidenced by an unsecured, convertible promissory
note (individually, a “Promissory Note,” and collectively, the “Promissory Notes”), and bear interest at the Applicable Federal Rate for short term loans (currently 2.84%), plus two (2%) percent. Principal and interest on the Promissory Notes
are due on or before January 31, 2026. Only with the consent of the Lender, may the Promissory Notes be prepaid, in whole or in part, at
any time without premium or penalty, but with interest on the amount or amounts prepaid.
At the election of Lender, the principal and accrued interest on Promissory Note(s) may be converted into the
number of shares of the Company’s Common Stock equal to the amount of principal and accrued interest on such Promissory Note divided by the price equal to the closing price of the Common Stock on the date of such Promissory Note, but in no event
less than $3.00 per share.
In connection with the Credit Agreement, the Company agreed to issue the Lender warrants to purchase up to an aggregate of 1,700,000 shares of the Company’s common stock, par value $0.001
per share (collectively, the “Warrants”). Upon execution of the Credit Agreement, the Company issued the Lender a Warrant to purchase up to 500,000
shares of Company’s Common Stock at an exercise price of $5.00 per share, which Warrant is exercisable upon issuance. Further, pursuant
to the Credit Agreement, the Company shall issue to the Lender additional Warrants to purchase up to the remaining 1,200,000 shares of
the Company’s common stock, ratably, upon borrowings under the Credit Agreement, with exercise prices equal to 150% of the closing price
of the Company’s common Stock on the date of the Promissory Note evidencing such draw, but in no event more than $10.00 per share nor
less than $3.00 per share. The Warrants expire on July 31, 2029.
The fair value of the 500,000 warrants vested at closing on July 25, 2022 was $738,000
at the date of issuance based on the following assumptions: an expected life of 7 years, volatility of 92%, risk free interest rate of 3.19%
and zero dividends. The fair value of the vested warrants was recorded in other assets (non-current) as a deferred financing cost and
will be amortized on a straight-line basis from July 25, 2022 through January 31, 2026. Amortization for the period ended September 30, 2022 of $39,000
was recorded as interest expense. The fair value of warrants that vest in the future based on borrowings will be computed when those borrowings occur and amortized over the remaining period through January 31, 2026.
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