Demand Loans & PPP Loans
|3 Months Ended|
Jun. 30, 2021
|Demand Loans & PPP Loans|
|Demand Loans & PPP Loans||
5. Demand Loans & PPP Loans
Convertible Loans Payable
During the three months ended June 30, 2020, the Company received $1.3 million, In addition to $0.1 million previously loaned to the Company, pursuant to a $7.0 million convertible note offering (the "2020 Convertible Note Offering"). The convertible notes issued in the 2020 Convertible Note Offering (the "2020 Convertible Notes") bear interest at a fixed rate at 1%
per month. The 2020 Convertible Notes were converted into common stock of the Company at March 31, 2021 in accordance with the terms of the 2020 Convertible Note Offering.
In the event the Company raises capital through the sale of common stock for cash during the period ending on the three year anniversary of the issuance date of the 2020 Convertible Notes, and the price per share thereof (the “Offering Price”) minus 20% is less than the original conversion price, then in such event the Company shall issue to all Convertible Noteholders at, at no further cost, additional shares of common stock equal to the number of conversion shares the holders would have received upon conversion if the conversion price equaled to a 20% discount to the Offering Price, less the number of conversion shares actually issued on or as of the maturity date of the 2020 Convertible Notes. Since the Company has adopted ASU 2017-11, the anti-dilution protection clause does not contribute to the conversion feature to be a derivative liability.
Interest expense associated with the 2020 Convertible Notes for the three months ended June 30, 2020, was $16,000
See Note 11—Subsequent Events for information on the consolidation of this indebtedness into the Company’s new convertible promissory note offering.
On March 23, 2020, the Company received a $2.0 million loan from an existing shareholder. The promissory note evidencing the loan bears interest at a fixed rate of 1% per month and has a maturity date of the earlier of (i) March 31, 2022 and (ii) the date of receipt of a minimum of $5.0 million from a “Subsequent Financing.” The accrued interest shall be payable in cash commencing on March 31, 2021 with the quarterly payments accrued for the first three payment dates (3-month, 6-month and 9-month anniversaries of the issue date), and then quarterly thereafter. The remaining half of the interest accrued will be paid upon the maturity date. The loan is repayable or convertible to common shares at the loan holder’s option on March 31, 2022 at a price per share equal to the price per share of the Company’s then most recent capital raise or debt conversion, or any other valuation as agreed in writing between the loan holder and the Company.
On February 24, 2021, and in addition to the shareholder loan above, the Company entered into a term loan and security agreement dated February 12, 2021 where Bionik may borrow up to $3.0 million from lenders from time to time. Pursuant to the terms of the agreement, the loan bears interest at a fixed rate of 1% per month. The principal amount and interest on the loan will be due and payable on the earlier of (i) February 12, 2023 and (ii) the date of receipt by the Company of a minimum of $3.0 million in equity. During the three months ended June 30, 2021, the Company received term loan proceeds totaling $0.6 million. As of June 30, 2021, the Company has received $1.6 million against this term loan.
Interest expense associated with these loans for the three months ended June 30, 2021 and 2020 was $0.1 million for each such periods. Interest payable associated with these loans at June 30, 2021 and March 31, 2021 was $0.3 million for each such periods.
See Note 11--Subsequent Events, for information on the consolidation of this indebtedness into the Company’s new convertible promissory note offering.
Paycheck Protection Program Loan
In May 2020, the Company signed a promissory note for $0.5 million pursuant to the federal Paycheck Protection Program under the Coronavirus Aid, Relief and Economic Security Act, which is administered by the U.S. Small Business Administration. The loan is unsecured, bears interest of 1% per annum and a deferment period of 6 months. The loan is to be used primarily for payroll related costs, lease, and utility payments. The Company has applied for forgiveness and as such forgiveness was granted in May 2021. The extinguishment of the PPP loan is recorded in the statement of operations as other income.
The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef