2018 Promissory Notes
On April 13, 2018, the Company entered into a promissory note purchase agreement whereby entities affiliated with Grifols and First Eagle,
the Companys two largest shareholders beneficially owning, collectively, approximately 75% of the Companys common stock as of June 30, 2018 and owning all of the Convertible Notes and Warrants described below, agreed to purchase up
to approximately $7 million aggregate principal amount of 9% senior unsecured promissory notes due 2021 (the Promissory Notes). The Promissory Notes bear interest at a rate of 9% per annum payable semiannually in arrears on
May 1 and November 1 of each year, beginning on May 1, 2018 in the case of Promissory Notes issued on April 13, 2018 and on November 1, 2018 and in the case of Promissory Notes issued thereafter, unless earlier redeemed or
cancelled in accordance with the terms of the Promissory Notes. Unless the Company elects otherwise, interest will be capitalized on the applicable interest payment date by adding such accrued interest to the principal balance of such Promissory
Notes, at which time such interest will be deemed to have been paid. The Promissory Notes are redeemable by the Company for cash at any time for a redemption price of 100% plus accrued and unpaid interest and are subject to acceleration upon certain
events of default.
The Company completed the first closing under the note purchase agreement on April 13, 2018, at which time the
Company issued and sold approximately $2 million aggregate principal amount of Promissory Notes. The Company received two of the five additional installment payments from a related party under subsequent closings as of June 30, 2018, for
aggregate proceeds totaling approximately $4 million during the quarter ended June 30, 2018.
Subject to the satisfaction or
waiver of the applicable closing conditions set forth in the note purchase agreement at each subsequent closing, the Company anticipates the sale of the remaining $3 million in Promissory Notes to occur in 3 subsequent monthly closings, the
last of which is expected to occur on September 13, 2018.
Financing costs of $116,252 incurred in connection with the issuance
of the Promissory Notes were recorded as a debt discount and are being amortized using the effective interest rate method and recognized as non-cash interest expense over the expected term of the
Promissory Notes. As of June 30, 2018, the unamortized debt discount will be amortized over a remaining period of approximately 2.84 years. Accrued interest payable on June 30, 2018 is $45,869 and is included in other accrued liabilities.
2016 Convertible Notes and Warrants
On April 21, 2016, the Company entered into a securities purchase agreement to conduct a private offering, or the Convertible Note
Financing, consisting of $23 million in aggregate principal amount of 9% senior convertible notes due 2021 convertible into shares of common stock, or the Convertible Notes, and 263,436 warrants to purchase shares of the Companys common
stock or the Warrants. The Convertible Notes bear interest at a rate of 9% per year, payable semiannually in arrears on November 1 and May 1 of each year commencing on November 1, 2016. The Convertible Notes mature on May 1,
2021, unless earlier redeemed or converted. The Convertible Notes are governed by the terms of the Indenture, between the Company and U.S. Bank National Association, as trustee, dated as of April 25, 2016 or the Indenture.
The Convertible Notes are senior unsecured and unsubordinated obligations; rank equal in right of payment to the Companys existing and
future unsecured indebtedness that is not subordinated and are effectively subordinated in right of payment to the Companys existing and future secured indebtedness. On or after December 1, 2017, the Company may redeem for cash all or a
portion of the Convertible Notes if the last reported sale price of the Companys common stock is at any time equal to or greater than 200% of the conversion price then in effect for at least twenty trading days immediately preceding the date
on which the Company provides notice of redemption, at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. The Indenture provides for
customary events of default which may result in the acceleration of the maturity of the Notes, including, but not limited to, cross acceleration to certain other indebtedness of the Company and its subsidiaries. In the case of an event of default
arising from specified events of bankruptcy or insolvency or reorganization, all outstanding Convertible Notes will become due and payable immediately without further action or notice. If any other event of default under the Indenture occurs or is
continuing, the trustee or holders of at least 25% in the aggregate principal amount of the then outstanding Convertible Notes may declare all the Convertible Notes to be due and payable immediately.
The Warrants have a five-year term and are exercisable at $5.21 per share of common stock. The exercise price is subject to adjustment in the
event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events or upon any distributions of assets, including cash, stock or other property to the Companys shareholders.
On April 18, 2018, the Company entered into a Supplemental Indenture between the Company and U.S. Bank National Association, as trustee,
or the Supplemental Indenture, which amended the Indenture by, among other things, (i) the addition of