XML 31 R17.htm IDEA: XBRL DOCUMENT
v3.21.2

Loans Payable | 3 Months Ended
--- | ---
Sep. 30, 2021
Loans Payable |
11. Loans Payable | 11. Loans Payable As of September 30, 2021 and June 30, 2021, loans payable primarily consisted of the BankUnited Term Loan (as defined below) payable to BankUnited N.A. (“BankUnited”). On February 26, 2019, we entered into a Loan Agreement (the “Loan Agreement”) with BankUnited for (i) a revolving line of credit up to maximum amount of $2,000,000 (the “BankUnited Revolving Line”), (ii) a term loan in the amount of up to $5,813,500 (“BankUnited Term Loan”), and (iii) a non-revolving guidance line of credit up to a maximum amount of $10,000,000 (the “Guidance Line” and, together with the BankUnited Revolving Line and BankUnited Term Loan, the “BankUnited Loans”), which Guidance Line has since been terminated. Each of the BankUnited Loans is evidenced by a promissory note in favor of BankUnited (the “BankUnited Notes”). Simultaneously with the execution of the Loan Agreement, we used the proceeds from the BankUnited Term Loan to pay in full, all outstanding amounts owed to Avidbank Corporate Finance, a division of Avidbank (“Avidbank”) pursuant to an acquisition term loan. On May 6, 2019, we entered into that certain First Amendment to Loan Agreement, effective February 26, 2019, with BankUnited (the “Amendment” and, together with the Loan Agreement, the “Amended Loan Agreement”). The Amendment amended the definition of the fixed charge coverage ratio to more accurately reflect the parties’ understandings at the time the Loan Agreement was executed. On September 9, 2021, we entered into a letter agreement with BankUnited (the “Letter Agreement”). The Letter Agreement: (i) reduces the fixed charge coverage ratio to 1.0 for the quarter ending September 30, 2021 and to 1.1 for the quarter ended December 31, 2021; (ii) modifies the calculation for both the fixed charge coverage ratio and the total leverage ratio to provide for adjustments related to expenses incurred in connection with the employee matters that occurred during fiscal 2021 at LPOI and LPOIZ, which expenses must be approved by BankUnited; (iii) terminates the Guidance Line; and (iv) requires approval from BankUnited prior to our being able to draw upon the Revolving Line, subject to our compliance with the fixed charge coverage ratio for the quarters ending September 30, 2021 and December 31, 2021. The Letter Agreement also granted us a waiver of default arising prior to the Letter Agreement for our failure to comply with the fixed charge coverage ratio measured on June 30, 2021. Based on the waiver, we are no longer in default of the Amended Loan Agreement. Finally, in connection with the Letter Agreement, we paid BankUnited a fee equal to $10,000. On November 5, 2021, we entered into a letter agreement with BankUnited (the “Second Letter Agreement”). In accordance with the Second Letter Agreement, the parties agreed to initiate discussions regarding a possible modification, forbearance, or other resolution of the Amended Loan Agreement (the “Proposed Restructuring Agreement”), which closing will occur on or before December 31, 2021. The Second Letter Agreement contemplates that the Proposed Restructuring Agreement will include the following terms, among others: (i) a maturity date of April 15, 2023 with respect to the Term Loan; (ii) an increased monthly payment amount of $100,000 commencing on November 1, 2022; (iii) the Term Loan will bear a higher interest rate commencing on August 1, 2022; (iv) an exit fee equal to 4% of the outstanding principal balance of the term loan on April 15, 2023 to the extent the Term Loan is still outstanding on such date and has not been refinanced with another lender; and (v) a fee of $50,000 payable upon execution of the Proposed Restructuring Agreement. The Second Letter Agreement also granted us a waiver of default arising prior to the Second Letter Agreement for our failure to comply with the fixed charge coverage ratio and total leverage ratio measured on September 30, 2021. Based on the Second Letter Agreement and the waiver, we are no longer in default of the Amended Loan Agreement. Additionally, the Second Letter Agreement states that BankUnited will waive compliance for the fixed charge coverage ratio and the total leverage ratio for the quarters ended December 31, 2021, March 31, 2022 and June 30, 2022, which waivers will be included in the Proposed Restructuring Agreement. Finally, in accordance with the Second Letter Agreement, we paid BankUnited a deposit equal to $25,000 to be used in connection with BankUnited’s legal fees, costs and expenses in connection with the Second Letter Agreement and the Proposed Restructuring Agreement. We have commenced discussions with other lenders, with the intent of refinancing our credit facility prior to maturity with reasonable commercial terms, of which there can be no assurance. BankUnited Revolving Line Pursuant to the Amended Loan Agreement, BankUnited will make loan advances under the BankUnited Revolving Line to us up to a maximum aggregate principal amount outstanding not to exceed $2,000,000, which proceeds will be used for working capital and general corporate purposes. Amounts borrowed under the BankUnited Revolving Line may be repaid and re-borrowed at any time prior to February 26, 2022, at which time all amounts will be immediately due and payable. The advances under the BankUnited Revolving Line bear interest, on the outstanding daily balance, at a per annum rate equal to 2.75% above the 30-day LIBOR. Interest payments are due and payable, in arrears, on the first day of each month. There were no borrowings under the BankUnited Revolving Line as of September 30, 2021. BankUnited Term Loan Pursuant to the Amended Loan Agreement, BankUnited advanced us $5,813,500 to satisfy in full the amounts owed to Avidbank, including the outstanding principal amount and all accrued interest under the acquisition term loan and to pay the fees and expenses incurred in connection with closing of the BankUnited Loans. The BankUnited Term Loan was for a 5-year term, but co-terminus with the BankUnited Revolving Line should the BankUnited Revolving Line not be renewed beyond February 26, 2022. Pursuant to the Second Letter Agreement, the maturity date of the Term Loan will be amended to April 15, 2023. The BankUnited Term Loan bears interest at a per annum rate equal to 2.75% above the 30-day LIBOR. Equal monthly principal payments of approximately $48,446, plus accrued interest, are due and payable, in arrears, on the first day of each month during the term. Upon maturity, all principal and interest shall be immediately due and payable. As of September 30, 2021, the applicable interest rate was 2.84%. Security and Guarantees Our obligations under the Amended Loan Agreement are collateralized by a first priority security interest (subject to permitted liens) in all of our assets and the assets of our U.S. subsidiaries, GelTech, Inc. (“GelTech”), and ISP, pursuant to a Security Agreement granted by GelTech, ISP, and us in favor of BankUnited. Our equity interests in, and the assets of, our foreign subsidiaries are excluded from the security interest. In addition, all of our subsidiaries have guaranteed our obligations under the Amended Loan Agreement and related documents, pursuant to Guaranty Agreements executed by us and our subsidiaries in favor of BankUnited. General Terms The Amended Loan Agreement contains customary covenants, including, but not limited to: (i) limitations on the disposition of property; (ii) limitations on changing our business or permitting a change in control; (iii) limitations on additional indebtedness or encumbrances; (iv) restrictions on distributions; and (v) limitations on certain investments. The Amended Loan Agreement also contains certain financial covenants, including obligations to maintain a fixed charge coverage ratio of 1.25 to 1.00 and a total leverage ratio of 4.00 to 1.00. As of September 30, 2021, we obtained a waiver of compliance for both the fixed charge coverage ratio and total leverage ratio, and we were in compliance with all other required covenants, as amended. We may prepay any or all of the BankUnited Loans in whole or in part at any time, without penalty or premium. Late payments are subject to a late fee equal to five percent (5%) of the unpaid amount. Amounts outstanding during an event of default accrue interest at a rate of five percent (5%) above the 30-day LIBOR applicable immediately prior to the occurrence of the event of default. The Amended Loan Agreement contains other customary provisions with respect to events of default, expense reimbursement, and confidentiality. Financing costs incurred related to the BankUnited Loans were recorded as a discount on debt and will be amortized over the term. Amortization of approximately $4,600 is included in interest expense for the each of the three months ended September 30, 2021 and 2020, respectively. In December 2020, ISP Latvia entered into an equipment loan with a third party (the “Equipment Loan”), which party is also a significant customer, and which the Equipment Loan is subordinate to the BankUnited Loans, and collateralized by certain equipment. The initial advance under the Equipment Loan was 225,000 EUR (or USD $275,000), payable in equal installments over 60 months, the proceeds of which were used to make a prepayment to a vendor for equipment to be delivered at a future date. An additional 225,000 EUR (or USD $267,000) was drawn in September 2021, which proceeds were paid to the vendor for the equipment, payable in equal installments over 52 months. The Equipment Loan bears interest at a fixed rate of 3.3%. Future maturities of loans payable are as follows:
|  | BankUnited Term Loan |  |  | Equipment Loan |  |  | Unamortized Debt Costs |  |  | Total |
Fiscal year ending: |  |  |  |  |  |  |  |  |  |  |  |
June 30, 2022 (remaining nine months) |  | $ | 436,012 |  |  | $ | 84,715 |  |  |  | (13,928 | ) |  | $ | 506,799 |
June 30, 2023 |  |  | 3,924,113 |  |  |  | 112,954 |  |  |  | (30,953 | ) |  |  | 4,006,114 |
June 30, 2024 |  |  | — |  |  |  | 112,954 |  |  |  | — |  |  |  | 112,954 |
June 30, 2025 |  |  | — |  |  |  | 112,954 |  |  |  | — |  |  |  | 112,954 |
After June 30, 2025 |  |  | — |  |  |  | 52,008 |  |  |  | — |  |  |  | 52,008 |
Total payments |  | $ | 4,360,125 |  |  | $ | 475,585 |  |  | $ | (44,881 | ) |  |  | 4,790,829 |
Less current portion |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (694,305 | )
Non-current portion |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | 4,096,524 |

X
- References No definition available. + Details
Name: | us-gaap_DebtDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition 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. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
Name: | us-gaap_DebtDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration