Item 1.01. Entry into Material Definitive Agreement
Please see the disclosure set forth under "Item 2.03 Creation of a Direct
Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of
a Registrant," which is incorporated by reference into this Item 1.01.
Item 1.02. Termination of a Material Definitive Agreement
Please see the disclosure set forth under "Item 2.03 Creation of a Direct
Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of
a Registrant," which is incorporated by reference into this Item 1.02.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant
On August 28, 2020, Celsion Corporation, a Delaware corporation ("Celsion"),
entered into the First Amendment (the "Amendment") to the Venture Loan and
Security Agreement with Horizon Technology Finance Corporation ("Horizon") dated
June 27, 2018 (the "Initial Horizon Credit Agreement").
On June 27, 2018, in connection with the closing of the Initial Horizon Credit
Agreement, Celsion drew down $10 million in new capital, as further described in
Celsion's Current Report on Form 8-K as filed with the Securities and Exchange
Commission on June 28, 2018. On August 28, 2020, in connection with the
Amendment, Celsion repaid $5 million of the initial $10 million, and the
remaining $5 million in obligations were restructured as set forth below.
Pursuant to the Amendment, the remaining $5 million in obligations of Celsion
under the Initial Horizon Credit Agreement are secured by a first-priority
security interest in substantially all assets of Celsion other than intellectual
property assets. The obligations will bear interest at a rate calculated based
an amount by which the one-month LIBOR exceeds 2% plus 9.625%. In no event shall
the interest rate be less than 9.625%. Payments pursuant to the Amendment are
interest only for the first twelve (12) months after August 1, 2020, followed by
a 21-month amortization period of principal and interest through the scheduled
maturity date. In addition, the remaining $5 million in obligations is subject
to an end of term fee equal, in the aggregate, to $275,000 which amount shall be
payable upon the maturity of the obligations or upon the date of final payment
or default, as applicable. In connection with the Amendment, Celsion has agreed
to a liquidity covenant which provides that, at all times, Celsion shall
maintain unrestricted cash and/or Cash Equivalents on deposit in accounts over
which the applicable Lenders maintain an account control agreement in an amount
not less than $2.5 million. In addition, pursuant to the Amendment, Celsion has
agreed to provide evidence to Horizon on or before March 31, 2021, that it has
received aggregate cash proceeds of not less than $5 million from the sale of
equity, debt, its New Jersey net operating losses, or a combination thereof,
subsequent to the date of the Amendment.
As a fee in connection with the Initial Horizon Credit Agreement, Celsion issued
Horizon warrants exercisable for a total of 190,114 shares of Celsion's common
stock (the "Existing Warrants") at a per share exercise price of $2.63. Pursuant
to the Amendment, one-half of the aggregate Existing Warrants, exercisable for a
total of 95,057 shares of Celsion's common stock, have been canceled, and, in
connection with the outstanding $5 million in obligations described above,
Celsion issued Horizon new warrants exercisable at a per share exercise price
equal to $1.01 for a total of 247,525 shares of Celsion's common stock (the "New
Warrants" and, together with the Existing Warrants, the "Warrants"). The
remaining 95,057 Existing Warrants issued in connection with the Initial Horizon
Credit Agreement remain outstanding at a per share exercise price of $2.63.
The Warrants are immediately exercisable for cash or by net exercise from the
date of grant and will expire after ten years from the date of grant. Following
the date of grant and within 90 days, Celsion is required to register the common
stock underlying the Warrants. The Horizon Credit Agreement contains customary
representations, warranties and affirmative and negative covenants including,
among other things, covenants that limit or restrict Celsion's ability to grant
liens, incur indebtedness, make certain restricted payments, merge or
consolidate and make dispositions of assets.
The foregoing description of the Amendment does not purport to be complete and
is qualified in its entirety by reference to the Amendment, a copy of which
Celsion intends to file as an exhibit to its Quarterly Report on Form 10-Q for
the quarter ending September 30, 2020.
Item 3.02 Unregistered Sales of Equity Securities.
Please see the disclosure set forth under "Item 2.03 Creation of a Direct
Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of
a Registrant" regarding the New Warrants, which is incorporated by reference
into this Item 3.02.
The purchase and issuance of the New Warrants occurred concurrent with the
execution of the Amendment and no separate consideration was paid for the New
Warrants, The Warrants have not been registered under the Securities Act of
1933, as amended, and was issued pursuant to the exemptions from registration
provided by Section 4(2) of the Securities Act of 1933 and/or Regulation D
promulgated thereunder. The shares issued or issuable thereunder are restricted
in accordance with Rule 144 under the Securities Act of 1933. The issuances and
the potential issuances did not involve any public offering; Celsion made no
solicitation in connection with the private placement other than communications
with the purchasers; Celsion obtained representations from the purchasers
regarding their investment intent, knowledge and experience; the purchasers
either received or had access to adequate information about Celsion in order to
make informed investment decisions; Celsion reasonably believed that the
purchasers are capable of evaluating the merits and risks of their investment;
and the shares potentially issuable thereunder are issuable with restricted
securities legends. This current report on Form 8-K does not constitute an offer
to sell or the solicitation of an offer to buy any security. The Warrant and the
shares issued upon exercise thereof have not been registered under the
Securities Act of 1933 or applicable state securities laws and may not be
offered or sold in the United States or any state thereof absent registration
under the Securities Act and applicable state securities laws or an applicable
exemption from registration.
Safe Harbor Statement
This Current Report on Form 8-K contains forward-looking statements. Actual
results and the timing of events could differ materially from those anticipated
in such forward-looking statements as a result of risks and uncertainties
including, without limitation, Horizon may not issue additional loan tranches
and has no obligation to issue them; Celsion may be unable to find suitable
assets or companies to acquire on attractive terms; any failure to satisfy the
closing conditions of subsequent borrowings of the credit facility; any increase
in Celsion's cash needs; unforeseen changes in the course of Celsion's research
and development activities and clinical trials; possible actions by customers,
suppliers, competitors or regulatory authorities; and other risks detailed from
time to time in the Company's periodic reports filed with the Securities and
Exchange Commission. Celsion undertakes no obligation to update any
forward-looking statement, whether written or oral, that may be made from time
to time, whether as a result of new information, future developments or
otherwise.
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