Quarterly report pursuant to Section 13 or 15(d)

Debentures

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Debentures
6 Months Ended
Jun. 30, 2021
Debt Disclosure [Abstract]  
Debentures

Note 7 – Debentures

 

The carrying amount of all outstanding debentures as of June 30, 2021and December 31, 2020 is as follows:

 

    June 30, 2021     December 31, 2020  
      (unaudited)        
Debentures   $ 12,690,539     $ 12,690,539  
Less current portion     (12,690,539 )     (12,690,539 )
Debentures, net of current portion   $ -     $ -  

 

Payment of all outstanding debentures totaling $12.7 million, including late-payment penalties, at December 31, 2020 was past due by the debentures’ original terms. The debentures bear interest at the rate of 18% per annum and are secured by a first priority lien on all of the Company’s assets. The terms of the outstanding debentures as of December 31, 2020 are more fully described in Note 9 to the Company’s consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2020. Certain of these debentures were issued with warrants to purchase shares of the Company’s common stock. Outstanding warrants are more fully discussed in Note 11.

 

The Company accrued interest expense on outstanding debentures during the three months ended June 30, 2021 and 2020 of $0.6 million and $1.9 million, respectively, and during the six months ended June 30, 2021 and 2020 of $1.1 million and $3.9 million, respectively.

 

On June 30, 2021, as adjusted for the Reverse Stock Splits, $2.6 million of principal amount of outstanding debentures were convertible into 5.9 million shares of the Company’s common stock at a price of $0.4407 per share and $5.6 million of outstanding debentures were convertible on that date into 0.1 million shares of the Company’s common stock at a conversion price of $52.00. The remaining outstanding debentures of $4.5 million are non-convertible.

 

See Notes 3 and 11 for a discussion of the dilutive effect of the outstanding convertible debentures and warrants as of June 30, 2021 and Note 16 for the dilutive effect of outstanding convertible debentures and warrants as of August 11, 2021.