LONG-TERM DEBT

9 Months Ended

Sep. 30, 2021

LONG-TERM DEBT [Abstract]

LONG-TERM DEBT

NOTE 7 — LONG-TERM DEBT:

On September 3, 2019, the Company entered into a Credit Agreement and Guaranty (the “Credit Agreement”) with Perceptive Credit Holdings II, LP (the “Lender”). The Credit Agreement provides for a $20,000,000 senior secured term loan credit facility, which was drawn in full on September 4, 2019. Under the terms of the Credit Agreement, the Company may use the proceeds (i) for general working capital purposes and other permitted corporate purposes, (ii) to refinance certain of the Company’s existing indebtedness and (iii) to pay fees, costs and expenses incurred in connection with the Credit Agreement, including the Lender’s closing cost amount of $550,000, which was netted from the proceeds, and a financing fee of $600,000 (3.0% of gross proceeds) payable to Craig-Hallum Capital Group LLC, the Company’s financial advisor for the financing.

No principal repayments are due under the Credit Agreement prior to September 30, 2022, unless the Company elects to prepay principal or principal is accelerated pursuant to an event of default identified in the Credit Agreement. Principal installments in the amount of $300,000 are payable on the last day of each of the eleven months from September 2022 through July 2023, and all remaining principal is payable at maturity on September 3, 2023. The Company may prepay outstanding principal from time to time, subject to payment of a premium on the prepaid principal amount equal to 4% through September 3, 2022. No premium will be due with respect to any prepayment made on or after September 4, 2022.

The Credit Agreement contains financial covenants requiring that the Company (i) maintain aggregate unrestricted cash of not less than $3,000,000 at all times and (ii) achieve specified minimum rolling four-quarter total revenue amounts as of September 30, 2019 and the last day of each calendar quarter thereafter. The minimum total revenue amounts, which range from $32.0 million to $50.1 million, were developed for purposes of the Credit Agreement and do not reflect the internal estimates and plans used by Chembio’s management and the Board to understand and evaluate the Company’s operating performance, to establish budgets, and to establish operational goals for managing the Company’s business.

As of September 30, 2021, the loan balance, net of unamortized discounts and debt issuance costs, was $18.6 million, and the Company was in compliance with its loan covenants.