LONG-TERM DEBT

9 Months Ended

Sep. 30, 2022

LONG-TERM DEBT [Abstract]

LONG-TERM DEBT

NOTE 7 — LONG-TERM DEBT:

On September 3, 2019, Chembio entered into a Credit Agreement and Guaranty (the “Credit Agreement”) with Perceptive Credit Holdings II, LP (the “Lender”). The Credit Agreement provides for a $20.0 million senior secured term loan credit facility, which was drawn in full on September 4, 2019. Under the terms of the Credit Agreement, Chembio may use the proceeds (i) for general working capital purposes and other permitted corporate purposes, (ii) to refinance certain of Chembio’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, Chembio’s financial advisor for the financing.

Principal outstanding under the Credit Agreement bears interest at a rate per annum equal to the sum of (a) the greater of the one-month London Interbank Offered Rate and 2.5% plus (b) 8.75%. At any time at which an event of default has occurred and is continuing, the interest rate will increase by 4.0%. Accrued interest is payable on a monthly basis. On September 30, 2022 the interest rate was 11.32%.

No principal repayments were due under the Credit Agreement prior to September 30, 2022.  Chembio did not elect to prepay principal and an event of default identified in the Credit Agreement did not occur that would have accelerated principal payments.  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. As of September 30, 2022, Chembio paid the first principal installment in accordance with the Credit Agreement.

Chembio’s obligations under the Credit Agreement are secured by a first priority, perfected lien on substantially all of its property and assets, including its equity interests in subsidiaries.

As of  September 30, 2022, the loan balance, net of unamortized discounts and debt issuance costs, was $19.0 million, and Chembio was in compliance with its loan covenants.