Note 14 – Subsequent Events



On May 13, 2019, the Company entered into an amendment (the “Second Amendment”) to the Credit Agreement discussed in Note 7.  The Second Amendment provides for reduced percentages to be used to calculate the quarterly revenue-based payments due on product revenue from net sales of FC2 during calendar 2019, a return to the current percentages used to calculate the quarterly revenue-based payments due on product revenue from net sales of FC2 during calendar 2020 and increased percentages to be used to calculate the quarterly revenue-based payments due on product revenue from net sales of FC2 during calendar 2021 and thereafter until the loan has been repaid. The Second Amendment also provides for an increase in the repayment amount from 175% to 176.5% of the aggregate amount advanced. In addition, the Second Amendment provides for payments under the Residual Royalty Agreement to commence at the same time as they would have commenced prior to the Second Amendment. The Second Amendment also eliminates the Company’s option to draw up to an additional $2.0 million under the Credit Agreement depending on the Company entering into agreements to distribute FC2 in Brazil and South Africa as the Company has determined that it would not make such draws. As a result of the Second Amendment, the Company’s quarterly revenue-based payment due May 15, 2019 will decrease from approximately $1.7 million to approximately $0.9 million. At this time, the Company is unable to determine all of the financial effects of the Second Amendment, which will likely result in the Company recording an extinguishment loss due to the modification of the terms of the Credit Agreement in the quarter ending June 30, 2019. An estimate of the loss amount cannot be made at this time as the Company is currently analyzing the accounting for the transaction, which includes fair value determinations.