Altimmune, Inc. Debt Disclosure

11.	Notes Payable

The Company’s outstanding notes payable are summarized as follows:

 

		December 31,
		2017				2016
Line of credit		$	49,702			$	49,702
Economic Development Partnership of Alabama (“EDPA”) promissory note			—				96,496
Hammond promissory note			—				100,000
Alex Choi promissory note			—				100,000
Frommer, Lawrence and Haug LLP (“FLH”) promissory note			—				112,431
Total notes payable		$	49,702			$	458,629

Line of Credit

The Company has a secured line of credit agreement with a financial institution that provides for borrowings up to $250,000 and matures in April 2018. The borrowings are secured by all of the Company’s accounts receivable from BARDA. Interest is payable monthly at the financial institution’s prime rate (5.00% at December 31, 2017) plus 2.0% per annum with a floor of 5.0%. Accrued interest was $536 and $33 as of December 31, 2017 and 2016, respectively. Interest expense for the years ended December 31, 2017 and 2016 totaled $3,321 and $2,956, respectively.

EDPA Promissory Note

The EDPA promissory note was in default as of December 31, 2016 and was classified as a current liability. The promissory note continued accruing interest at the stated interest rate of 6% per annum, compounded annually, through February 28, 2017 when the outstanding principal and accrued interest were converted into the Notes according to the Note Agreement. Accrued interest was $34,121 at December 31, 2016. Interest expense on the promissory note was $1,079 and $5,621 in 2017 and 2016, respectively.

Hammond Promissory Note

The Hammond promissory note was in default as of December 31, 2016 and was classified as a current liability. The promissory note continued accruing interest at the stated default interest rate of 15% per annum through February 28, 2017 when accrued interest was converted into the Notes according to the Note Agreement and the principal was repaid with proceeds from the Notes. Accrued interest was $94,685 at December 31, 2016. Interest expense on the promissory note was $4,663 and $15,000 in 2017 and 2016, respectively.

Alex Choi Promissory Note

Alex Choi is one of the Company’s stockholders. The Alex Choi promissory note was in default as of December 31, 2016 and was classified as a current liability. The promissory note continued accruing interest at the stated interest rate of 6% per annum through February 28, 2017 when the outstanding principal and accrued interest were converted into the Notes according to the Note Agreement. Accrued interest was $40,951 at December 31, 2016. Interest expense on the promissory note was $1,575 and $8,149 in 2017 and 2016, respectively.

FLH Promissory Note

The FLH promissory note was in default as of December 31, 2016 and was classified as a current liability. The promissory note was noninterest bearing and was repaid with proceeds from the Notes.