MNKD 2017 Annual Report

minimum quantities of insulin for calendar years 2018 through 2023 for an aggregate total remaining purchase price of € 90.3 million at December 31, 2017. We may not have the necessary capital resources on hand in order to service this contractual commitment. Our losses have had, and are expected to continue to have, an adverse impact on our working capital, total assets and stockholders’ equity. Our ability to achieve and sustain positive cash flow from operations and profitability depends heavily upon successfully commercializing Afrezza, and we cannot be sure when, if ever, we will generate positive cash flow from operations or become profitable. We have a substantial amount of debt, and we may be unable to make required payments of interest and principal as they become due. As of December 31, 2017, we had $157.8 million principal amount of outstanding debt, consisting of: • $23.7 million principal amount of senior convertible notes bearing interest at 5.75% per annum (the “2021 notes”), with interest payable in cash semiannually in arrears on February 15 and August 15 of each year, and maturing on October 23, 2021; • $39.4 million principal amount of notes issued pursuant to the Facility Agreement, bearing interest at 9.75% per annum (the “2019 notes”), which is payable in cash quarterly in arrears on the last business day of March, June, September and December of each year, and of which total principal amount $4.4 million was scheduled to become due and payable on January 19, 2018, $15.0 million will become due and payable in each of July 2018 and July 2019, and $5.0 million will become due and payable in December 2019; • $15.0 million principal amount of notes issued pursuant to the Facility Agreement, bearing interest at 8.75% per annum (the “Tranche B notes” and together with the 2019 notes, the “Facility Financing Obligation”), which is payable in cash quarterly in arrears on the last business day of March, June, September, and December of each year, and of which total principal amount $5.0 million will become due and payable in each of May 2018, May 2019, and December 2019; and • $79.7 million principal amount of indebtedness under The Mann Group Loan Arrangement maturing on January 5, 2010, bearing interest at a fixed rate of 5.84% per annum payable quarterly in arrears on the first day of each calendar quarter for the preceding quarter, except that the lender has agreed to defer interest payments until July 1, 2018 unless otherwise permitted under the subordination agreement with Deerfield, and such interest payments are subject to additional deferral beyond July 1, 2018 until our payment obligations to Deerfield have been satisfied in full. On January 18, 2018, we entered into an Exchange and Sixth Amendment to Facility Agreement (the “Sixth Deerfield Amendment”) with Deerfield, pursuant to which, among other things, we issued to Deerfield an aggregate of 1,267,972 shares of our common stock in exchange for the cancellation of $3,157,251 of 2019 notes. In addition, the payment date for the remaining $1,250,000 in remaining principal amount of the 2019 notes that was previously due to be repaid on January 19, 2018 was extended to May 6, 2018. There can be no assurance that we will have sufficient resources to make any required repayments of principal under the terms of our indebtedness when required. Further, if we undergo a fundamental change, as that term is defined in the indentures governing the terms of the 2021 notes, or certain Major Transactions as defined in the Facility Agreement in respect of the 2019 notes and the Tranche B notes, the holders of the respective debt securities will have the option to require us to repurchase all or any portion of such debt securities at a repurchase price of 100% of the principal amount of such debt securities to be repurchased plus accrued and unpaid interest, if any. While we have been able to timely make our required interest payments to date, we cannot guarantee that we will be able to do so in the future. If we fail to pay interest on the 2021 notes, 2019 notes, or Tranche B notes, or if we fail to repay or repurchase the 2021 notes, 2019 notes, Tranche B notes, or the loans under The Mann Group Loan Arrangement when required, we will be in default under the instrument for such 21