Quarterly report pursuant to Section 13 or 15(d)

Note 5 - Note Payable

v3.7.0.1
Note 5 - Note Payable
3 Months Ended
Mar. 31, 2017
Notes to Financial Statements  
Debt Disclosure [Text Block]
5.
        Note Payable
  
On
June
20,
2016,
we entered into a Loan and Security Agreement, as amended
January
13,
2017
(the
“2016
Loan Agreement”) with Western Alliance Bank (“WAB”), pursuant to which WAB agreed to loan us up to an aggregate of
$10,000,000
payable in
two
tranches of
$7,500,000
and
$2,500,000.
The funding conditions for both tranches were satisfied as of the closing date, and therefore, the aggregate principal amount of
$10,000,000
was provided to us on
June
20,
2016.
The proceeds received were used to repay the outstanding existing indebtedness and the remaining balance was used for working capital purposes and to fund general business requirements. The borrowings are repayable in interest only payments until
July
1,
2017
and then
30
monthly equal installments of principal and interest. The term loan bears interest on the outstanding obligations under the loan at a floating per annum rate equal to the greater of (i) the Index Rate (i.e., the
30
day U.S. LIBOR rate reported in the Wall Street Journal) plus
6.96%,
determined as of the last day of each month, and (ii)
7.40%.
The interest rate for the note payable with WAB was
7.94%
as of
March
31,
2017.
 
In connection with the
2016
Loan Agreement, we issued a
10
-year warrant to the WAB to purchase a total of
100,402
shares of the Company’s common stock at an exercise price of
$4.98
per share (See Note
7).
 
 
The Company is also required to meet certain financial and other covenants in connection with the
2016
Loan Agreement. These covenants include actual performance to plan revenue of not less than
80%
which is not required to be complied with if the Company maintains a ratio of unrestricted cash with WAB to indebtedness of at least
1.25
to
1.00.
 In addition, the Company must at all times maintain unrestricted cash in accounts with WAB in an amount equal to or greater than
$2,000,000,
which financial covenant shall no longer apply at such time that the Company achieves a ratio of minimum unrestricted cash in accounts with WAB to indebtedness of at least
1.25
to
1.00.
As of
March
31,
 
2017,
the Company was in compliance with all covenants.
 
In addition to all outstanding principal and accrued interest on the term loan, the Company shall pay a final payment fee equal to
4.00%
of the original principal amount of the term loan.
 
All borrowings under the
2016
Loan Agreement are collateralized by substantially all of the Company’s assets, including intellectual property.
 
As of
March
31,
 
2017,
future minimum payments under the note payable are as follows (in thousands): 
 
Year Ending December 31,
 
 
 
 
2017
  $
2,534
 
2018
   
4,463
 
2019
   
4,512
 
Total payments
   
11,509
 
Less: Amount representing interest
   
(1,509
)
Present value of obligations
   
10,000
 
Less: Unamortized debt discount
   
(336
)
     
9,664
 
Less: Note payable, noncurrent portion
   
6,794
 
Note payable, current portion
  $
2,870