Note 7 - Note Payable
|12 Months Ended|
Dec. 31, 2018
|Notes to Financial Statements|
|Debt Disclosure [Text Block]||
June 20, 2016,the Company entered into a Loan and Security Agreement, as amended
January 13, 2017 (the
“2016Loan Agreement”) with Western Alliance Bank (“WAB”), pursuant to which WAB agreed to loan the Company up to an aggregate of
$2,500,000.The funding conditions for both tranches were satisfied as of the closing date, and therefore, the aggregate principal amount of
$10,000,000was provided on
June 20, 2016.The terms of the loan also required the Company to meet certain financial and other covenants in connection with the
2016Loan Agreement. In addition to all outstanding principal and accrued interest on the term loan, the terms of the loan required the Company to pay a final payment fee equal to
4.00%of the original principal amount of the term loan. All borrowings under the
2016Loan Agreement were collateralized by substantially all of the Company’s assets, including intellectual property. The outstanding principal balance and accrued interest related to this note payable were repaid in
In connection with the
2016Loan Agreement, the Company issued a
10-year warrant to WAB to purchase a total of
100,402shares of the Company’s common stock at an exercise price of
$4.98per share (See Note
May 22, 2017,the Company entered into a Term Loan Agreement (the
“2017Loan Agreement”) with affiliates of CRG LP (“CRG”). The credit facility consists of
$20,000,000drawn at closing and access to additional funding of up to an aggregate of
$10,000,000for a total of
$30,000,000available under the credit facility. On
December 29, 2017,the Company accessed the remaining
$10,000,000available under the credit facility.
A portion of the initial loan proceeds were used to repay all of the amounts owed by the Company under its
2016Loan Agreement with WAB. The remainder of the loan proceeds (after deducting loan origination costs and other fees and expenses incurred in connection with the
2017Loan Agreement), plus any additional amounts that
maybe borrowed in the future, will be used for general corporate purposes and working capital.
2017Loan Agreement has a
six-year term with
fouryears of interest-only payments after which quarterly principal and interest payments will be due through the maturity date. Amounts borrowed under the
2017Loan Agreement accrue interest at an annual fixed rate of
may,at the election of the Company, be paid in-kind during the interest-only period by adding such accrued amount to the principal loan amount each quarter. During the years ended
December 31, 2018and
2017,the Company paid interest in-kind of
$495,000,respectively, which was added to the total outstanding principal loan in that period. The Company is also required to pay CRG a final payment fee upon repayment of the loans in full equal to
5.0%of the sum of the aggregate principal amount plus the deferred interest added to the principal loan amount during the interest-only period. The Company accounts for the final payment fee by accruing the fee over the term of the loan using the effective interest rate method. As of
December 31, 2018,interest accrued related to the final payment fee in the amount of
$484,000was included in other noncurrent liabilities in the consolidated balance sheets.
mayprepay all or a portion of the outstanding principal and accrued unpaid interest under the
2017Loan Agreement at any time upon prior notice to CRG, subject to a prepayment fee during the
fiveyears of the term (which reduces each year) and
noprepayment fee thereafter.
As security for its obligations under the
2017Loan Agreement, the Company entered into security agreements with CRG whereby the Company granted CRG a lien on substantially all of the Company’s assets, including intellectual property.
The terms of the
2017Loan Agreement also require the Company to meet certain financial and other covenants. These covenants require the Company to maintain cash and cash equivalents of
$2.0million and, each year through the end of
2022,to meet a minimum total annual revenue threshold. In the event that the Company does
notmeet the minimum total annual revenue threshold for a particular year, then the Company can retroactively cure the shortfall by either issuing additional equity in exchange for cash or incurring certain additional permitted indebtedness, in each case, in an amount equal to
2.0times the shortfall. Any such amounts shall be applied to prepay the loans. The
2017Loan Agreement also contains customary affirmative and negative covenants for a credit facility of this size and type, including covenants that limit or restrict the Company’s ability to, among other things, incur indebtedness, grant liens, merge or consolidate, dispose of assets, make investments, make acquisitions, enter into transactions with affiliates, pay dividends or make distributions, license intellectual property rights on an exclusive basis or repurchase stock, in each case subject to customary exceptions. As of
2018,the Company was in compliance with all covenants.
December 31, 2018and
$28,948,000was recorded on the balance sheets under the
2017Loan Agreement, which is net of the remaining unamortized debt discount.
In connection with the
2017Loan Agreement, the Company issued
10-year warrants to CRG to purchase a total of
222,049shares of the Company’s common stock at an exercise price of
$9.50per share (See Note
2018,future minimum payments under the note payable are as follows (in thousands):
The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef