Quarterly report pursuant to Section 13 or 15(d)

Financing Arrangements

v3.7.0.1
Financing Arrangements
6 Months Ended
Jun. 30, 2017
Debt Disclosure [Abstract]  
Financing Arrangements

Note 7. Financing Arrangements

Notes Payable

2015 Term Note 

At December 31, 2016 and June 30, 2017, outstanding borrowings under the 2015 Term Note were $11.7 million and $13.1 million, respectively, net of unamortized debt issuance costs.

Borrowings under the 2015 Term Note bear interest at the greater of: (i) the average prime rate in effect during each month or (ii) the average three-month LIBOR rate during such month, plus 2.5% per annum, plus 7.5% with a minimum rate of 11%, with interest only payments through October 2017, followed by 36 equal monthly installments of principal and interest through October 2020, the maturity date. The weighted average interest rate during the three and six months ended June 30, 2016 was 11.00% for both periods. The weighted average interest rate during the three and six months ended June 30, 2017 was 11.42% and 11.50%, respectively.

For the three and six months ended June 30, 2016, the Company recognized interest expense of $0.2 million and $0.5 million, respectively, based on the outstanding balance during the respective periods. For the three and six months ended June 30, 2017, the Company recognized interest expense of $0.4 million and $0.7 million, respectively, based on the outstanding balance during the respective periods.

During the three and six months ended June 30, 2016, amortization of debt issuance costs was $32,000 and $64,000, respectively. During the three and six months ended June 30, 2017, amortization of debt issuance costs was $50,000 and $84,000, respectively.

Borrowings under the 2015 Term Note are secured by substantially all of the assets of the Company. Additionally, the terms of the 2015 Term Note contain certain financial covenants and various negative covenants.

In March 2017, the Company amended the 2015 Term Note. In connection with the amendment of the 2015 Term Note, the Company issued a warrant to purchase 76,704 shares of Series B-1 preferred stock at an exercise price of $5.8667 per share;  however, the terms of the warrant provided that upon the completion of a public offering in which the Company raises at least $25.0 million in net proceeds, the number of shares underlying the warrant would be reduced to 61,363 shares. Consistent with these terms, upon the closing of the IPO, the number of shares underlying this warrant was reduced to 61,363 shares, and the warrant became exercisable for common stock.

For further details regarding the 2015 Term Note, refer to Note 7, Financing Arrangements, to the notes to the consolidated financial statements included in the Prospectus.

Notes payable consisted of the following (in thousands):

 

 

December 31,

 

 

June 30,

 

 

 

2016

 

 

2017

 

 

 

 

 

 

 

(unaudited)

 

Notes payable

 

$

12,000

 

 

$

13,500

 

Unamortized debt issuance costs

 

 

(321

)

 

 

(378

)

Current maturities of term note

 

 

(667

)

 

 

(3,000

)

Total notes payable, net of current maturities

 

$

11,012

 

 

$

10,122