Quarterly report pursuant to Section 13 or 15(d)

Debt

v2.4.1.9
Debt
 3 Months Ended
Mar. 31, 2015
Debt Disclosure [Abstract]  
Debt
Debt  
On June 30, 2014, the Company entered into a Loan and Security Agreement with Hercules in connection with the Hercules Term Loan.  The Hercules Term Loan provided the Company with a $20 million term loan. On June 30, 2014, the Company also entered into a Securities Purchase Agreement with MG Partners II Ltd. (“Magna”) pursuant to which the Company sold to Magna an initial unsecured senior convertible note (“Initial Convertible Note”) with an original principal amount of $2.9 million for a purchase price of $2.5 million. Additionally, on August 11, 2014, the Company sold to Magna an additional unsecured senior convertible note (“Additional Convertible Note”) with an original principal amount of $3.5 million for a purchase price of $3.5 million. The Initial Convertible Note and the Additional Convertible Note are collectively referred to as the Magna Convertible Notes.
Hercules Term Loan
The Hercules Term Loan matures on January 1, 2018. The Hercules Term Loan included a $200,000 closing fee, which was paid to Hercules Technology on the closing date of the loan.  The closing fee has been recorded as a debt discount and is being amortized to interest expense over the life of the loan. The Hercules Term Loan also includes a non-refundable final payment fee of $1.5 million.  The final payment fee is being accrued and recorded to interest expense over the life of the loan. The Hercules Term Loan also has an early termination fee of $1.2 million if the loan is paid prior to July 1, 2015.
The Hercules Term Loan bears interest at the rate of the greater of either (i) the prime rate plus 7.7%, and (ii) 10.95%.  Interest accrues from the closing date of the loan and interest payments are due monthly. Principal payments are required commencing August 1, 2015 and are to be made in 30 equal installments of approximately $700,000, with the remainder due at maturity. 
The Hercules Term Loan contains certain covenants related to restrictions on payments to certain Company affiliates, financial reporting requirements and a minimum liquidity covenant that requires the Company to maintain cash and cash equivalents of not less than $9 million.  Although the Company was in compliance with the liquidity covenant at March 31, 2015, the Company anticipates that it will be non-compliant with the liquidity covenant during the fourth quarter of 2015 if additional financing is not obtained, and has therefore classified the entire obligation as a current liability.  
Magna Convertible Notes
The Initial Convertible Note and the Additional Convertible Note mature on June 30, 2016 and August 11, 2016, respectively, (subject to extension by the holder) and accrue interest at an annual rate of 6.0%.  At March 31, 2015, the outstanding principal amounts of the Initial Convertible Note and the Additional Convertible Note were $798,000 and $3.5 million, respectively.
The Magna Convertible Notes are convertible at any time after issuance, in whole or in part, at Magna’s option, into shares of common stock at a conversion price equal to the lesser of (i) $3.75 per share or (ii) a price equal to 80% of the lowest daily volume weighted average price (“VWAP”) of our common stock during the five trading days prior to conversion.
During the three months ended March 31, 2015, Magna converted a total of $202,000 of the principal amount of the Convertible Notes into 373,000 shares of common stock. The Company recorded a loss upon extinguishment of $79,000 during the three months ended March 31, 2015.

Outstanding long-term debt consisted of the following (in thousands):
 
March 31, 2015
 
December 31, 2014
 
Outstanding Principal
 
Unamortized Discount
 
Net Carrying Amount
 
Outstanding Principal
 
Unamortized Discount
 
Net Carrying Amount
Hercules Term Loan
$
20,000

 
$
(843
)
 
$
19,157

 
$
20,000

 
$
(930
)
 
$
19,070

Convertible Note
4,298

 
(1,188
)
 
3,110

 
4,500

 
(1,439
)
 
3,061

Total debt
24,298

 
(2,031
)
 
22,267

 
24,500

 
(2,369
)
 
22,131

Less: Current portion
(20,000
)
 
843

 
(19,157
)
 
(20,000
)
 
930

 
(19,070
)
Long-term debt
$
4,298

 
$
(1,188
)
 
$
3,110

 
$
4,500

 
$
(1,439
)
 
$
3,061


The following summarizes by year the future principal payments as of March 31, 2015 (in thousands):
Years Ending December 31,
Hercules Term Loan
 
Magna Convertible Notes
 
Total
2015
$
2,949

 
$
—

 
$
2,949

2016
7,666

 
4,298

 
11,964

2017
8,567

 
—

 
8,567

2018
818

 
—

 
818

2019
—

 
—

 
—

Total future principal payments
$
20,000

 
$
4,298

 
$
24,298