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Long-term debt
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12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2013
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| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Long-term debt | Long-term debt Long-term debt at December 31, 2012 and 2013, consists of the following:
On June 27, 2013, the Company entered into a $20.0 million term loan credit agreement (the “Credit Agreement”) with Sixth Floor Investors LP ("Sixth Floor"), as administrative agent, and the other lenders party thereto (the “Lenders”). Under the Credit Agreement, on June 28, 2013, the Company borrowed $12.0 million (“Tranche 1”) and had the option to borrow the remaining $8.0 million (“Tranche 2”) at any time until December 31, 2013, subject to the completion of a public equity offering of over $40.0 million (a “Qualifying Equity Offering”). The Company subsequently closed a Qualifying Equity Offering on July 30, 2013. The Company did not borrow the Tranche 2 funds prior to the December 31, 2013 deadline and those funds are no longer available under the Credit Agreement. The term of the Credit Agreement is four years. Outstanding loans bear interest at 6.5% per annum plus the greater of 2% or one-month LIBOR. Interest payments will be made monthly in arrears. Principal will be payable in 30 monthly installments, beginning in February 2015. The Credit Agreement provides for an exit fee of 5.0% of the total amount borrowed under the facility, due upon final repayment; a 0.5% facility fee, which was paid upon execution of the Credit Agreement; a quarterly administrative fee of $2,500; and the reimbursement of certain fees and expenses of the Lenders. In the event of prepayment, other than regularly scheduled installments and mandatory prepayments, a premium of 1.0% to 3.0% of the then-outstanding balance, dependent upon the timing of the prepayment, would be incurred. The Credit Agreement does not allow the Company to incur or permit to exist additional debt, except for liabilities arising with respect to customary indemnification contracts entered into in the ordinary course of business. The Company used a portion of the proceeds of the Tranche 1 loans to repay the remaining balances due to the Wisconsin Economic Development Corporation under two promissory notes. The Credit Agreement contains customary affirmative and negative covenants and events of default, but does not include financial covenants. The Credit Agreement restricts the Company’s ability to, among other things, sell certain assets, engage in a merger or change in control transaction, incur debt, pay cash dividends, enter into transactions with affiliates and make investments. The Credit Agreement also contains events of default that are customary for credit facilities of this type, including payment defaults, covenant defaults, defaults related to insolvency and events of default relating to liens, judgments, material misrepresentations and the occurrence of certain material adverse events. In connection with the Tranche 1 loans, the Lenders were issued detachable warrants to purchase shares of our Series B preferred stock. The warrants have since been converted to warrants to purchase shares of common stock, see Note 5. A total of 28,406 warrants were issued in respect of the Tranche 1 loans, each with an exercise price per share equal to the initial public offering ("IPO") price per share in the Company's initial public offering or $12.68 if an offering was not completed before August 1, 2013. As of the date of our IPO, the strike price on these warrants was established at the IPO price per share of $12.00. The warrants have a 10 year term. The warrants contain no mandatory redemption features and no repurchase obligations requiring the transferring of assets and, once issued, will relate to a fixed number of shares, except for customary anti-dilution adjustments. At the time of issuance, the relative fair value of the warrants was estimated at $261,000 using the Black- Scholes method and recorded as a debt discount against the notes. The warrants had a strike price that would have been adjusted if the Company had not completed its initial public offering prior to August 1, 2013. Due to this initial variability in exercise price, the warrants were accounted for as a liability when issued. As of the IPO date, when the exercise price was no longer variable, the Company revalued the warrants and reclassified the remaining value to equity. The revaluation resulted in a $20,000 gain that was recorded to Other income in the statements of operations. |
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