Condensed Consolidated Balance Sheets |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Supplemental Balance Sheet Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Supplemental Balance Sheet Disclosures [Text Block] |
Note 3. Condensed Consolidated Balance Sheets
Inventories
Inventories consisted of the following (in thousands):
Notes Payable
On June 29, 2011, the Company entered into a Loan and Security Agreement and a Supplement to the Loan and Security Agreement with Venture Lending & Leasing VI, Inc. to borrow up to an aggregate of $2,500,000 (collectively, the “VLL6 Agreements”). The VLL6 Agreements provide for a first tranche of $1,500,000 and, upon meeting certain milestones, the Company became eligible to borrow an additional $1,000,000. The loan is secured by the assets of the Company. On June 29, 2011, the Company borrowed $1,500,000 on the first tranche. The cash interest or “streaming” rate on the loan is 10%. For the first nine months, the Company will make monthly interest-only payments set at $12,500. Thereafter, the Company will make principal and interest payments of $56,250 per month for thirty months. Additionally, the Company will make a final balloon payment of $116,505 on September 29, 2014, resulting in an effective interest rate of 13%. During the three and six months ended September 30, 2011, the Company made interest payments of $14,000 and $39,000, respectively.
At the time the Company borrows the additional funds pursuant to the second tranche, the Company will make interest-only payments for nine months following the commencement of the second tranche. Following the interest-only period, the second tranche will be amortized over thirty months, with a final payment due equal to 7.767% of the amount funded.
In connection with the VLL6 Agreements, the Company issued a warrant to Venture Lending & Leasing VI, LLC for the purchase of 226,325 shares of the Company’s common stock at a purchase price per share equal to $1.657. On September 30, 2011, the Company became eligible to draw the second tranche of the loan and issued a second warrant with coverage equal to $62,500 for the purchase of additional shares of common stock at a strike price equal to the 10-day volume-weighted average price (“VWAP”) ending on the trading day prior to the date the Company satisfied the second tranche milestones. On September 30, 2011, the Company issued the second warrant for the purchase of 39,100 shares of common stock at an exercise price of $1.5985 per share. If the Company draws on the second tranche, it will be obliged to issue a third warrant with coverage equal to $62,500 for the purchase of additional shares of the Company’s common stock at a strike price equal to the 10-day VWAP ending on the trading day prior to the borrowing date of the loan funded on the second tranche (collectively, the “Warrants”). The Warrants have a cashless exercise feature. The Warrants expire on November 30, 2018. Additionally, the Warrants related to the first tranche may be put back to the Company for $937,500 cash, this amount increased to $1,093,750 on September 30, 2011 when the Company became eligible to draw the second tranche of the loan. This amount will increase to $1,250,000 if the Company draws the additional $1,000,000 on the second tranche. The put feature is available to the holder for 60 days after the first of the following to occur: (i) a change in control of the Company, (ii) the closing of at least $20,000,000 of additional equity financing, or (iii) July 31, 2015.
The Company recorded the $1,093,750 cash value of the warrants as a put warrant liability and a corresponding amount of $1,093,750 was recorded as a discount on the note payable. The discount will be accreted to non-cash interest expense over the term of the loan using the effective interest method. For the three and nine months ended September 30, 2011, the Company recorded $59,000 of non-cash interest related to the note. The remaining balance of the discount on note payable amounted to $1,034,750 at September 30, 2011, of which $258,000 is included in the current portion of long-term debt, net, in the accompanying condensed consolidated balance sheet. The remaining balance of the note amounted to $1,500,000 at September 30, 2011, of which $200,000 is included in the current portion of long-term debt in the accompanying condensed consolidated balance sheet.
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