The presentation addresses the size of the market, the depth of the management team, and the advantages of the product. It briefly mentions commercialization, but really says very little about their plans or projections. Since its spin, the company has borrowed $15 million, and it can borrow up to $30 million more under the same agreement if certain revenue targets are hit.
The credit facilities consist of (a) term loan facilities in an aggregate maximum principal amount of $40,000,000 comprised of (i) a $15,000,000 Term Loan A Commitment, which was funded in full at the initial closing under the Loan Agreement, (ii) a $12,500,000 Term Loan B Commitment, which is available for draw December 31, 2016 through June 30, 2017, and (iii) a $12,500,000 Term Loan C Commitment, which is available for draw June 30, 2017 through December 31, 2017 (collectively, the “Term Loans”); and (b) a Revolving Line Commitment in a maximum principal amount of $5,000,000 (the “Revolving Loans” and collectively with the Term Loans, the “Loans”), in each case provided 50% by each Lender severally and not jointly. Availability of the Term Loan B Commitment is subject to the Borrowers achieving consolidated trailing six month revenues of at least $13,500,000, and the availability of the Term Loan C Commitment is subject to the Borrowers achieving consolidated trailing six month revenues of at least $20,000,000. The Borrowers must draw on each Term Loan B and C Commitments within 60 days of achieving the applicable revenue threshold. The Revolving Line Commitment is subject to a borrowing base of 80% of the aggregate amount of eligible accounts receivable of the Borrowers, which advance rate and eligibility criteria may be modified by the Lenders from time to time based on periodic collateral examinations.
The company can only access the next $12.5 million if they achieve $13.5 million in revenue for a six month period prior to June 30,2017 and the final $12.5 million if they achieve $20 million in revenue for a six month period prior to December 31, 2017. These targets would represent strong growth for a company that did just $5.2 million in revenue last year. If the company, which still trades below its net cash value, can hit these targets, this bumpy ride may prove quite profitable for shareholders who hang on.
Disclosure: The author holds no shares of any stock mentioned.