(formerly AuraSense Therapeutics, LLC)
NOTES TO FINANCIAL STATEMENTS
(in thousands, except unit, share, per unit, and per share data)
of 2018 and early adoption is permitted. An entity that elects early adoption must adopt all of the amendments in the same period. The Company is currently evaluating the impact of this guidance on its statement of cash flows.
3. Property and Equipment
Components of property and equipment were as follows:
Furniture and fixtures
Computers and software
Construction in process
Property and equipment, gross
Less: accumulated depreciation
Property and equipment, net
Construction in process at December 31, 2015 represents the purchase of scientific equipment in December 2015 that was placed in service during the second quarter of 2016.
On February 17, 2016, the Company closed a $10,000 loan facility with Hercules Technology Growth Capital (HTGC) at a floating interest rate equal to the greater of either (i) 9.95% or (ii) the sum of 9.95% plus the United States prime rate minus 3.50%, with an initial advance against this loan facility of $6,000. Total proceeds net of fees and issuance costs were $5,839. Fees and issuance costs of $161, as well as fees of $231 that are payable to the lender at maturity, are recorded as a reduction in the carrying amount of long-term debt on the Company’s balance sheet and will be amortized to interest expense through the maturity date of September 1, 2019 using the effective interest method. Interest amounts are payable monthly beginning on March 1, 2016 through the maturity date of September 1, 2019. Initially, principal amounts were payable monthly beginning on April 1, 2017 through the maturity date. In 2016, the Company met certain terms in the loan agreement so that principal amounts are payable monthly beginning on July 1, 2017. The loan is collateralized by a security interest in all tangible assets. In addition, the Company is subject to certain financial reporting requirements and certain negative covenants requiring lender consent. Additionally, HTGC shall have the right to participate in a future financing of up to $1,000 under the same terms and conditions and pricing afforded to other participants in that future financing.
In connection with the February 2016 HTGC loan, HTGC also has the right to purchase 104,348 shares of Series C preferred stock at $2.30 per share under the terms of a warrant agreement with the Company. The preferred stock warrant liability was recorded at fair value at the date of issuance of February 17, 2016 in the amount of $134 and recorded as a reduction in the carrying amount of long-term debt on the Company’s balance sheet. This discount of $134 will be amortized to interest expense through the loan maturity date of September 1, 2019 using the effective interest method. The Company will estimate the fair value of the preferred stock warrant liability at the end of each reporting period using the Black-Scholes model and will record any changes in fair value to other income (expense), net on the Company’s statement of operations. At December 31, 2016 the carrying value of long-term debt is $5,667 and the fair value of the preferred stock warrant liability is $201. See Note 9, Fair Value Measurements, for more information on the fair value of the preferred stock warrant liability.