Note 8 - Note Payable

3 Months Ended

Sep. 30, 2015

Notes to Financial Statements

Debt Disclosure [Text Block]

NOTE 8 – NOTE PAYABLE

In connection with the 2011 Distribution Agreement with Century (see Note 7, Distribution, License, Development and Commercialization Agreements), the Company entered into a secured note purchase agreement and a related security agreement pursuant to which Century agreed to loan to the Company up to an aggregate of $4.0 million and the secured note purchase agreement was amended effective July 1, 2014, to extend the principal due date by two years. Under this facility, the Company received $2.0 million on September 30, 2011, and the remaining $2.0 million on December 27, 2011. The note bears 5% annual interest which is payable quarterly in arrears on the last business day of March, June, September and December of each year through September 30, 2018, the maturity date when the total $4.0 million of principal becomes due, and can be prepaid by the Company at any time without penalty. The debt issuance discount of approximately $2.1 million is reflected as a reduction in long-term debt and is being amortized as interest expense over the term of the note using the effective interest method. The note is secured by substantially all of the Company's assets, including the Company’s intellectual property related to the PAS-Port® Proximal Anastomosis System, but excluding all other intellectual property, until the note is repaid. There are no covenants associated with this debt.

As of September 30, 2015, and June 30, 2015, the balance of the loan was $2.9 million and $2.8 million net of debt issuance costs of $1.1 million and $1.2 million, respectively, and the distribution of the microcutter products had not begun for the respective periods.