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Debt
12 Months Ended
Dec. 31, 2015
Debt Disclosure [Abstract]  
Debt
Debt
Convertible Notes
In July 2014, we issued a subordinated promissory note (the 2014 Note) totaling $5.0 million with a 7% coupon rate and maturing January 31, 2016. The note contained an option to convert outstanding principal and paid-in-kind interest into our Class A common stock upon successful completion of an initial public offering at a 10% discount to the offering price.
We evaluated the convertible debt instrument under ASC 480, Distinguishing Liabilities from Equity and concluded it would be accounted for as a liability. We concluded the holder’s redemption rights upon a new equity financing or change of control event and the holder’s options to either convert the note into shares in the event of an initial public offering or to continue receiving simple interest at a 10% paid-in-kind coupon rate were embedded features of the note that were required to be bifurcated and accounted for as a compound derivative in accordance with ASC 815-15, Derivatives and Hedging. We recorded $1.2 million as the fair value of the embedded derivative liability upon issuance of the convertible note as of July 31, 2014, with a corresponding amount recorded as a debt discount. The discount was being accreted to interest expense over the term of the note.
On December 16, 2014, in conjunction with the close of our initial public offering, the holder elected to exercise the option to convert the 2014 Note. We settled the $5.1 million of outstanding principal and interest with 407,480 shares of our Class A common stock at a price of $12.60 per share, which represents 90% of the initial public offering price of our Class A common stock. This settlement resulted in a loss of $111,000, which is reported in “Other income and (expense), net” on the consolidated statement of operations. The change in fair value of the derivative resulted in expense of $193,000 through conversion and is reported in “Other income and (expense), net” on the consolidated statement of operations. We recorded $400,000 of interest related to the convertible note through conversion.
Other Long-Term Debt
On August 31, 2009, we received financing from the IEDA that provides for a loan of $100,000, accruing interest at 5%, due in monthly installments maturing on August 31, 2014. The loan was paid in full during the year ended December 31, 2014.
In addition, we received a loan of $150,000 from IEDA on August 31, 2009. We are required to pay the lesser of 2% of prior year total gross revenue or $25,000 per year until $225,000 has been remitted. We expect to pay $25,000 in 2016, and therefore, the principal portion of $18,000 and $73,000 have been reflected in the current and long-term portion of debt on our balance sheet, respectively. Interest will be accreted over the estimated period of repayment. Under the terms of both IEDA notes, we were required to create 20 jobs in Iowa by May 2012 and maintain them through May 2014, which we did. In the event such conditions were not met, $150,000 of the loan amount would have been immediately due and payable. We recorded interest expense of $7,100, $6,800 and $11,000 for the years ended December 31, 2015, 2014 and 2013, respectively, related to such 2009 debt agreements.
On February 15, 2010, we received financing from IEDA that provides for a forgivable grant of $150,000. The grant is forgivable after 10 years unless any of the following events occur: we complete an initial public offering, our operations and development center move out of Iowa, or we sell 51% or more of our assets or the company. We recorded interest expense of $9,000 and $11,000 for the years ended December 31, 2014 and 2013, respectively, related to such debt agreement. In connection with our initial public offering in December 2014, the grant became due and payable including accrued interest at a rate of 6%. The outstanding principal and interest was paid in full during December 2014.
On April 30, 2010, we received a loan of $100,000 from the City of Ames accruing interest at 1.625% per annum, due in monthly installments. The loan was secured by furniture located in Ames, Iowa. The terms of the loan included a requirement to create 62 jobs by January 2015, which was met. We recorded interest expense of $300 and $1,000 for the years ended December 31, 2014 and 2013, respectively, related to such debt agreements. This loan was paid in full during December 2014.
On May 20, 2010, we received a non-interest bearing loan of $500,000 from IEDA, due in monthly installments from September 2010 through August 2015. Under the terms of the loan, we were required to create 62 jobs by January 2013 and maintain them through January 2015. We have met this requirement. This loan was paid in full during the year ended December 31, 2015.
On July 14, 2011, we obtained a $1.0 million line of credit with Bankers Trust. The line of credit has a variable interest rate of the bank’s prime lending rate plus 1.5%. We recorded interest expense of $0 for the years ended December 31, 2014 and 2013 related to such debt agreement. The line of credit matured during 2014 and was not renewed.
During 2012, we entered into various vehicle financing arrangements totaling $85,000. The loans accrued interest at 8.35% per annum and were due in monthly installments maturing August 2015. We recorded interest expense of $3,200 and $5,400 for the years ended December 31, 2014 and 2013, respectively related to such debt agreements. These debt agreements were paid in full during the year ended December 31, 2014.
On March 6, 2013, we obtained a line of credit with Morgan Stanley providing for maximum borrowings of $20.8 million. The availability on the line of credit is limited to the value of our cash and marketable securities held in the associated account at Morgan Stanley. We recorded interest expense of $0, $16,000 and $27,000 for the years ended December 31, 2015, 2014 and 2013 related to such debt agreement. The line of credit was closed during 2015.
In August 2014, we entered into a $15.0 million credit facility with Silicon Valley Bank, which was subsequently amended. The credit facility can be used to fund working capital and general business requirements and matures in August 2016. The credit facility is secured by all of our assets, has first priority over our other debt obligations, and requires us to maintain certain financial covenants, including the maintenance of at least $5.0 million of cash on hand or unused borrowing capacity. The credit facility contains certain restrictive covenants that limit our ability to transfer or dispose of assets, merge with other companies or consummate certain changes of control, acquire other companies, pay dividends, incur additional indebtedness and liens, experience changes in management and enter into new businesses. The credit facility has a variable interest rate equal to the bank’s prime lending rate with interest payable monthly and the principal balance due at maturity. The credit facility’s interest rate was 3.5% at December 31, 2015. In connection with the credit facility, at December 31, 2015 a letter of credit issued by the bank was outstanding in the amount of $2.3 million as security against a February 2011 forgivable loan that was closed out in December 2015 (see Note 5). This letter of credit does not reduce availability under the credit facility. We recorded interest expense of $0 and $28,000 for the years ended December 31, 2015 and 2014 related to such debt agreement. No amounts were outstanding under the credit facility as of December 31, 2015 and 2014.