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Notes Payable, Related Parties

12 Months Ended

Dec. 31, 2016

9. Notes Payable, Related Parties

A summary of the Company’s notes payable, related parties is as follows:

	December 31,
	2016		2015
Unsecured promissory note, interest rate of 4.25% and 8% per annum	$	36	$	73
Unsecured promissory note, interest rate of 8% per annum		—		236
Unsecured promissory note, interest rate of 6% per annum		—		27
Unsecured promissory notes, interest rate of 4% per annum		—		160
Total notes payable, related parties		36		496
Less: current portion of notes payable, related parties		30		462
Total notes payable, long-term	$	6	$	34

The Company issued a series of unsecured promissory notes to a previous executive employee for deferred salaries to be repaid in a future period. The notes accrue interest at a rate of 8% per annum. The outstanding balance on these notes, including accrued interest, totaled $380 at December 31, 2015. In March 2016, the Company issued an amended and restated promissory note (“Revised Note”) in the amount of $414, which includes accrued and unpaid interest and other settlement costs and replaced in their entirety the previous unsecured promissory notes. The Revised Note of $414 requires the Company to pay an initial payment of $25 upon the effective date of the note, and monthly and quarterly payments of $10 and $25, respectively, thereafter, with interest accruing at 12% per annum. Additionally, the Revised Note provides for an acceleration of the amount due in the event of (i) a merger, sale or acquisition of substantially of the Company’s assets; (ii) initial public offering; (iii) total equity raise of $2.5 million or more; and (iii) debt financing of $2.5 million with an unaffiliated lender within thirty days of such events.

In May 2016, the Company repaid the outstanding balance under the Revised Note, plus accrued and unpaid interest totaling $389, as the consummation of the Rights Offering triggered an acceleration of the amounts due under the Revised Note.

In April 2013, the Company and a previous employee entered into an agreement to settle all outstanding obligations consisting of a promissory note of $40, dated March 2009, and deferred salaries amounting to $72. The note and salary obligation continue to bear interest at 8% and 4.25%, respectively. The note requires monthly payments of $1 and matures in May 2018. The deferred salary obligation requires monthly payments of $1 and matures in June 2018.

Amounts outstanding on these obligations were $36 and $73 at December 31, 2016 and 2015, respectively.

In October 2011, the Company entered into an unsecured promissory note in the amount of $30 with its chief executive officer with interest accruing at 4%. At the same time, the Company entered into an unsecured promissory note in the amount of $30 with its Chief Research Officer with the same terms and conditions. Both of these notes were repaid in 2015.

In 2015, the Company entered into short-term unsecured promissory notes, totaling $195, with its previous chief executive officer. The notes accrued interest at 4% per annum and matured in December 2015. The funds were used to meet working capital requirements. The Company repaid $35 on the promissory notes during 2015 and repaid the balance in May 2016.

In August 2015, the Company entered into a short-term unsecured promissory note for $27 with a member of its advisory board. The note accrued interest at 6% per annum and was due in February 2016. Upon maturity, the holder transferred the note to a certain stockholder who acquired the note. The maturity date of the note was then extended for ninety days. On April 7, 2016, this note was settled with the issuance of 54,000 shares of common stock. See note 13.

Equity Participation Promissory Notes

In September 2016, the Company entered into a settlement agreement with the holder of equity participation promissory notes. The settlement agreement terminated the holder’s equity participation and conversion rights. The Company agreed to pay the promissory note holder principal, interest and expenses of $464 with $88 paid at the agreement execution and equal monthly payments of $14. Interest continues to accrue on unpaid balances at 1.25% per month with the total outstanding balance to be paid in full by the earlier of (i) May 25, 2017, (ii) the sale, merger or acquisition of the Company or substantially all of its assets, or (iii) 45 days after an initial public offering. This settlement was fully paid at December 31, 2016.

Interest expense on the notes payable, related parties, was $56 and $33 for the years ended December 31, 2016 and 2015, respectively.