iCAD, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
March 31,
2019
If the Revolving Loans are paid in full and the Loan Agreement is terminated prior to the
maturity date, then the Company will pay to the Bank a termination fee in an amount equal to two percent (2.0%) of the maximum revolving line of credit. If the Company prepays the Term Loans prior to the maturity date, then the Company will pay to
the Bank an amount between 1.0% and 3.0% of the Term Loans, depending on when such Term Loans are repaid. In addition, the Loan Agreement requires the Company to pay a final payment of 8.5% of the Term Loans upon the earliest of the repayment of the
Term Loans, the termination of the Loan Agreement and the maturity date. The Company is accruing such payment as additional interest expense. As of March 31, 2019 and December 31, 2018, the accrued final payment is approximately $195,000
and $162,000, respectively and is a component of the outstanding loan balance.
The Loan Agreement, as amended, includes certain covenants
which require the Company to maintain minimum consolidated revenues of $11.4 million, $11.6 million, $13.0 million and $14.5 million during the trailing six month periods ending on March 31, 2019, June 30, 2019,
September 30, 2019 and December 31, 2019, respectively, as well as adjusted EBITDA levels of $(3.5 million), $(4.0 million), $(4.0 million) and $(2.0 million) during the trailing six month periods ending on March 31, 2019,
June 30, 2019, September 30, 2019 and December 31, 2019, respectively. In addition, the Company and Silicon Valley Bank will be required to negotiate the covenants for the 2020 and 2021 fiscal years, with a failure to agree to such
covenants by specified dates in the agreement leading to an acceleration of the Initial Term Loan maturity date to either April 30, 2020 or April 31, 2021, respectively. As of March 31, 2019, the Company is in compliance with the
covenants.
Obligations to the Bank under the Loan Agreement or otherwise are secured by a first priority security interest in
substantially all of the assets, including intellectual property, accounts receivable, equipment, general intangibles, inventory and investment property, and all of the proceeds and products of the foregoing, of each of the Company and Xoft, Inc.
and Xoft Solutions LLC, wholly-owned subsidiaries of the Company.
In connection with the Loan Agreement, the Company incurred
approximately $74,000 of closing costs. In accordance with ASC Topic 835, Interest, the closing costs have been deducted from the carrying value of the debt and will be amortized through August 1, 2021, the maturity date of the
Initial Term Loan.
The Company has evaluated the accounting impact of each of the modifications noted above, and as all have occurred
within a 12 month period, each successive modification has been combined and compared to the terms of the original Loan Agreement. The Company has determined that modifications occurring at each modification date above are modifications of the Loan
Agreement for accounting purposes. As such, the Company has capitalized any closing costs paid to the Bank as part of the modifications and has expensed
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