NETL » Topics » Liquidity and Capital Resources

This excerpt taken from the NETL DEF 14A filed Sep 30, 2009.

Liquidity and Capital Resources

From its inception, RMI has satisfied its liquidity needs primarily through a combination of private sales of preferred stock, cash collections as a result of the sale of its product, borrowing from its term loans and accounts receivable collateralized line of credit, and cash received from the exercise of stock options. RMI’s cash and cash equivalents and short term investments were $14.2 million and $14.8 million as of December 31, 2008 and 2007, respectively and $20.2 million as of June 30, 2009. Restricted cash consists of a $0.25 million certificate of deposit used to collateralize a letter of credit for its facility lease in Cupertino and included in purchased intangibles and other assets, net.

In December 2004, RMI entered into a loan agreement for $10.0 million with Silicon Valley Bank, or SVB, Gold Hill Ventures, and Venture Lending and Leasing IV, or VLL, collateralized by all of its intellectual property and substantially all of its assets. Concurrently, RMI granted warrants to purchase an aggregate of 1,169,874 shares of Series B-2 Preferred Stock to SVB, Gold Hill Ventures and VLL. This loan was completely amortized in December 2007.

In December 2006, RMI entered into a loan agreement with VLL and SVB for up to $15.0 million in term debt collateralized by all of its intellectual property and substantially all of its assets. This loan agreement called for loan draws on the quarterly basis of $3.3 million for the fourth quarter of 2006 and the first quarter of 2007 and a draw of $3.4 million in the second quarter of 2007 based on the achievement of revenue milestones by RMI. It has drawn all of these funds. Concurrent with the execution of the term loan, RMI granted VLL and SVB warrants to purchase an aggregate of 355,416 shares of its Series C Preferred Stock. In addition, RMI exercised its option to draw an additional $5.0 million under the terms of the loan agreement in September 2007. Concurrent with this draw, RMI issued VLL warrants to purchase 177,708 shares of its Series C Preferred Stock. RMI was required to repay the loans in 34-equal consecutive monthly installments beginning the month following the draw. It made an advance payment of the last installment of each draw, which has been deducted from the gross proceeds of the loan. RMI will be required to make a milestone payment to the lenders at the occurrence of its initial public offering, a change of control, or liquidation. As of June 30, 2009, the estimated fair value of the milestone liability was $1.8 million. This amount is recorded as a debt discount and is being amortized over the term of the loan using the yield-interest method. The unamortized balance of this debt discount as of June 30, 2009 is $94,000.

 

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In March 2007, RMI established a revolving line of credit of $10.0 million subject to a qualifying accounts receivable borrowing base with SVB. This line subsequently was amended in March 2009 and the term was extended to March 2011. Borrowings under this line of credit carry an interest rate ranging from bank’s prime rate plus 0.75% to bank’s prime rate plus 1.5%. As of June 30, 2009, the amount of borrowings outstanding under this revolving credit line is $758,000.

The following table sets forth RMI’s cash flows from operating activities, investing activities and financing activities for the years ended December 31, 2008, 2007, and 2006 and for the six months ended June 30, 2009 and 2008 (in thousands):

 

     Year ended December 31,     Six Months ended
June 30,
 
     2008     2007     2006     2009     2008  

Net cash used in operating activities

   $ (15,570   $ (14,193   $ (21,514   $ (5,769   $ (3,598

Net cash used in investing activities

     (3,478     (2,288     (970     (821     (2,698

Net cash provided by financing activities

     18,451        12,940        27,177        12,561        20,880   
                                        

Total cash provided/(used)

   $ (597   $ (3,541   $ 4,693      $ 5,971      $ 14,584   
                                        
This excerpt taken from the NETL 10-K filed Mar 14, 2008.

Liquidity and Capital Resources

At December 31, 2007, our principal sources of liquidity were our cash and cash equivalents which totaled $50.7 million.

The table below (in thousands) sets forth the key components of cash flow for the years ended December 31, 2007, 2006 and 2005:

 

     Year ended
December 31,
2007
    Year ended
December 31,
2006
    Year ended
December 31,
2005
 

Net cash provided by operating activities

   $ 24,907     $ 22,308     $ 25,925  

Net cash used in investing activities

   $ (32,629 )   $ (41,391 )   $ (1,635 )

Net cash provided by financing activities

   $ 7,674     $ 4,053     $ 77  
This excerpt taken from the NETL 10-K filed Mar 2, 2007.

Liquidity and Capital Resources

At December 31, 2006, our principal sources of liquidity were our cash, cash equivalents and short-term investments which totaled $89.9 million.

The table below (in thousands) sets forth the key components of cash flow for the years ended December 31, 2006, 2005 and 2004:

 

    

Year ended
December 31,

2006

   

Year ended
December 31,

2005

   

Year ended
December 31,

2004

 
      

Net cash provided by (used in) operating activities

   $ 22,308     $ 25,925     $ (9,658 )

Net cash provided by (used in) investing activities

   $ (41,391 )   $ (1,635 )   $ 6,814  

Net cash provided by financing activities

   $ 4,053     $ 77     $ 31,100  
This excerpt taken from the NETL 10-Q filed Nov 8, 2006.

Liquidity and Capital Resources

At September 30, 2006, our principal source of liquidity was our cash and investments which totaled $84.0 million, and which we believe is adequate for our operational needs for the foreseeable future.

The table below (in thousands) sets forth the key components of cash flow for the nine months ended September 30, 2006 and September 30, 2005:

 

     Nine months ended
September 30, 2006
    Nine months ended
September 30, 2005
 

Net cash provided by operating activities

   $ 16,244     $ 20,417  

Net cash used in investing activities

   $ (19,909 )   $ (975 )

Net cash provided by (used in) financing activities

   $ 3,209     $ (389 )

 

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This excerpt taken from the NETL 10-Q filed Aug 9, 2006.

Liquidity and Capital Resources

At June 30, 2006, our principal source of liquidity was our cash and cash equivalents which totaled $76.0 million, which we believe is adequate for our operational needs for the foreseeable future.

The table below (in thousands) sets forth the key components of cash flow for the three months ended June 30, 2006 and June 30, 2005:

 

    

Six months

ended

June 30, 2006

   

Six months

ended

June 30, 2005

 

Net cash provided by operating activities

   $ 8,644     $ 10,804  

Net cash used in investing activities

   $ (948 )   $ (863 )

Net cash provided by (used in) financing activities

   $ 2,547     $ (367 )

 

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This excerpt taken from the NETL 10-Q filed May 9, 2006.

Liquidity and Capital Resources

At March 31, 2006, our principal source of liquidity was our cash and cash equivalents which totaled $69.6 million, which we believe is adequate for our operational needs for the foreseeable future.

The table below (in thousands) sets forth the key components of cash flow for the three months ended March 31, 2006 and March 31, 2005:

 

    

Three Months

ended

March 31,

2006

   

Three Months

ended

March 31,

2005

 

Net cash provided by operating activities

   $ 2,632     $ 4,935  

Net cash used in investing activities

   $ (621 )   $ (199 )

Net cash provided by financing activities

   $ 1,751     $ 123  

 

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This excerpt taken from the NETL 10-K filed Feb 28, 2006.

Liquidity and Capital Resources

 

At December 31, 2005, our principal sources of liquidity were our cash and cash equivalents which totaled $65.8 million.

 

Our line of credit for $14.5 million with Silicon Valley Bank expired on October 2, 2005, and was not renewed as management determined that our currently available liquid resources were adequate for our operational needs for the foreseeable future.

 

The table below (in thousands) sets forth the key components of cash flow for the years ended December 31, 2005, 2004 and 2003:

 

     Year ended
December 31,
2005


    Year ended
December 31,
2004


    Year ended
December 31,
2003


 

Net cash provided by (used in) operating activities

   $ 25,925     $ (9,658 )   $ (25,795 )

Net cash provided by (used in) investing activities

   $ (1,635 )   $ 6,814     $ (7,523 )

Net cash provided by financing activities

   $ 77     $ 31,100     $ 8,592  

 

This excerpt taken from the NETL 10-Q filed Nov 8, 2005.

Liquidity and Capital Resources

 

At September 30, 2005, our principal sources of liquidity were our cash and cash equivalents, which totaled $60.5 million.

 

Our line of credit for $14.5 million with Silicon Valley Bank expired on October 2, 2005, and was not renewed as management determined that our currently available liquid resources were adequate for our operational needs for the foreseeable future.

 

The table below (in thousands) sets forth the key components of cash flow for the nine months ended September 30, 2005 and September 30, 2004:

 

     Nine months ended
September 30,
2005


    Nine months ended
September 30,
2004


 

Net cash provided by (used in) operating activities

   $ 20,417     $ (11,581 )

Net cash provided by (used in) investing activities

   $ (975 )   $ 6,961  

Net cash provided by (used in) financing activities

   $ (389 )   $ 31,101  

 

This excerpt taken from the NETL 10-Q filed Aug 9, 2005.

Liquidity and Capital Resources

 

At June 30, 2005, our principal sources of liquidity were our cash and cash equivalents, which totaled $51.0 million.

 

We have a line of credit for $14.5 million with Silicon Valley Bank, which is available for general working capital purposes (the “Working Capital Line”). As of June 30, 2005, we had no balance outstanding under the Working Capital Line. Borrowings under the Working Capital Line will bear interest at a rate of the Silicon Valley Bank prime rate plus one quarter of one percent (6.5% at June 30, 2005), or 4.25%, whichever is higher, except in the event of our default in which case the interest rate would be increased by 5% over the rate in effect immediately before the event of default. The Working Capital Line is secured by all of our assets, including receivables and intangible assets, but excluding our intellectual property. To maintain the Working Capital Line, we are required to maintain a tangible net worth of at least $40 million and a minimum Adjusted Quick Ratio of 2.0 (both as defined in the working capital line agreement) at all times. We had complied with these covenants as of June 30, 2005.

 

The table below (in thousands) sets forth the key components of cash flow for the six months ended June 30, 2005 and June 30, 2004:

 

     Six months
ended
June 30,
2005


    Six months
ended
June 30,
2004


 

Net cash provided by (used in) operating activities

   $ 10,803     $ (8,178 )

Net cash provided by (used in) investing activities

   $ (863 )   $ 6,769  

Net cash provided by (used in) financing activities

   $ (367 )   $ 9,477  

 

This excerpt taken from the NETL 10-Q filed May 9, 2005.

Liquidity and Capital Resources

 

At March 31, 2005, our principal sources of liquidity were our cash and cash equivalents which totaled $46.3 million.

 

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We have a line of credit for $14.5 million with a bank, which is available for general working capital purposes (the “Working Capital Line”). As of March 31, 2005, we had no balance outstanding under the Working Capital Line. Borrowings under the Working Capital Line will bear interest at a rate of the Silicon Valley Bank prime rate plus one quarter of one percent (6.0% at March 31, 2005), or 4.25%, whichever is higher, except in the event of our default in which case the interest rate would be increased by 5% over the rate in effect immediately before the event of default. The Working Capital Line is secured by all of our assets, including receivables and intangible assets, but excluding our intellectual property. To maintain the Working Capital Line, we are required to maintain a tangible net worth of at least $40 million and a minimum Adjusted Quick Ratio of 2.0 (both as defined in the working capital line agreement) at all times. We had complied with these covenants as of March 31, 2005.

 

The table below (in thousands) sets forth the key components of cash flow for the three months ended March 31, 2005 and March 31, 2004:

 

    

Three Months

ended

March 31,

2005


   

Three Months

ended

March 31,

2004


 

Net cash provided by (used in) operating activities

   $ 4,935     $ (7,005 )

Net cash provided by (used in) investing activities

   $ (199 )   $ 4,880  

Net cash provided by financing activities

   $ 123     $ 9,678  

 

This excerpt taken from the NETL 10-K filed Mar 11, 2005.

Liquidity and Capital Resources

 

At December 31, 2004, our principal sources of liquidity were our cash and cash equivalents which totaled $41.4 million.

 

On July 14, 2004, we completed an initial public offering of our common stock at a price of $12.00 per share. We sold 3,736,876 shares and additional 2,038,124 shares were sold by selling stockholders. We received $39.3 million in proceeds after deducting underwriters’ fees and other transaction costs.

 

In July 2004, we repaid in full $10.5 million outstanding under a working capital line of credit. Subsequent to our initial public offering on July 14, 2004, the working capital line was amended twice and our line of credit was increased to $14.5 million available for general working capital purposes. As of December 31, 2004, we had no balance outstanding under the Working Capital Line. Borrowings under the working capital line will bear

 

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interest at a rate of the Silicon Valley Bank prime rate plus one quarter of one percent (5.5% at December 31, 2004), or 4.25%, whichever is higher, except in the event of our default in which case the interest rate would be increased by 5% over the rate in effect immediately before the event of default. The working capital line is secured by all of our assets, including receivables and intangible assets, but excluding our intellectual property. To maintain the working capital line, we are required to maintain a tangible net worth of at least $40 million and a minimum Adjusted Quick Ratio of 2.0 (both as defined in the working capital line agreement) at all times. We had complied with this covenant as of December 31, 2004.

 

In March 2004, we issued $7.6 million in convertible promissory notes bearing interest at 10.0% per annum and warrants to purchase 76,500 shares of common stock at $2.00 per share. The notes were issued to existing stockholders, directors and management. In July 2004, the notes and accrued interest were repaid in full following the closing of the initial public offering of our common stock.

 

The table below (in thousands) sets forth the key components of cash flow for the years ended December 31, 2004, 2003 and 2002:

 

     Year ended
December 31,
2004


    Year ended
December 31,
2003


    Year ended
December 31,
2002


 

Net cash used in operating activities

   $ (9,658 )   $ (25,795 )   $ (17,827 )

Net cash provided by (used in) investing activities

   $ 6,814     $ (7,523 )   $ (1,976 )

Net cash provided by financing activities

   $ 31,100     $ 8,592     $ 31,515  

 

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