Subsequent Events

6 Months Ended

Jun. 30, 2019

Subsequent Events [Abstract]

Subsequent Events

18.

Subsequent Events

Sale of Intellectual Property

On July 3, 2019, the Company entered into an AutoLap System Sale Agreement (the “AutoLap Sale Agreement”) with GBIL. Pursuant to the AutoLap Sale Agreement, the Company sold the AutoLap laparoscopic vision system (“AutoLap”) and related assets to GBIL for $17.0 million plus an additional equity investment in the Company by GBIL of $30.0 million . The Company acquired AutoLap and its related assets from MST in October 2018. The assets include inventory, spare parts, production equipment, testing equipment and certain intellectual property specifically related to the AutoLap. In addition, at the second cosing, the Company will enter into a cross‑license agreement with GBIL to retain rights to use any AutoLap-related intellectual property sold to GBIL, and to non-exclusively license additional intellectual property to GBIL.

The purchase price is to be paid in two installments. The initial $5.0 million was due on July 31, 2019 but as of the date of this filing, has not been received, and the remaining $12.0 million to be paid upon the transfer of the AutoLap and related assets. The Company cannot currently predict when the $5.0 million payment will be made. The final closing is anticipated to occur in November 2019. In addition, GBIL agreed to pay $30.0 million for the purchase of 15,000,000 shares of the Company’s common stock at $2.00 per share (the “AutoLap Shares”). Pursuant to a Subscription Agreement executed by the parties with respect to the issuance of the AutoLap Shares, upon their issuance, the AutoLap Shares will be subject to a lock-up agreement between GBIL and the Company pursuant to which GBIL agreed, subject to certain exceptions, not to sell, transfer or otherwise convey any of the AutoLap Shares for two years following the date of the second closing. The Company also agreed to register the AutoLap Shares for resale, as needed, upon the expiration of the lock-up period.

Amendment to the Loan and Security Agreement

In connection with the entry into the AutoLap Sale Agreement with respect to the AutoLap assets, the Company commenced discussions with the Agent, or Hercules Capital, Inc., in order to obtain the required consent of the Agent and the Lender with respect to the sale of the AutoLap assets. In connection with obtaining such consent, the Company entered into the Consent and Second Amendment to the Loan and Security Agreement on July 10, 2019 (the “Hercules Second Amendment”). Under the Hercules Second Amendment, in consideration for the consent to the sale of, and the release of the Lender’s security interest on, the AutoLap assets, the Company reduced its indebtedness under the Hercules Loan Agreement by repaying $15.0 million of the $30.0 million of outstanding indebtedness thereunder, without any prepayment penalties, amendment fee or acceleration of the end of term charges, and received adjustments to the quarterly financial covenants and related waiver conditions to reflect the decreased outstanding indebtedness.

Under the Hercules Second Amendment, the applicable waiver condition for fiscal year 2019 has been changed to maintenance of unrestricted cash equal to $7.0 million. As of the date of this report, the Company is in compliance with this waiver condition.