Response Biomedical Corp. has secured a $2.5 million term loan from Silicon Valley Bank ("SVB"). The Company will initially draw down $1.5 million of the facility, and a further $1.0 million will become available for draw down if certain financial targets are met on or before July 31, 2014. The Company plans to use the funds from the loan to support working capital needs for growing its markets both in the U.S. and internationally, and for general corporate purposes.
"We are pleased that our financial performance and growth opportunities have provided us with the ability to secure additional financing with attractive terms. As we recently announced, we have engaged new distributors in both the U.S. and China, which we believe will represent a firm base for long term growth in both markets. This new credit facility, coupled with our previously announced $3.1 million brokered and non-brokered private placements, gives us additional financial strength and flexibility by providing us with additional working capital to support our ability to attract new and retain existing customers," said Mr. Bill Adams, Response's Chief Financial Officer.
"We are pleased to support Response in its ongoing development of new and existing markets for its RAMP technology. SVB works with thousands of companies across the innovation sector in North America - and worldwide - and we look forward to providing the financial services Response needs to continue to grow," said Minh Le, Managing Director and Deal Team Leader of Silicon Valley Bank in the Pacific Northwest.
Under the terms of the loan agreement entered into with SVB (the "Loan Agreement"), the total proceeds of $2.5 million will be made available in tranches of $1.5 million upon closing and the remaining $1.0 million at the discretion of the Company at any time prior to September 30, 2014 if certain revenue targets are met by July 31, 2014 and the Company remains in compliance with the terms of the Loan Agreement. The loan matures on May 1, 2017 and bears an interest rate of Wall Street Journal Prime Rate plus 2.5% annually. Interest only payments will be made until October 1, 2014 at which time, 32 equal monthly installments of principal plus accrued interest will be made through to maturity. Response has provided SVB with 52,796 warrants with an exercise price of $1.831 per warrant and a term of 10 years. The loan will be secured by substantially all of the assets of the Company and includes financial covenants related to certain revenue and liquidity targets.
Response develops, manufactures and markets rapid on-site diagnostic tests for use with its RAMP® Platform for clinical, biodefense and environmental applications. RAMP® represents a unique paradigm in diagnostics that provides reliable laboratory quality results in minutes. The RAMP® Platform consists of a reader and single-use disposable test cartridges and has the potential to be adapted to more than 250 medical and non-medical tests currently performed in laboratories.