Executives at NeuroMetrix Inc. (NSDQ:NURO) don’t appear to be in any rush to take on any new debt, but they could borrow up to $7.5 million after signing a one-year extension of a revolving credit facility with Comerica Bank.
Terms of the pact disclosed today are unchanged from the original deal signed in March 2010: Interest on the 12-month loans is set at prime rate (currently 3.5 percent) plus 0.5 percent with any borrowings secured by cash, receivables, inventory and equipment at the company. Excluding equipment, that added up to nearly $21 million at the end of the December 2010 quarter, mostly from the $17 million in cash still in the bank following NeuroMetrix’s last equity raise in September 2009.
The company has never tapped the Comerica revolver since signing on last year. But that doesn’t mean it has no need for quick cash in a pinch — perhaps even more so with a recent turn to focus on the diabetic neuropathy market. For example, net cash used for operations at NeuroMetrix during the final three months of 2010 was $1.9 million, an $800,000 improvement over the prior quarter but still lifting the overall cash burn during 2010 to $13.4 million. Combined revenues at Neurometrix last year were just under $13.9 million.
NURO shares closed trading today up nearly 4 percent to 53 cents apiece.