14—LONG

TERM DEBT AND FINANCIAL INSTRUMENTS CARRIED AT FAIR VALUE

Long-term debt:

	December 31,
	2018			2017
France term loan		526			700
Japanese term loan (YEN)		628			40
Germany term loan		632			399
Italy term loan		27			78
Malaysia term loan		17			–
Total long term debt		1,830			1,217
Less current portion		(491	)		(383	)
Total long-term portion		1,339			834

As of

December 31, 2018,

long-term debt in Japan consists of a new loan in Yen with the following conditions:

Initial
Amount

Maturity

Fixed Interest rate

Frequency of
principal payments

EDAP Technomed Co. Ltd

80,000,000

November 30, 2025

1.98

Monthly instalment

As of

December 31, 2017,

long-term debt in Japan consists of

two

loans in Yen with the following conditions:

	Initial Amount		Maturity		Fixed Interest rate			Frequency of principal payments
EDAP Technomed Co. Ltd		55,000,000		June 30, 2018		1.80	%	Monthly instalment
		10,000,000		June 30, 2018		2.10	%	Monthly instalment

As of

December 31, 2018

and

2017,

long-term debt in Germany consists of

two

loans in euro with the following conditions:

Initial
Amount

Maturity

Fixed Interest rate

Frequency of
principal payments

EDAP TMS GMBH

450,000

November 30, 2020

2.49

Monthly instalment

This loan is pledged by an HIFU equipment with a purchase value of

€450

thousand.

Initial
Amount

Maturity

Fixed Interest rate

Frequency of
principal payments

EDAP TMS GMBH

136,500

December 31, 2022

2.25

Monthly instalment

This loan is pledged by an UDS equipment with a purchase value of

€136

thousand.

And a new loan as of

December 31, 2018

with the following conditions:

Initial
Amount

Maturity

Fixed Interest rate

Frequency of
principal payments

EDAP TMS GMBH

400,000

April 30, 2023

2.40

Monthly instalment

This loan is pledged by an HIFU equipment with a purchase value of

€438

thousand.

As of

December 31, 2018

and

2017,

long-term debt in Italy consists of a loan in euro for an initial amount of

€242

thousand with an interest rate of Euribor

month +

4.5%

due to mature on

June 6, 2019.

As of

December 31, 2018

and

2017,

long-term debt in France consists of

one

loan in Euro to finance the ERP project with the following conditions:

Initial
Amount

Maturity

Fixed Interest rate

Frequency of
principal payments

EDAP TMS FRANCE

700,000

October 16, 2021

0.40

Quarterly instalment

As of

December 31, 2018,

long-term debt in Malaysia consists of a new loan in Ringgit with the following conditions:

Initial
Amount

Maturity

Fixed Interest rate

Frequency of
principal payments

EDAP TECHNOMED SDN BHD

90,000

July 31, 2022

4.64

Monthly instalment

Financial instruments carried at fair value:

	December 31,
	2018		2017

Investor Warrants		–		840
				–
Total		–		840
Less current portion		–		(840	)
Total long-term portion		–		–

March 28, 2012,

pursuant to a securities purchase agreement dated

March 22, 2012,

as amended, the Company issued new ordinary shares in the form of ADSs to selected institutional investors in a registered direct placement (the

“March 2012

Placement”) with warrants attached (the

“March 2012

Investor Warrants”) allowing Investors to purchase up to

1,406,250

new ordinary shares of the Company. The Company also issued warrants to the placement agent, Rodman & Renshaw LLC (the

“March 2012

Placement Agent Warrants” giving rights to the Placement Agent to purchase up to

168,750

new shares of the Company (together with the

March 2012

Investor Warrants: the

“March 2012

Warrants”). The Company determined that the

March 2012

Warrants should be accounted for as a liability. The Company used the Black-Scholes pricing model to value the

March 2012

Warrants at inception, with subsequent changes in fair value recorded as a financial expense or income.

May 28, 2013,

pursuant to a securities purchase agreement dated

May 20, 2013,

as amended, the Company issued

3,000,000

new ordinary shares in the form of ADSs to selected institutional investors in a registered direct placement (the

“May 2013

Placement”), at a price of

$4.00

per share, with warrants attached (the

“May 2013

Investor Warrants”). The

May 2013

Investor Warrants allowed investors to purchase up to

1,500,000

shares in the form of ADSs at an exercise price of

$4.25.

The

May 2013

Investor Warrants were exercisable as from

November 29, 2013

and expired on

November 29, 2018.

The Company also issued warrants to the placement agent, H.C. Wainwright & Co., LLC with an exercise price of

$5.00

per share (the

“May 2013

Placement Agent Warrants” and together with the

May 2013

Investor Warrants, the

“May 2013

Warrants”), The

May 2013

Placement Agent Warrants were exercisable from

November 29, 2013

and expired on

May 28, 2016.

As the

May 2013

Warrants comprised the same structure and provisions than the

March 2012

Warrants, including an exercise price determined in U.S. dollars while the functional currency of the Company is the Euro, the Company determined that the

May 2013

Warrants should be accounted for as a liability. Total gross proceeds for the

May 2013

Placement amounted to

$12

million (€

9.270

million), out of which

$3.817

million (

€2.950

million) allocated to the Investor and Placement Agent Warrants based on their fair value and accounted for as liability, and the remaining

$8.183

million (

€6.320

million) allocated to the share capital increase (see note

). The Company used the Black-Scholes pricing model to value the

May 2013

Warrants at inception, with changes in fair value recorded as a financial expense or income.

April 14, 2016,

pursuant to a securities purchase agreement dated

April 7, 2016,

the Company issued

3,283,284

ordinary shares in the form of ADSs to selected institutional investors in a registered direct placement (the

“April 2016

Placement”), at a price of

$3.50

per share, with warrants attached (the

“April 2016

Investor Warrants”). The

April 2016

Investor Warrants allowed investors to purchase up to

3,283,284

shares in the form of ADSs at an exercise price of

$4.50.

The

April 2016

Investor Warrants were exercisable from

October 14, 2016

and expired on

October 14, 2018.

As the

April 2016

Warrants comprised the same structure and provisions than the

March 2012

and

May 2013

Warrants, including an exercise price determined in U.S. dollars while the functional currency of the Company is the Euro, the Company determined that the

April 2016

Warrants should be accounted for as a liability. Total gross proceeds for the placement amounted to

$11.5

million (€

10.2

million), out of which

$3.578

million (

€3.168

million) allocated to the Investor Warrants based on their fair value and accounted for as liability, and the remaining

$7.913

million (

€7.006

million) allocated to the share capital increase (see Note

). The Company used the Black-Scholes pricing model to value the

April 2016

Warrants at inception, with changes in fair value recorded as a financial expense or income.

Fair Value of the

May 2013

Investor Warrants:

The valuation model of the Investor Warrants uses the following main assumptions and parameters based on a Black-Scholes model. Note that Warrant’s maturity is assumed to be their legal duration as per Warrant contract.

	At inception date		December 31, 2018		December 31, 2017
Share price at closing date		$3.96		–		$2.87
Strike price of warrants		$4.25		–		$4.25
Risk free interest rate at 5.5 years		1.07%		–		0%
Share price volatility		71%		–		57.40%
Dividend rates		0%		–		0%
Unit fair value		$2.35		–		$0.26
Total fair value (in thousand $)		$3,525		–		$392
Total equivalent amount (in thousand €)		€2,725		–		€328

As of

December 31, 2018,

all of the

May 2013

Investors Warrants were exercised or forfeited.

Fair Value of the

April 2016

Investor Warrants:

	At inception date		December 31, 2018		December 31, 2017
Share price at closing date		3.64		–		2.87
Strike price of warrants		$4.50		–		$4.50
Risk free interest rate at 2.5 years		0%		–		0%
Share price volatility		60.20%		–		57.40%
Dividend rates		0%		–		0%
Unit fair value		$1.09		–		$0.19
Total fair value (in thousand $)		$3,579		–		$614
Total equivalent amount (in thousands €)		€3,168		–		€512

As of

December 31, 2018,

all of the

April 2016

Investors Warrants were exercised or forfeited.

Refer to Note

for more details on the fair value of Financial Instruments.

Long-term debt and financial instruments maturity:

Long-term debt and financial instruments carried at fair value at

December 31, 2018

mature as follows:

2019			491
2020			460
2021			381
2022			205
2023 and thereafter			293
Total			1,830