Annual report pursuant to Section 13 and 15(d)

Bank Term Note and Line of Credit

v3.6.0.2
Bank Term Note and Line of Credit
12 Months Ended
Dec. 31, 2016
Debt Disclosure [Abstract]  
Bank Term Note and Line of Credit
Bank Term Note and Line of Credit

On May 7, 2015, we entered into a debt financing facility with Silicon Valley Bank (“SVB”) to refinance the Company’s cash collateralized loan from Wells Fargo and to provide an additional working capital line of credit. The SVB credit facility provides for a $6.0 million term note (“Term Note”) and a revolving line of credit (“Line of Credit”) for an amount not to exceed the lesser of (i) $4.0 million or (ii) an amount equal to 80% of eligible accounts receivable. The Term Note requires interest-only payments through April 30, 2016 and beginning May 1, 2016, monthly principal payments of approximately$167,000 will be required plus interest through maturity on April 1, 2019. The interest rate of the Term Note is the Wall Street Journal prime rate plus 2%, with a floor of 5.25% (5.75% and 5.50% at December 31, 2016 and 2015, respectively) and an additional deferred interest payment of $180,000 will be due upon maturity. The Line of Credit requires monthly interest-only payments of the Wall Street Journal prime rate plus 1.5% (5.25% and 5.00% at December 31, 2016 and 2015, respectively) and matures on May 7, 2017. The loan agreement requires maintenance of certain financial ratios and grants SVB a first security interest in substantially all Company assets (other than our intellectual property). At December 31, 2016 and 2015, the principal balance of the Term Note was $4,666,667 and $6,000,000, respectively, and the principal balance of the Line of Credit was $0. On January 28, 2016, the Line of Credit was amended with SVB and as of December 31, 2016, we were no longer able to draw on the Line of Credit until we raised approximately $2.5 million of additional equity. The Term Loan and Line of Credit were subsequently paid, see Note 20 Subsequent Events.

The following is a summary of long-term debt as of December 31 (in thousands):

 
 
2016
 
2015
Term note, principal balance
 
$
4,667

 
$
6,000

Less unamortized debt issuance costs
 
13

 
25

Term note, net
 
4,654

 
5,975

Less current maturities
 
2,000

 
1,333

Long-term portion
 
$
2,654

 
$
4,642



Principal maturities of the Term Note as of December 31, 2016 are as follows: 2017 - $2,000,000; 2018 - $2,000,000; 2019 - $666,667.