Quarterly report pursuant to Section 13 or 15(d)

Bank Term Note and Line of Credit

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Bank Term Note and Line of Credit
9 Months Ended
Sep. 30, 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”). 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% (5.50% at September 30, 2016) 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% (5.00% at September 30, 2016) 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 September 30, 2016 the principal balance of the Term Note was approximately $5,167,000 and the principal balance of the Line of Credit was $0. On January 28, 2016, the Line of Credit was amended with SVB and we are no longer able to draw on the Line of Credit until we raise approximately $2.5 million of additional equity.

The following is a summary of long-term debt (in thousands):
 
September 30, 2016
 
December 31, 2015
Term Note, principal balance
$
5,167

 
$
6,000

Less unamortized debt issuance costs
16

 
25

Term Note, net
5,151

 
5,975

Less current maturities
2,000

 
1,333

Long-term portion
$
3,151

 
$
4,642

 
 
 
 

Principal maturities of the Term Note as of September 30, 2016 are as follows: 2016 (remaining three months) - $500,000; 2017 - $2,000,000; 2018 - $2,000,000; 2019 - $666,667.