7. Financial Liabilities

Financial liabilities consist of (in thousands):

	December 31,
	2017			2016
Secured term loan	$	5,000		$	10,000
Bank revolving loan facility		8,736			8,300
Total before discount and debt issuance costs		13,736			18,300
Less: Current portion of financial liabilities		(9,829	)		(8,119	)
Less: Current portion of unamortized discount and debt issuance costs		(404	)		(181	)
Less: Long-term portion of unamortized discount and debt issuance costs		(582	)		(221	)
Long-term financial liabilities	$	2,921		$	9,779

Bank Term Loan and Revolving Loan Facility

On March 31, 2014, the Company entered into a credit agreement (as amended, the “Credit Agreement”) with Opus Bank. The Credit Agreement provided for a term loan in an aggregate principal amount of $10.0 million and an additional $10.0 million revolving loan facility. On February 8, 2017, the Company entered into new Loan and Security Agreements. In connection with the closing of such agreements, the Company repaid all outstanding amounts under the Credit Agreement. In evaluating the transaction, the Company compared the net present value cash flows under the existing Credit Agreement and the new Loan and Security Agreements to determine whether the terms of the new debt facility and the existing facility were "substantially different." As the net present value of cash flows varied by more than 10%, the Company concluded that the transaction should be accounted for as a debt extinguishment. As a result, the Company recorded a gain on extinguishment of debt totaling $1.0 million, representing the difference between the reacquisition price of the previous debt facility, net of cancelled warrants previously issued to Opus Bank, and its net carrying amount.

On February 8, 2017, the Company entered into Loan and Security Agreements with each of EWB and VLL7 and VLL8. The Loan and Security Agreement with EWB provides for a $10.0 million revolving loan facility, and the Loan Security Agreement with VLL7 and VLL8 provides for a term loan in an aggregate principal amount of $10.0 million (the "Term Loan"). The obligations of the Company under each of the Loan and Security Agreements are secured by substantially all assets of the Company.

The Revolving Loan Facility bears interest at prime rate plus 2.0% and matures and becomes due and payable on February 8, 2019. Interest is payable monthly beginning on March 1, 2017. The Company may voluntarily prepay amounts outstanding under the Revolving Loan Facility, without prepayment charges. In the event the Revolving Loan Facility is terminated prior to its maturity, the Company would be required to pay an early termination fee in the amount of 1.0% of the revolving line, and an additional cash early termination fee of 1.0% if terminated prior to February 8, 2018. Additional borrowing requests under the Revolving Loan Facility are subject to various customary conditions precedent, including satisfaction of a borrowing base test as more fully described in the Revolving Loan Facility.

The Term Loan matures on August 8, 2020. Payments under the Term Loan Facility are interest-only for the first twelve months at a per annum rate of 12.5%, followed by principal and interest payments amortized over the remaining term of the Term Loan. If the Company elects to prepay the Term Loan before its maturity, all accrued and unpaid interest outstanding at the prepayment date will be due and payable, together with all the scheduled interest that would have accrued and been payable through the stated maturity of the Term Loan, provided that at any time after the Company has made at least twelve scheduled amortization payments of principal and interest on the Term Loan, the Company shall only be required to pay 80% of the scheduled interest that would have accrued and been payable through the stated maturity of the Term Loan.

The Company is obligated to pay customary fees and expenses, including customary facility fees for credit facilities of this size and type, in the aggregate amount of approximately $120,000, in connection with the closing of the two facilities. An additional facility fee of $40,000 will be payable in connection with the Revolving Loan Facility on February 8, 2018.

Each of the Revolving Loan Facility and the Term Loan Facility contain customary representations and warranties and customary affirmative and negative covenants, including, limits or restrictions on the Company's ability to incur liens, incur indebtedness, make certain restricted payments, merge or consolidate and dispose of assets. The Revolving Loan Facility also contains various financial covenants, including but not limited to a liquidity covenant requiring the Company to maintain at least $4.0 million of cash. In addition, each of the Revolving Loan Facility and the Term Loan Facility contains customary events of default that entitle EWB or VLL7 and VLL8, as appropriate, to cause any or all of the Company's indebtedness under the Revolving Loan Facility or the Term Loan Facility, respectively, to become immediately due and payable. The events of default (some of which are subject to applicable grace or cure periods), include, among other things, non-payment defaults, covenant defaults, cross-defaults to other material indebtedness, bankruptcy and insolvency defaults and material judgment defaults. Upon the occurrence and during the continuance of an event of default, EWB and VLL7 and VLL8 may terminate their lending commitments and/or declare all or any part of the unpaid principal of all loans, all interest accrued and unpaid thereon and all other amounts payable under the Loan and Security Agreements to be immediately due and payable.

As of December 31, 2017, the Company was in compliance with all financial covenants under the Term Loan. As of December 31, 2017, the Company was not in compliance with the minimum debt service coverage ratio requirement under the Revolving Loan Facility. During the allotted cure period, on January 31, 2018, the Company and EWB amended the Revolving Loan Facility (the “Third Amendment”) removing certain financial covenants, including the minimum debt service coverage ratio.

The proceeds of the Term Loan and the initial draw under the Revolving Loan Facility, after payment of fees and expenses, were used to repay all outstanding amounts under the Credit Agreement with Opus Bank. In connection with the repayment, warrants to purchase an aggregate of 400,000 shares of common stock issued to Opus Bank were cancelled. The proceeds of any additional draws under the Revolving Loan Facility will be used for working capital and other general corporate purposes.

On December 28, 2017, the Company paid down an aggregate principal amount of $5.0 million of the $10.0 million outstanding principal balance of its Term Loan with VLL7 and VLL8. The Company paid to VLL7 and VLL8 approximately $5.9 million, consisting of $5.0 million in outstanding principal, and $0.9 million of accrued and unpaid interest outstanding at the prepayment date, together with all scheduled interest that would have accrued and been payable through the stated maturity of the Term Loan. As a result, the Company recorded a loss on extinguishment of debt totaling $1.8 million, representing the difference between the reacquisition price of the repaid portion of the Term Loan and the its net carrying amount.

On January 31, 2018, the Company entered the Third Amendment with EWB. Under the Third Amendment, the Revolving Loan Facility was increased from $10.0 million to $12.0 million, the interest rate was reduced from prime rate plus 2.0% to prime rate plus 1.0%, and a non-formula line of credit sublimit was added not to exceed $3.0 million. In addition, certain financial covenants were amended, including the definition of EBITDA, and certain reporting requirements have been streamlined.

On February 5, 2018, the Company entered into an amendment (the “Fourth Amendment”) to its Loan and Security Agreement with EWB. Under the Fourth Amendment, EWB agreed to include as Permitted Indebtedness, as defined in the Loan and Security Agreement, the issuance of $2.0 million in subordinated unsecured promissory notes associated with the acquisition of 3VR Security, Inc., a California corporation (“3VR”), subject to certain terms and conditions. In addition, EWB agreed to include certain 3VR indebtedness payable to 3VR’s lender, which remained outstanding subsequent to the acquisition, as Permitted Indebtedness, subject to the Company repaying in full amounts outstanding within 5 business days of the closing of the acquisition.

On February 14, 2018, the Company completed the acquisition of 3VR and on February 21, 2018, the Company paid 3VR’s lender $3.6 million in full repayment of all indebtedness outstanding of 3VR.

On March 6, 2018, the Company entered into an amendment (the “Fifth Amendment”) to its Loan and Security Agreement with EWB. Under the Fifth Amendment, the Revolving Loan Facility was increased from $12.0 million to $16.0 million. In addition, certain definitions were amended, including the definition of Borrowing Base.

The following table summarizes the timing of repayment obligations for the Company’s long-term financial liabilities for the next three years under the current terms of the Term Loan Facility at December 31, 2017 (in thousands):

		2018				2019				2020				Total
Bank term loan facility		$	1,497			$	2,014			$	1,489			$	5,000