Note 6. Debt Facilities

Senior Credit Facility

We have a loan and security agreement, which we refer to as our senior credit facility, with Silicon Valley Bank. The senior credit facility provides for both revolver and term borrowings. In May 2016, we amended our senior credit facility to, among other things, refinance our $10.5 million aggregate principal amount of outstanding term borrowings, extend the maturity date of the revolver to December 2017, add a $5.0 million sublimit under the revolver for the issuance of standby letters of credit, reduce the interest rate applicable to revolving loans, amend the tangible net worth covenant and provide for a new equipment term-loan facility of up to $2.0 million.

Interest on term borrowings accrues at a floating rate equal to the lender’s prime rate plus 2.25% during a one year interest-only period and at a floating rate equal to the lender’s prime rate plus 1.75% after expiration of the interest-only period (5.75% at June 30, 2016). Beginning in June 2017, we must begin paying 36 equal monthly installments of principal, plus accrued and unpaid interest. All outstanding principal and accrued and unpaid interest on the term borrowings is due and payable in May 2020. We may at our option prepay the outstanding term loan balance by paying the lender all principal and accrued and unpaid interest, plus a prepayment fee equal to $210,000 if the term-loan is prepaid on or prior to the first anniversary of the May 2016 amendment, and $105,000 if the term loan is prepaid after the first anniversary but on or prior to the second anniversary of the May 2016 amendment.

The revolver allows us to borrow up to the lesser of $15.0 million and a borrowing base tied to the amount of our eligible accounts receivable and inventory. Interest on revolver borrowings is payable monthly and accrues at a floating rate equal to the lender’s prime rate plus 2.50% at all times when our cash held at the bank plus the amount available to borrow on the revolver is less than or equal to $8.5 million, and 2.00% when our cash held at the bank plus the amount available to borrow on the revolver is greater than $8.5 million for a period of at least 60 consecutive days (5.25% at June 30, 2016). At June 30, 2016, we had $13.0 million of revolver borrowings outstanding.

At June 30, 2016, $23.5 million of term loan and revolver borrowings were outstanding, excluding unamortized debt issuance costs of $195,000. The weighted average interest rate on these facilities was 5.5% at June 30, 2016. Scheduled principal maturities as of June 30, 2016 were as follows (in thousands):

2016	$	13,000
2017		2,042
2018		3,500
2019		3,500
2020		1,458
	$	23,500

As amended in May 2016, our senior credit facility also provides for up to $2.0 million in equipment term loans to fund purchases of eligible equipment. Equipment loans are available for borrowing for one year following the May 2016 amendment date and mature in May 2020. Equipment loans are repaid in 36 equal monthly installments of principal, plus accrued and unpaid interest, following each borrowing and accrue interest at a floating rate equal to the lender’s prime rate plus 1.75%. We may at our option prepay the outstanding equipment loan balance by paying the lender all outstanding principal and accrued and unpaid interest plus a prepayment fee equal to 2.00% of the principal amount of each equipment loan prepaid if such equipment loan is prepaid on or prior to the first anniversary of the date such equipment loan was borrowed, and 1.00% of the principal amount of each equipment loan prepaid if such equipment loan is prepaid after the first anniversary of the date such equipment loan was borrowed. At June 30, 2016, we had no equipment loan borrowings outstanding.

The senior credit facility contains customary conditions to borrowing and affirmative and negative covenants, including covenants that restrict our and our subsidiaries’ ability to, among other things, dispose of assets, have a change of control, merge with or acquire other entities, incur indebtedness, grant liens on our assets, make distributions to holders of our capital stock, make investments or engage in transactions with our affiliates. The senior credit facility also requires us to maintain a minimum tangible net worth and liquidity ratio. We were in compliance with all covenants under our senior credit facility as of December 31, 2015 and June 30, 2016. Substantially all of our assets other than intellectual property are pledged as collateral under the senior credit facility.

Mezzanine Credit Facility

We have a mezzanine loan and security agreement, which we refer to as our mezzanine credit facility, with SG Enterprises II, LLC, which provides for a $5.0 million term loan which was drawn in September 2015. Interest on the term loan accrues at a fixed per-year rate equal to 18.0% and is payable monthly. Beginning in October 2017, we are required to pay equal monthly installments of principal equal to $138,889 through the maturity date. We may at our option and upon certain conditions, prepay the outstanding term loan balance without premium or penalty. All outstanding principal and accrued and unpaid interest on the term loan under the mezzanine credit facility is due and payable in October 2020.

The mezzanine credit facility contains customary conditions to borrowing and affirmative and negative covenants, including covenants that restrict our and our subsidiaries’ ability to, among other things, dispose of assets, merge with or acquire other entities, incur indebtedness, grant liens on our assets, make distributions to holders of our capital stock, make investments or engage in transactions with our affiliates. The mezzanine credit facility also requires us to maintain minimum revenues of at least 80% of our board-approved annual operating plan, measured quarterly on a year-to-date basis. Substantially all of our assets other than intellectual property are pledged as collateral under the mezzanine credit facility. We were in compliance with all covenants as of June 30, 2016.

As of June 30, 2016, $5.0 million of mezzanine loan borrowings, excluding unamortized debt discounts and issuance costs of $109,000 were outstanding. Scheduled principal maturities as of June 30, 2016 were as follows (in thousands):

2017	$	416
2018		1,667
2019		1,667
2020		1,250
	$	5,000