Note 5. Debt Obligations.

Growth Term Loan

In August 2014, the Company entered into the Growth Term Loan with a syndicate of two lending institutions. The first tranche of the Growth Term Loan (“Growth Term Loan A”) of $11.0 million was funded at closing with a second tranche of $5.0 million (“Growth Term Loan B”) is available to be drawn with the completion of the Company’s IPO in May 2015 for 60 days following the effective date of the IPO. The Company received the proceeds, net of a $0.3 million original issue discount. The Company also booked a discount for the issuance of warrants with the debt (See Note 7). The original issuance discount and warrant discount are being amortized, using the effective interest method, over the term of the Growth Term Loan A. Amortization expense was $0.1 million and $0 for the periods ended March 31, 2015 and 2014, respectively, and is included in interest expense in the accompanying condensed statement of operations. The Growth Term Loan A bears interest at the fixed rate of 8.5% and matures in September 2018 and, at least through September 2015, is payable in monthly interest-only payments. The interest-only payment period is extendable through January 31, 2016, upon funding of the second tranche prior to its expiration. Following the interest-only payment period, equal monthly payments of $347,000 consisting of principal and interest amortized over the remaining term of the loan are due. The Growth Term Loan requires the Company to maintain compliance with specific reporting covenants and does not require financial covenants. The Growth Term Loan is secured by a lien covering substantially all of the Company’s assets, excluding patents, trademarks and other intellectual property rights (except for rights to payment related to the sale, licensing or disposition of such intellectual property rights) and certain other specified property. The Company paid $0.1 million in financing costs upon entering the Growth Term Loan. The agreement includes preferred stock warrants to purchase 2,512,562 shares of Series E Stock (“the “Series E Loan Warrants”) at a price of $0.2189 per share or at the purchase price of the next round of equity sold if no further shares of Series E Stock are sold. The warrants to purchase shares of Series E Stock expire on August 22, 2024 (See Note 8).

The principal repayments due under the term loan as of March 31, 2015, are as follows:

2015	$	813,715
2016		3,432,771
2017		3,736,197
2018		3,017,317
Total Growth Term Loan payments		11,000,000
Less discount		(500,311	)
Plus final fee premium		80,438
Total Growth Term Loan, net	$	10,580,127

Convertible Notes

On December 30, 2014, the Company entered into two, separate subordinated convertible promissory note agreements, (“the Note Agreements”).

Under the first Note Agreement, the Company was able to issue up to $7,339,165 of notes to existing investors at five future, individual closings of up to $1,500,000 each upon ten days’ notice to participating investors. The date and time of the closings must be approved by the unanimous vote or written consent of those members of the Company’s Board of Directors who are not affiliated with the participating investors. When issued, the notes bear annual interest at 8% and mature on March 31, 2016. Any outstanding principal and accrued interest has automatically converted into shares of the Company’s common stock with the Company’s qualified initial public offering in May 2015. In addition, pursuant to the first Note Agreement the Company issued to participating investors warrants to purchase up to 5,029,114 shares of Series E preferred stock at $0.2189 per share, discussed further in Note 8.

Under the second Note Agreement, the Company can issue up to $6,203,971 of subordinated convertible notes to existing investors at four future, individual closings of up to $1,703,971 each upon ten days’ notice to participating investors. The date and time of the closings must be approved by the Company’s Board of Directors, including a majority of the directors elected by the holders of the Company’s Series E Convertible Preferred Stock (the “Series E Directors”) and participating investors whose applicable closing commitment amount for such closing equals or exceeds 50% of the aggregate principal amount of the notes to be sold at such closing. When issued, the notes bear annual interest at 8% and mature on March 31, 2016. Any outstanding principal and accrued interest is automatically converted into shares of the Company’s common stock in the event of a qualified initial public offering or a private placement of preferred stock, each with gross proceeds of at least $20,000,000. In addition, pursuant to the second Note Agreement the Company issued to participating investors warrants to purchase up to 4,282,472 shares of Series E preferred stock at $0.2189 per share, discussed further in Note 8. None of the notes under the second Note Agreement were issued prior to the IPO in May 2015.

As of the Company’s qualified initial public offering the number of shares into which the notes will be converted is equal to the outstanding principal and accrued interest divided by the $14.00 price per share paid by investors purchasing such newly issued equity securities.

Under each of the Note Agreements, the failure of a principal or major participating investor to invest their committed amount at each of the closings resulted in the conversion of a percentage of the investor’s preferred shares into common shares at the applicable conversion rates in effect pursuant to the Company’s restated certificate of incorporation. Under the first Note Agreement, failure of a principal investor to purchase their committed amount will resulted in the conversion of their entire holdings of preferred stock into common stock, at conversion rates then in effect. Under the second Note Agreement, up to 80% of the total preferred stock held by such investor will be converted into common stock, at conversion rates then in effect. In addition, failure to purchase the full committed amount in any closing will result in the termination of the applicable investor’s warrants, in whole or in part, and the forgiveness and extinguishment of 80% of the aggregate principal amount of the applicable investor’s outstanding notes, if any. In the event the Company sold new shares of stock in a qualified initial public offering or preferred stock in a private placement, an investor’s failure to participate in the subsequent equity financing, in an amount equal to their applicable remaining committed amount under the Note Agreements, would result in the conversion of up to 80% of the non-participating investor’s aggregate preferred stock holding as of the closing date of the subsequent equity financing, along with a reduction of up to 80% of the non-participating investor’s warrants. Pursuant to the provisions of the second Note Agreement, certain preferred shares were optionally converted into common stock as of December 30, 2014. As of March 31, 2015, all principal participating investors in the first Note Agreement had met their obligations to purchase the committed amount under the agreement.

Certain provisions of the first Note Agreement terminated (including the investors’ obligations to purchase notes thereunder) immediately prior to the closing of the qualified initial public offering in May 2015. Certain provisions of the second Note Agreement terminated (including the investors’ obligations to purchase notes thereunder) immediately prior to the registration statement covering a public offering of the Company’s securities under the Securities Act of 1933, as amended, becoming effective in May 2015.

As of December 31, 2014, there were no borrowings on the Note Agreements.

Below is a summary of the convertible notes issued as of March 31, 2015:

Date Issued	Draw Amount		Maturity Date
February 25, 2015	$	1,500,000	March 31, 2016
March 25, 2015		1,500,000	March 31, 2016
Total convertible note draws		3,000,000
Less discount		(709,822)
Total convertible notes, net	$	2,290,178

The Company booked a discount for the estimated fair value of warrants issued in connection with the debt (See Note 8). The warrant discount is being amortized, using the effective interest method, over the term of the Convertible Notes. Amortization expense was $32,006 and $0 for the periods ended March 31, 2015 and 2014, respectively, and is included in interest expense in the accompanying condensed statement of operations.