Debt

Equipment Line of Credit

In November 2015, the Company entered into a Loan and Security Agreement (“Equipment Line of Credit”) with Silicon Valley Bank that provided for cash borrowings for equipment (“Equipment Advances”) of up to $2.0 million, secured by the equipment financed. Under the terms of the agreement, interest is equal to 1.25% above the Prime Rate. Interest only payments are due on borrowings through November 30, 2016, with both interest and principal payments commencing in December 2016. Any equipment advances after November 30, 2016 are subject to principal and interest payments immediately over a 36-month period following the advance. All unpaid principal and interest on each Equipment Advance will be due on November 1, 2019. The Company has an obligation to make a final payment equal to 7% of total amounts borrowed at the loan maturity date.

The Company is also subject to certain affirmative and negative covenants under the Equipment Line of Credit. As of March 31, 2016, the Company was in compliance with all covenants.

As of March 31, 2016, $1,636,359 has been borrowed under the Equipment Line of Credit. As of March 31, 2016, amounts due under the Equipment Line of Credit included $181,818 in current liabilities and $1,462,260 in long-term liabilities, which includes $7,719 of accrued final payment. The Company recorded $21,179 in interest expense related to the Equipment Line of Credit during the year ended March 31, 2016.

Future payments of long-term debt at March 31, 2016 are as follows:



2016	$	181,818
2017	545,453
2018	545,453
2019	363,635
Total principal	1,636,359
Plus final fee premium accretion	7,719
Total long-term obligations	$	1,644,078

Loan and Security Agreement

In June 2014, the Company entered into a $15,000,000 loan and security agreement (“Agreement”) under which the lenders provided the Company a term loan, which was funded at closing. The interest rate is 7.07% per annum. Under the Agreement, the Company made interest only payments on the outstanding amount of the loan on a monthly basis through February 2016, after which equal monthly payments of principal and interest are due until the loan maturity date of July 1, 2018. The loan is secured by a security interest in all of the Company’s assets except intellectual property, which is subject to a negative pledge. In connection with the loan, the lenders received a warrant to purchase an aggregate 85,470 shares of the Company’s common stock at an exercise price of $3.51 per share exercisable for ten years from the date of issuance. The original value of the warrants, totaling $235,857, was recorded as debt discount and additional paid-in capital as the warrants were equity classified. As of March 31, 2016, a warrant to purchase 42,735 shares of common stock remains outstanding.

At the Company’s option, it may prepay all of the outstanding principal balance, subject to certain pre-payment fees ranging from 1% to 3% of the prepayment amount. In the event of a final payment of the loans under the loan agreement, either in the event of repayment of the loan at maturity or upon any prepayment, the Company is obligated to pay the amortized portion of the final fee of $1,050,000.

The Company is also subject to certain affirmative and negative covenants under the Agreement, including limitations on its ability to: undergo certain change of control events; convey, sell, lease, license, transfer or otherwise dispose of any equipment financed by loans under the loan agreement; create, incur, assume, guarantee or be liable with respect to indebtedness, subject to certain exceptions; grant liens on any equipment financed under the loan agreement; and make or permit any payment on specified subordinated debt. In addition, under the Agreement, subject to certain exceptions, the Company is required to maintain with the lender its primary operating, other deposit and securities accounts. Furthermore, under the amendment to the Agreement, the Company is required to be in compliance with healthcare laws and regulations and terms and conditions of healthcare permits. The Company was in compliance with all covenants as of March 31, 2016.

As of March 31, 2016, amounts due under the Agreement include $5,752,026 in current liabilities and $8,827,028 in long-term liabilities, which include $623,182 of accrued final payment. The Company recorded $345,162 in interest expense related to the Agreement during the three months ended March 31, 2016.

Future payments of long-term debt at March 31, 2016 are as follows:



2016	$	5,752,026
2017	6,172,134
2018	2,155,976
Total principal	14,080,136
Less discount	(124,264		)
Plus final fee premium accretion	623,182
Total long-term obligations	$	14,579,054

Debt Agreement

In February 2016, the Company signed a term sheet to refinance its existing term loan in June 2014. Under the term sheet, interest would be equal to 3.75% plus the Wall Street Journal Prime Rate, subject to a floor of 7.25%. Interest only payments would be for 12 months, followed by equal monthly payments of principal and interest over the following 30 months. The Company would also have an obligation to make a final payment equal to 7.50% of total funded amounts at the loan maturity date. In addition, the lenders would receive a warrant to purchase such number of shares of the Company’s common stock as is equal to 1% of the funded amount divided by an average closing price of the Company’s common stock. As of March 31, 2016, the refinancing documents have not been fully executed.