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. At December 31, 2016, the interest rate was 5.0%. 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 December 31, 2016, the Company was in compliance with all covenants.

As of December 31, 2016, amounts due under the Equipment Line of Credit included $626,104 in current liabilities and $1,232,534 in long-term liabilities, which includes $32,501 of final fee premium accretion. The Company recorded $111,293 in interest expense related to the Equipment Line of Credit during the year ended December 31, 2016.

Future maturities of long-term debt at December 31, 2016 are as follows:



2017	$	626,104
2018	626,104
2019	573,929
Total principal	1,826,137
Plus final fee premium accretion	32,501
Total long-term obligations	$	1,858,638

Loan and Security Agreement

In June 2014, the Company entered into a $15,000,000 loan and security agreement (“Agreement”) with two banks pursuant to which the lenders provided the Company with a term loan, which was funded at closing. 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, each of the lenders received a warrant to purchase up to an aggregate of 85,470 shares of the Company’s common stock at an exercise price of $3.51 per share, which such warrants are exercisable for ten years from the date of issuance.

On July 20, 2016, the Company signed the 5th Amendment to Loan and Security Agreement (“Amendment”) to refinance its existing term loan. Under the Amendment, the interest rate was adjusted to 3.75% plus the Wall Street Journal Prime Rate (subject to a floor of 7.25%). At December 31, 2016, the interest rate was 7.5%. The Amendment also extended the maturity date of the loan to February 1, 2020. The Company is required to make interest only payments on the outstanding amount of the loan on a monthly basis through September 1, 2017, after which equal monthly payments of principal and interest are due until the loan maturity date of February 1, 2020. In addition, the lenders received a warrant to purchase an aggregate 30,992 shares of the Company’s common stock at an exercise price of $4.84 per share exercisable for ten years from the date of issuance. The fair value of the warrants, totaling $148,885, was recorded as debt discount and additional paid-in capital as the warrants were equity classified. As of December 31, 2016, warrants to purchase 73,727 shares of common stock remains outstanding, of which 42,735 of these warrants were in connection with the original Agreement.

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 $1,125,000.

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; make or permit any payment on specified subordinated debt; and pay dividends. 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, 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 under the Agreement, as amended, as of December 31, 2016.

As of December 31, 2016, amounts due under the Agreement include $1,734,005 in current liabilities, which include $265,995 of current portion of debt discount, and $12,943,825 in long-term liabilities, which include $192,171 of final fee premium accretion and $248,346 of debt discount. The Company recorded $1,563,049 in interest expense related to the Agreement during the year ended December 31, 2016. Closing costs are being accreted over the life of the loan to interest expense.

Future maturities of long-term debt at December 31, 2016 are as follows:



2017	$	2,000,000
2018	6,000,000
2019	6,000,000
2020	1,000,000
Total principal	15,000,000
Less discount	(514,341		)
Plus final fee premium accretion	192,171
Total long-term obligations	$	14,677,830