6. Debt and Related Warrants

Prior Facilities

In June 2015, the Company executed a Loan and Security Agreement with Ares Venture Finance (2015 Credit Facility) comprising an $8.0 million term loan and a $4.0 million revolving loan. In April 2017, the Company repaid the outstanding balance of $1.1 million on the revolving loan at which time the unamortized balance of the debt discount of $10,000 was recognized as a loss on extinguishment of debt. In May 2017, the Company repaid the outstanding principal balance of $6.2 million on the term loan at which time the unamortized balance of the debt discount was $175,000, and paid a prepayment penalty of $61,000. The unamortized debt discount balance and the prepayment penalty were recognized as a loss on extinguishment of debt in the statements of operations and comprehensive loss.

2017 Credit Facility

On May 4, 2017, the Company entered into a Loan and Security Agreement with Silicon Valley Bank (2017 Credit Facility) for a $12.0 million term loan. The term loan provided for interest at a floating rate equal to the prime rate minus 0.75%. The term loan provided for a period of interest-only payments through April 30, 2018, followed by fixed principal and interest payments based on either a 24-month amortization schedule or a 36-month amortization schedule if the Company met certain sales milestones. As of December 31, 2017, the Company determined it would not meet the sales milestones and as such the term loan was based on a 24-month amortization schedule. An end of term fee of 6% of the amount borrowed must be made when the loan is prepaid or repaid, whether at maturity or as a result of a prepayment or acceleration or otherwise.

On July 6, 2018, the Company entered into the First Amendment to the 2017 Credit Facility (the Amended Credit Facility). The Amended Credit Facility extends the period of interest-only payments through December 31, 2018, followed by fixed principal and interest payments based on either a 24-month or a 36-month amortization schedule if the Company achieves certain milestones. The Company determined it would not meet the milestones, as such the Amended Credit Facility is based on a 24-month amortization schedule. The Amended Credit Facility provides for interest at a floating rate equal to the prime rate minus 0.75%. As of December 31, 2018, the interest rate was 4.75%. The terms of the Amended Credit Facility include the refund of $1.0 million in principal payments previously made by the Company. An end of term fee of 7% of the amount borrowed must be made when the loan is prepaid or repaid, whether at maturity or as a result of a prepayment or acceleration or otherwise. The additional payment is being accreted using the effective interest method. As of December 31, 2018, the effective interest rate under the Amended Credit Facility was 7.77%. Borrowings under the Amended Credit Facility mature in December 2020.

Security for the Amended Credit Facility includes all of the Company’s assets except for intellectual property. The Company is required to comply with certain covenants under the Amended Credit Facility, including requirements to maintain a minimum liquidity ratio, meet certain revenue targets, and restrictions on certain actions without the consent of the lender, such as limitations on its ability to engage in mergers or acquisitions, sell assets, enter into transactions involving related parties, incur indebtedness or grant liens or negative pledges on its assets, make loans or make other investments. Under these covenants, the Company is prohibited from paying cash dividends with respect to its capital stock. The Company was in compliance with all covenants at December 31, 2018. The Amended Credit Facility contains a material adverse effect clause which provides that an event of default will occur if, among other triggers, an event occurs that could reasonably be expected to result in a material adverse effect on the Company’s business, operations or condition, or on the Company’s ability to perform its obligations under the term loan. As of December 31, 2018, management believes that it is remote that the clause will be triggered within the next twelve months, and therefore the term loan is classified as long-term.

The carrying value of the Company’s Amended Credit Facility at December 31, 2018, was as follows (in thousands):


	Current		Long-Term
	Portion		Debt		Total
Credit Facility	$	6,000	$	6,840	$	12,840
Unamortized debt discounts		(33)		(341)		(374)
Net carrying value	$	5,967	$	6,499	$	12,466

The carrying value of the Company’s 2017 Credit Facility at December 31, 2017, was as follows (in thousands):


	Current		Long-Term
	Portion		Debt		Total
Credit Facility	$	4,000	$	8,720	$	12,720
Unamortized debt discounts		(23)		(563)		(586)
Net carrying value	$	3,977	$	8,157	$	12,134

The table below includes the principal repayments due under the Amended Credit Facility as of December 31, 2018 (in thousands):


	Principal Repayment
	as of December 31, 2018
2019	$	6,000
2020		6,840
2021		—
2022		—
2023		—
Total principal repayments	$	12,840

Capital Lease Obligations

The Company leases certain equipment under capital lease obligations expiring in October 2020. The balance of the capital lease obligations was $20,000 and $31,000 at December 31, 2018 and 2017, respectively.

Property and equipment under capital leases amounted to $31,000 at December 31, 2018 and 2017. Accumulated depreciation and amortization on these assets was $13,000 and $2,000 at December 31, 2018 and 2017, respectively.

Future minimum rental commitments under the Company’s capital lease obligations are $10,000 for each of the years ended December 31, 2019 and 2020.