7. Debt

Long-term Debt

Long-term debt consisted of the following (in thousands):

	March 31, 2017			December 31, 2016
Notes payable	$	25,175		$	25,127
Total		25,175			25,127
Less current portion		(2,083	)		—
Long-term portion	$	23,092		$	25,127

Term Loan

In December 2015, the Company entered into a loan and security agreement (“Term Loan”) with Silicon Valley Bank (the “Bank”) providing for a senior secured term loan facility in the amount of $25.0 million, which proceeds were used to repay all existing debt.

The Term Loan accrues interest at a floating annual rate equal to nine tenths of one percentage point (0.90%) above the prime rate published from time to time in The Wall Street Journal. The agreement requires the Company to make monthly interest-only payments through December 2017. After this date, the Company is required to make thirty-six (36) equal monthly installments of principal, plus accrued interest. The Company’s final payment, due on the maturity date of December 1, 2020, shall include all outstanding principal and accrued and unpaid interest plus a final payment equal to $625,000. In the event the loan is repaid prior to its maturity, the Company is responsible for (i) all outstanding principal plus accrued and unpaid interest, (ii) a prepayment fee equal to 2% of the outstanding principal balance if prepayment occurs after December 29, 2016, but on or prior to December 29, 2017, and 1% of the outstanding principal amount if the prepayment occurs after December 29, 2017, (iii) the final payment of $625,000, and (iv) other bank expenses. The loan has been recorded on the Consolidated Balance Sheet, net of issuance fees.

This loan and security agreement contains customary events of default and covenants, including a financial covenant that requires the Company to maintain either a liquidity ratio (defined as the ratio of the Company’s cash, cash equivalents and net accounts receivable to the Company’s obligation owed to the Bank) of at least 1.4:1.0, or to cash collateralize 100% of the Company’s obligations to the Bank. The Company’s obligations to the Bank are secured by substantially all of the Company’s assets, excluding intellectual property. As of March 31, 2017, the Company is in compliance with all covenants.

The Company recognized interest expense of $339,000 and $327,000 for the three months ended March 31, 2017 and 2016, respectively. Of the total interest expense recognized, $49,000 was related to the amortization of the debt discount and end of term payment for both three months ended March 31, 2017 and 2016.