United states securities and exchange commission

3. Goodwill and Intangible Assets

Goodwill was $989,000 for the years ended December 31, 2016 and 2015.

Intangible assets consisted of the following (in thousands):

 

		Average   Remaining		December 31,
		Useful Life		2016				2015
Domain names		15 Months		$	1,268			$	1,268
Tradenames and trademarks		5 Months			109				109
Non-compete agreements		0 Months			26				26
Software		30 Months			321				—
Capitalized Learning Content		58 Months			400				—
Accumulated amortization					(1,364	)			(959	)
Total				$	760			$	444

 

Amortization expense for intangible assets was $405,000, $309,000 and $306,000 for the years ended December 31, 2016, 2015, and 2014, respectively. Amortization expense for capitalized learning content is recorded within cost of revenue on the consolidated statements of operations.

Based on the recorded intangible assets at December 31, 2016, estimated amortization expense is expected to be as follows (in thousands):

 

		Amortization
Years Ending December 31,		Expense
2017		$	292
2018			191
2019			133
2020			80
2021			64
Total		$	760

 

F-17

INSTRUCTURE, INC.

Notes to Consolidated Financial Statements

 

4. Marketable Securities

Our investment policy is consistent with the definition of available-for-sale securities. We do not buy and hold securities principally for the purpose of selling them in the near future nor do we intend to hold securities to maturity. Rather, our policy is focused on the preservation of capital, liquidity and return. From time to time, we may sell certain securities but the objectives are generally not to generate profits on short-term differences in price.

The following table summarizes, by major security type, our assets that are measured at fair value on a recurring basis (in thousands).

 

		December 31, 2016
		Amortized				Gross  Unrealized				Gross  Unrealized				Estimated Fair
		Cost				Gains				Losses				Value
Corporate debt securities		$	23,907			$	—			$	(12	)		$	23,895

 

		December 31, 2015
		Amortized				Gross Unrealized				Gross Unrealized				Estimated Fair
		Cost				Gains				Losses				Value
Corporate debt securities		$	325			$	—			$	—			$	325

 

The aggregate fair value of investments in an unrealized loss position was $17,906,000 as of December 31, 2016. Because we do not intend to sell the investments that are in an unrealized loss position and it is not likely that we will be required to sell any investments before recovery of their amortized cost basis, we do not consider these investments with an unrealized loss to be other-than-temporarily impaired as of December 31, 2016.

There were no marketable securities in an unrealized loss position as of December 31, 2015.

There were gross realized gains of $0, $0 and $9,000 from the sale or maturity of marketable securities included in other income (expense), net during 2016, 2015 and 2014, respectively. There were no gross realized losses from the sale or maturity of marketable securities during the years ended December 31, 2016, 2015 and 2014.

During the years ended December 31, 2016, 2015 and 2014, we recognized gross interest income on securities of $281,000, $30,000 and $177,000, respectively. Accretion expense on securities of $42,000, $13,000 and $148,000 during 2016, 2015 and 2014, respectively, and was reported within interest expense on the consolidated statements of operations.

The estimated fair value of investments by contractual maturity is as follows (in thousands):

 

		December 31,
		2016				2015
Due within one year		$	23,895			$	325
Due after one year and through 5 years			—				—
Due after 5 years and through 10 years			—				—
Due after 10 years			—				—
Total		$	23,895			$	325

 

F-18

INSTRUCTURE, INC.

Notes to Consolidated Financial Statements

 

5. Credit Facility

In November 2012, we entered into a loan and security agreement with a financial institution, or the credit facility, allowing us to incur revolver borrowings of up to $7.0 million, or such lesser amount equal to a percentage of our monthly contracted recurring revenue. Interest on borrowings accrued at a rate equal to the prime rate plus 1.25% to 3.75%, with the exact interest rate determined by reference to a specified operating metric. Accrued interest is payable monthly on the first day of each month with all outstanding borrowings payable on the maturity date. In addition to an upfront facility fee, we are obligated to pay the lender a fee, payable quarterly in arrears, in an amount equal to 0.25% of the average unused portion of the available borrowings.

The credit facility contains customary conditions to borrowing, events of default and covenants, including covenants that restrict our ability to dispose of assets, change our business, merge with or acquire other entities, incur indebtedness, incur encumbrances, make distributions to holders of our capital stock, make investments or engage in transactions with our affiliates. The agreement also includes a financial covenant requiring the achievement of minimum bookings on a trailing three month basis, tested monthly. During the continuance of an event of default, SVB may accelerate amounts outstanding, terminate the credit facility, and foreclose on the collateral. Amounts borrowed under the credit facility are secured by a first priority security interest in substantially all of our assets other than intellectual property and more than 65% of the capital stock of any of our foreign subsidiaries.

In June 2015, we amended the credit facility to (1) increase available aggregate revolver borrowings and (2) decrease the interest rate on borrowings from a rate of prime plus 1.75% to prime plus 0.50%. The aggregate revolver borrowings is $15.0 million (subject to increase to $25.0 million in the lender’s sole discretion) through the maturity date in June 2017 so long as we are in compliance with all terms and conditions under the credit facility.

In November 2016, as part of our normal credit facility maintenance, we amended the minimum bookings targets for October 2016 through February 2017.  The aggregate revolver borrowings remained at $15.0 million (subject to increase to $25.0 million in the lender’s sole discretion) through the maturity date in June 2017 so long as we are in compliance with all terms and conditions under the credit facility.

As of December 31, 2016 and 2015, we had no borrowings under the credit facility. Unamortized deferred financing costs associated with the credit facility were $10,000 and $56,000 as of December 31, 2016 and 2015, respectively.