CREDIT FACILITY

12 Months Ended

Dec. 31, 2014

Notes to Financial Statements

Credit Facility

4. CREDIT FACILITY AND LONG-TERM DEBT

The Company has a credit and security agreement with Wells Fargo which expires December 31, 2015. The agreement includes a $15.0 million asset-based revolving line of credit with a stated interest rate at December 31, 2014 of LIBOR plus 3.75% (4.125%). The Company anticipates the stated interest rate will decline to LIBOR plus 2.75% as of April 1, 2015 based on the terms of credit and security agreement and the Company’s 2014 financial performance. There is an annual minimum interest charge of $100 thousand under the agreement. Amounts due under the credit facility are secured by a first security interest in essentially all of the Company's assets excluding assets securing the term debt referenced below, which is an obligation of Heska Imaging and which was outstanding when the Company acquired a majority interest in Heska Imaging. Under the agreement, the Company is required to comply with certain financial and non-financial covenants. Among the financial covenants through December 31, 2014 are requirements for minimum capital monthly, minimum net income quarterly and capital expenditures monthly. Beginning January 1, 2015 the financial covenant is based on a fixed charge coverage ratio, as defined in the credit and security agreement with Wells Fargo. The amount available for borrowings under the line of credit varies based

upon available cash, eligible accounts receivable and eligible inventory. As of December 31, 2014, there was $48 thousand of borrowings outstanding and there was approximately $8.8 million available capacity for borrowings under the line of credit agreement.

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

	December 31,
	2013		2014
Term loan with a financial entity, secured by demo equipment, due in monthly installments beginning July 2012 with the balance paid in full in June 2017 and a stated interest rate of 6.0%.	$	501		$	368
Less current portion of long-term debt		132			141
Long-term debt, net of current portion	$	369		$	227

Maturities of long-term debt as of December 31, 2014 were as follows (in thousands):

Year Ending December 31,
2015	$	141
2016		149
2017		78
	$	368