6. Debt

12 Months Ended

Dec. 31, 2014

Notes to Financial Statements

6. Debt

The Company has a secured revolving credit facility with Silicon Valley Bank (“SVB”).   Effective on December 31, 2014, the Company and SVB amended the Loan and Security Agreement dated as of October 23, 2008, as amended by the First Amendment thereto dated as of October 20, 2010, the Second Amendment thereto dated as of June 22, 2011, and the Third Amendment thereto dated as of December 18, 2012, under which the existing $5.0 million secured revolving credit facility is maintained, by entering into the Fourth Amendment to Loan and Security Agreement.   Under the Fourth Amendment, the existing $5.0 million secured revolving credit facility was amended as follows:

●   the secured credit facility’s maturity date was extended to December 30, 2015 from December 31, 2014;

●   the variable rate at which borrowings bear interest was changed to the prime rate, as in effect from time to time, plus 50 basis points, provided if the Company’s “Adjusted Quick Ratio” is greater than or equal to 1.50 to 1.00, then the interest rate is the prime rate;

●   the Company’s minimum “tangible net worth” requirement was reset to $26.5 million, such minimum requirement continuing to be subject to increase by (i) 50% of quarterly net profits and (ii) 75% of the net proceeds received from issuances of equity and issuances of “subordinated debt”; and

●   the Company is now permitted to pay cash dividends, the total of which may not exceed $3.5 million in the aggregate, during any twelve month period, so long as an event of default does not exist at the time of such dividend and would not exist after giving effect to such dividend.

The Company was in compliance with all covenants under the Loan and Security Agreement, as amended by the Fourth Amendment, as of December 31, 2014.  The Company had no borrowings outstanding under the secured credit facility as of December 31, 2014, and approximately $3.0 million was available for borrowing.

The foregoing description of the revolving credit facility is not complete and is qualified in its entirety by reference to the loan and security agreement dated as of October 23, 2008, as amended by the first amendment to loan and security agreement dated as of October 20, 2010, by the second amendment to loan and security agreement dated June 22, 2011, by the third amendment to loan and security agreement dated December 18, 2012, and by the fourth amendment to loan and security agreement dated as of January 28, 2015 and effective as of December 31, 2014, copies of which are listed and incorporated by reference as Exhibits 10.8, 10.9, 10.10, 10.11 and 10.17 to the report in which these Consolidated Financial Statements are included, and are incorporated by reference herein.