Notes Payable and Credit Arrangements

9 Months Ended

Sep. 30, 2012

Notes Payable and Credit Arrangements [Abstract]

Debt Disclosure [Text Block]

Notes Payable and Credit Arrangements

The Company has two separate credit facilities with Silicon Valley Bank (the “Bank” or “SVB”): (i) a Second Amended and Restated Loan and Security Agreement (as amended to date, the “Revolving Credit Facility”) and (ii) an Amended and Restated Export-Import Bank Loan and Security Agreement (as amended to date, the “Ex-Im Facility”) pursuant to which outstanding amounts under this facility are guaranteed by the Export-Import Bank of the United States (the “EXIM Bank”). The credit facilities provide an aggregate amount of $6 million under both facilities, with up to $2 million available under the Revolving Credit Facility and up to $4 million available under the Ex-Im Facility. These credit facilities have a maturity date of December 29, 2012 and the Company has commenced preliminary discussions with the Bank with respect to the renewal and extension of the Revolving Credit Facility and the Ex-Im Facility. In addition, a guidance line has been established to support letters of credit in an aggregate amount of up to $1.5 million through December 29, 2012. If the Company achieves certain levels of liquidity, based on cash on hand and availability under the credit facility, the Company will not be required to cash collateralize letters of credit issued under this guidance line.

The Company's obligations under these two credit facilities, as well as the guidance line, are secured by substantially all of the assets of the Company. Advances under the Revolving Credit Facility are limited to 80% of eligible receivables. Advances under the Ex-Im Facility are limited to (i) 90% of eligible receivables subject to a suitable foreign currency hedge agreement if applicable, plus (ii) 75% of all other eligible receivables billed in foreign currency, plus (iii) 50% of the value of eligible inventory, as defined. Under the Revolving Credit Facility and the Ex-Im Facility, as long as any commitment remains outstanding under the facilities, the Company must comply with a financial covenant by maintaining a minimum cash balance of $1.0 million. In addition, until all amounts under the credit facilities with the Bank are repaid, covenants under the credit facilities impose restrictions on the Company's ability to, among other things, incur additional indebtedness, create or permit liens on the Company's assets, merge, consolidate or dispose of assets (other than in the ordinary course of business), make dividend and other restricted payments, make certain debt or equity investments, make certain acquisitions, engage in certain transactions with affiliates or change the business conducted by the Company. Any failure by the Company to comply with the covenants and obligations under the credit facilities could result in an event of default, in which case the Bank may be entitled to declare all amounts owed to be due and payable immediately.

Under the credit facilities, interest on outstanding borrowings accrues at a rate per annum equal to the greater of (i) the prime rate plus 2.5% or (ii) 7.0%. In addition, if the Company achieves certain levels of liquidity, based on cash on hand and availability under the credit facility, the Company will have a 0.5% lower interest rate.

Advances outstanding under the Revolving Credit Facility were $1.0 million and zero at September 30, 2012 and December 31, 2011, respectively.  Advances outstanding under the Ex-Im Facility were $145 thousand and $1.2 million at September 30, 2012 and December 31, 2011, respectively.  As of September 30, 2012, the interest rate per annum on the Revolving Credit Facility and Ex-Im Facility was 6.0% and 6.0%, respectively. The Company has utilized $675 thousand and $1.4 million of the guidance line at September 30, 2012 and December 31, 2011, respectively. Combined availability under the Revolving Credit Facility and the Ex-Im Facility was zero as of September 30, 2012.