4. Bank Line of Credit

9 Months Ended

Mar. 31, 2018

Debt Disclosure [Abstract]

Bank Line of Credit

We are party to a Loan and Security Agreement (as amended, the “Loan Agreement”) with Silicon Valley Bank (“SVB”), which provides a $4,000,000 revolving line of credit, based on qualified accounts receivable. The Loan Agreement has a maturity date of September 30, 2018.

The Loan Agreement provides for an interest rate per annum equal to the greater of the prime rate plus 0.75% or 4.25%, provided that we maintain a monthly quick ratio of 1.0 to 1.0 or greater. The quick ratio measures our ability to use our cash and cash equivalents maintained at SVB and our net accounts receivable to extinguish or retire our current liabilities. If this ratio is not met, the interest rate per annum will become the greater of the prime rate plus 1.25% or 4.25%. At March 31, 2018, we met the 1.0 to 1.0 or greater quick ratio requirement.

The Loan Agreement also includes a covenant requiring us to maintain a certain Minimum Tangible Net Worth (“Minimum TNW”), currently required to be approximately $6,305,000. The Minimum TNW is subject to adjustment upward to the extent we raise additional equity or debt financing or achieve net income in future quarters. Our Actual Tangible Net Worth (“Actual TNW”) is calculated as total stockholders’ equity, less goodwill.

The following table presents the Minimum TNW compared to our Actual TNW:

	March 31, 2018
		(In thousands)
Minimum TNW	$	6,305
Actual TNW	$	12,378

The following table presents certain information with respect to the Loan Agreement with SVB:

	March 31, 2018			June 30, 2017
	(In thousands)
Outstanding borrowings on the line of credit	$	–	$	–
Available borrowing capacity	$	2,830	$	2,812
Outstanding letters of credit	$	51	$	51

Our outstanding letters of credit are used as security deposits.