12. Subsequent Events

SWK Credit Agreement Amendment

On February 3, 2015 (the “Amendment Closing Date”), the Company entered into a first amendment (the “Amendment”) to that certain credit agreement (the “Credit Agreement”), dated July 30, 2014, with SWK Funding LLC, as the agent (the “Agent”), and the lenders (including SWK Funding LLC) party thereto from time to time (the “Lenders”). Pursuant to the Amendment, the Company drew an additional $1,500,000 of the maximum $12,000,000 term loan commitment amount (the “Loan Commitment Amount”) increasing the total amount advanced to the Company under the Credit Agreement to $10,000,000. The maturity date for the term loan remains July 30, 2020 (the “Term Loan Maturity Date”) or such earlier date on which the Loan Commitment Amount is terminated pursuant to the terms of the Credit Agreement.

On the Amendment Closing Date, the Company replaced the warrant to purchase 681,090 shares of the Company's common stock at an exercise price of $0.936 that was initially issued to the Agent on July 30, 2014 (the “Initial Warrant”), with an adjusted exercise price (the “Replacement Warrant”). The Replacement Warrant is exercisable up to and including July 30, 2020 at an exercise price of $0.39 per share. The Agent may exercise the Replacement Warrant on a cashless basis at any time. In the event the Agent exercises the Replacement Warrant on a cashless basis, the Company will not receive any proceeds. The exercise price of the Replacement Warrant is subject to customary adjustments for stock splits, stock dividends, recapitalizations and the like.

In addition, on the Amendment Closing Date, the Company issued the Agent a warrant (the “First Amendment Warrant”) to purchase 576,923 shares of Common Stock. The First Amendment Warrant is exercisable up to and including February 3, 2021 at an exercise price of $0.39 per share, subject to adjustment. The Agent may exercise the First Amendment Warrant on a cashless basis at any time. In the event the Agent exercises the First Amendment Warrant on a cashless basis, the Company will not receive any proceeds. The exercise price of the First Amendment Warrant is subject to customary adjustments for stock splits, stock dividends, recapitalizations and the like.

The remaining $2,000,000 of the Loan Commitment Amount (the “Subsequent Term Loan”) may be advanced to the Company upon written request to the Agent during the period beginning on the Amendment Closing Date and ending February 28, 2016 provided that (i) no default or event of default has occurred or is continuing under the Credit Agreement, (ii) the aggregate revenue recognized by the Company and any of its subsidiaries during any period of four (4) consecutive fiscal quarters ending prior to December 31, 2015, exceeds a certain dollar amount threshold and (iii) the Agent has received an executed warrant (the “Subsequent Term Loan Warrant”) to purchase a number of shares of Common Stock equal to the number obtained when the amount of the Subsequent Term Loan is multiplied by 15% and the product is divided by the exercise price of such warrant. The exercise price of the Subsequent Term Loan Warrant will be equal to the lower of (a) the average closing price of the Common Stock on the previous 5 trading days before the closing date of the Subsequent Term Loan, or (b) the closing price of the Common Stock on the last trading day prior to such Subsequent Term Loan’s closing date. The Subsequent Term Loan Warrant will be exercisable for a period of six years from the closing date of the Subsequent Term Loan, subject to adjustment. Upon issuance, the Agent may exercise the Subsequent Term Loan Warrant on a cashless basis at any time. In the event the Lenders exercise the Subsequent Term Loan Warrant on a cashless basis, the Company will not receive any proceeds. The exercise price of the Subsequent Term Loan Warrant is subject to customary adjustments for stock splits, stock dividends, recapitalizations and the like.

On January 30, 2015, SG-Financial, LLC (“SG”) assigned to SWK all of the interests under the SWK Credit Agreement that was assigned to SG by SWK, as the initial Lender, on September 9, 2014 including $2,500,000 of the $8,500,000 Closing Date initial advance to the Company and $1,029,412 of the remaining Loan Commitment Amount. In addition, on the same date, SG assigned to SWK the portion of the Initial Warrant consisting of the right to purchase 200,321 shares of common stock of the Company that was assigned to SG by SWK on September 9, 2014. As such as of January 30, 2015, SWK is the sole Lender under the SWK Credit Agreement and held the entire Initial Warrant which was replaced by the Replacement Warrant on February 3, 2015.

Nasdaq Delisting Extension Update

On December 19, 2014, the Company received a delisting determination letter from Nasdaq due to the Company not regaining compliance with The Nasdaq Capital Market minimum bid price of $1.00 requirement for continued listing set forth in Nasdaq Listing Rule 5550(a)(2) within 180 days or by December 17, 2014. The delisting determination letter also stated that the Company is not eligible for an additional 180-day extension to regain compliance with the minimum bid price rule because the Company does not meet the minimum $2,500,000 in stockholders’ equity standard for continued listing under Nasdaq Listing Rule 5550(b)(1).

Pursuant to the determination letter, the Company requested an appeal of this determination and appeared before a Nasdaq Hearing Panel (the “Panel”) on February 5, 2015 and was granted its request for continued listing on the Nasdaq Stock Market, subject to certain conditions, on February 17, 2015. If the Company fails to meet the terms of the Panel’s decision by June 19, 2015, the Panel will issue a final delist determination and the Company will be suspended from trading on the Nasdaq Stock Market.

The Company believes that it is in the process of complying with the conditions set by the Panel for continued suspension of delisting. However, there can be no assurance that the Company will be able to timely meet all of the conditions and continue to be listed on Nasdaq. If the Company’s common stock ceases to be listed for trading on the Nasdaq Capital Market, the Company expects that its common stock would be traded on the OTC Markets on or about the same day.