Debt

Loan and Security Agreement with Silicon Valley Bank

On March 29, 2010, the Company entered into an amended and restated loan and security agreement with Silicon Valley Bank ("SVB"). The agreement was amended on December 27, 2011 to increase outstanding borrowings, amended on June 29, 2012 to modify financial covenants and reduce the interest rate and other fees, amended on May 10, 2013 to modify financial covenants and amended on June 26, 2014 to extend the line of credit to September 30, 2014 and reduce the interest rate. The agreement, as amended, includes a $12,000 term loan and a $15,000 line of credit. The terms of each of these loans are as follows:

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The $12,000 term loan had an initial interest rate of 8.0%, which could have been reduced to 7.0% based on the achievement of positive EBITDA for the trailing six month period. The term loan had a maturity of 36 months, with repayment terms that included interest only payments during the first six months, followed by 30 equal principal payments of $400 plus interest, and a final payment of $100 due at maturity. This term loan also included an acceleration provision that required the Company to pay the entire outstanding balance, plus a penalty ranging from 1.0% to 3.0% of the commitment amount, upon prepayment or the occurrence and continuance of an event of default. The balance outstanding on the term loan at June 30, 2014 and 2013 was $0 and $7,017, respectively, net of the unamortized discount associated with warrants issued to SVB in connection with the loan. The unamortized discount associated with warrants and other fees paid to the lender were amortized over the 36 months maturity period. See Note 6 for additional information. The term loan expired on June 30, 2014.

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The $15,000 line of credit expires on September 30, 2014 and has a floating interest rate equal to the Wall Street Journal's prime rate. Interest on borrowings is due monthly and the principal balance is due at maturity. Borrowings on the line of credit are based on 85% of eligible accounts. Accounts receivable receipts are deposited into a lockbox account in the name of SVB. The line of credit is subject to non-use fees, annual fees, and cancellation fees. During the quarter ended December 31, 2013, the Company paid the remaining balance on the term loan with funds from the line of credit. The balance outstanding on the line of credit at June 30, 2014 and 2013 was $2,400 and $0, respectively.

Borrowings from SVB are secured by all of the Company's assets. The borrowings are subject to prepayment penalties and financial covenants, including maintaining certain liquidity and fixed charge coverage ratios. The Company was in compliance with all financial covenants as of June 30, 2014. Any non-compliance by the Company under the terms of debt arrangements could result in an event of default under the SVB loan, which, if not cured, could result in the acceleration of this debt.

Loan and Security Agreement with Partners for Growth

On April 14, 2010, the Company entered into a loan and security agreement with PFG, as amended on August 23, 2011, December 27, 2011, June 30, 2012 and May 10, 2013. The amended agreement provides that PFG will make loans to the Company up to $5,000. The agreement has a maturity date of April 14, 2015. The loans bear interest at a floating per annum rate equal to 2.75% above SVB's prime rate, and such interest is payable monthly. The principal balance of and any accrued and unpaid interest on any notes are due on the maturity date and may not be prepaid by the Company at any time in whole or in part. As of June 30, 2014, PFG had converted all outstanding loans.

At any time prior to the maturity date, PFG may at its option convert any of the outstanding loans into shares of the Company's common stock at the applicable conversion price, which in each case equaled the ten-day volume weighted average price per share of the Company's common stock prior to the issuance date of each note. The Company may also effect at any time a mandatory conversion of amounts, subject to certain terms, conditions and limitations provided in the agreement, including a requirement that the ten-day volume weighted average price of the Company's common stock prior to the date of conversion is at least 15% greater than the conversion price. The Company may reduce the conversion price to a price that represents a 15% discount to the ten-day volume weighted average price of its common stock to satisfy this condition and effect a mandatory conversion. The Company recorded an (expense) benefit of $(61) and $370 for the years ended June 30, 2014 and 2013 related to the change in fair value of the conversion options on all outstanding loans. This amount is a component of interest and other, net on the accompanying statement of operations. The balance outstanding under the loan and security agreement at June 30, 2014 and 2013 was $0 and $5,000, respectively, including the net unamortized premium. The net unamortized premium associated with the loan, a beneficial conversion feature, and other fees paid to the lender was recorded as a component of interest and other, net on the accompanying statement of operations.

During the years ended June 30, 2014 and 2013, PFG converted various loans, in accordance with the conversion terms set forth in the agreement. The non-cash conversion activity was as follows (in thousands, except share amounts):



Date of Conversion	Amount Converted		Shares Issued Upon Conversion
February 1, 2013	$	1,000	74,516
February 7, 2013	$	500	36,657
February 11, 2013	$	1,000	73,314
February 20, 2013	$	1,000	73,314
February 21, 2013	$	500	36,657
February 26, 2013	$	500	36,657
August 14, 2013	$	500	32,679
October 15, 2013	$	1,000	65,530
October 23, 2013	$	1,500	96,586
November 13, 2013	$	1,150	72,784
December 3, 2013	$	850	53,518

Upon conversion of the PFG loans, the Company recorded a noncash write-off of $252 and $400 of premiums related to the loans during the years ended June 30, 2014 and 2013, respectively. Any loans are secured by certain of the Company’s assets, and the agreement contains customary covenants limiting the Company’s ability to, among other things, incur debt or liens, make certain investments and loans, effect certain redemptions of and declare and pay certain dividends on its stock, permit or suffer certain change of control transactions, dispose of collateral, or change the nature of its business. In addition, the PFG loan and security agreement contains financial covenants requiring the Company to maintain certain liquidity and fixed charge coverage ratios. The Company was in compliance with all financial covenants at June 30, 2014. If the Company does not comply with the various covenants, PFG may, subject to various customary cure rights, decline to provide additional loans, require amortization of any future loan over its remaining term, or require the immediate payment of all amounts outstanding under any future loan and foreclose on any or all collateral, depending on which financial covenants are not maintained.