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Note 4 - Long-Term Debt

6 Months Ended

Jun. 30, 2013

4. LONG-TERM DEBT

Long-term debt consists of the following (in thousands):

	June 30, 2013			December 31, 2012
Revolving credit facilities - Sweden	$	824		$	-
Term loans - Europe		419			-
Term loan - US		537			677
Other		64			-
		1,844			677
Less: portion due within one year		(1,269	)		(280	)
	$	575		$	397

Revolving credit facilities - Sweden

As a result of the Business Combination, the Company has revolving credit facilities in Sweden that total $1.15 million of which $0.824 million is outstanding at June 30, 2013. The revolving credit facilities have expiration dates of December 31, 2013 and automatically renew for twelve month periods, unless notified by the lender ninety days prior to expiration. The interest rate on these revolving credit facilities is 5.95%. The revolving credit agreements are collateralized by the assets of certain Swedish subsidiaries of the Company.

Term loans - Europe

As a result of the Business Combination, the Company also has three term loans related to its European operations that total $0.42 million. Two of the term loans require principal payments totaling $10 thousand per month and bear interest at rates that range between 7.45% and 7.75% and will mature in 2014 and 2015. The third term loan, which has an outstanding balance of $0.2 million, bears interest that is payable quarterly at 15%, requires no principal payments and will be due on December 31, 2014.

Credit facility and term loan - US

In March 2013, the Company entered into a seventh loan modification agreement and amended its loan and security agreement (the "Revised Credit Facility") with Silicon Valley Bank ("SVB"). Under this Revised Credit Facility, the expiration date of the facility remained at August 12, 2013 and the revolving line of credit (the "Revolving Line") was reduced from $3.0 million to $2.0 million. Available borrowings under the Revolving Line was changed from 80% of eligible accounts receivable to 80% of eligible accounts receivable less the amount of principal outstanding under the term loan that forms part of the Revised Credit Facility, as described below. The Revolving Line continues to bear interest at a floating annual rate equal to SVB's prime rate ("Prime") +1.75%. The Company also has a term loan with SVB, that was unchanged under the Revised Credit Facility, whereby advances were available to be drawn through December 31, 2012 in minimum amounts of $0.25 million.

At June 30, 2013, available borrowings under the Revolving Line were approximately $2 million but no borrowings were outstanding. During the fourth quarter of 2012, the Company took two advances of $0.35 million each from the term loan and the balance outstanding at June 30, 2013 was $0.5 million. The term loan bears interest at Prime +2.25% (which was 6.25% at June 30, 2013) and principal and interest are being repaid over thirty months.

On August 5, 2013 the Company entered into a loan modification and waiver agreement with Silicon Valley Bank ("SVB") whereby the expiration date of the Revised Credit Facility has been extended to October 12, 2013 with the intention that the Company and SVB will enter into a new credit facility prior to that date.

Pursuant to the Revised Credit Facility, the financial covenants were modified. The Company is required to maintain financial covenants based on an adjusted quick ratio ("AQR") of at least 1.2 to 1.0, measured at each calendar month-end, and the minimum tangible net worth covenant was replaced by a maximum EBITDA loss/profitability covenant (tested at quarter end) effective with the first quarter of 2013. Additionally, if the Company's AQR falls below 1.5x at any month-end during the remaining term of the facility, then any borrowings under the Revolving Line will be repaid by SVB applying collections from the Company's SVB collateral account (for receipts by wire) and SVB lockbox account (for receipts by check) to reduce the revolving loan balance on a daily basis, until such time as the month-end AQR is again 1.5x or greater. If the AQR at month-end is 1.5x or greater, the Company will maintain a static loan balance and all collections will be deposited into the Company's operating account. Due to the Business Combination with Hego, which was not anticipated when the covenant requirements were established, the Company failed to meet the financial covenants at May 31, 2013 and June 30, 2013, and obtained waivers from SVB with respect to those financial covenants. As is usual and customary in such lending agreements, the agreements also contain certain non-financial requirements, such as required periodic reporting to the bank and various representations and warranties. The lending agreement also restricts the Company's ability to pay dividends without the bank's consent.

The Revised Credit Facility is collateralized by the Company's assets, except for (i) its intellectual property rights which are subject to a negative pledge arrangement with the bank, and (ii) any equipment whose purchase is financed by any other lender or lessor, solely to the extent the security agreement with such lender or lessor prohibits junior liens on such equipment, and only until the lien held by such lender or lessor is terminated or released with respect to such equipment.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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