Long-Term Debt

The Company maintains the 2013 Loan and Security Agreement for working capital purposes and capital expenditures. The Company also entered into the Credit Agreement with SWK Funding LLC in connection with the Acquisition. The following table summarizes the Company's outstanding borrowings:



(in thousands)	September 30, 2015

2013 Loan and Security Agreement	$	3,395
Term Loan	5,000
Discount on Term Loan	(3,135		)
Total debt	5,260
Short term portion	(5,195		)
Total long-term debt, net of discount	$	65

2013 Loan and Security Agreement

The Company maintains the 2013 Loan and Security Agreement, as amended, with the Senior Lender. Borrowings under the 2013 Loan and Security Agreement are to be used for working capital purposes and capital expenditures. The amount available for borrowing is less than the $7 million under this facility at any given time due to the manner in which the maximum available amount is calculated. The Company had an available borrowing base subject to reserves established at the lender's discretion of 85% of Eligible Receivables up to $7 million under this facility. As discussed in Note 2, the maximum borrowing capacity on the 2013 Loan and Security Agreement was reduced from $10 million to $7 million in connection with the Acquisition on April 17, 2015, (subject to increase to up to $12 million in certain circumstances, subject to the Senior Lender’s consent, as provided in the 2013 Loan and Security Agreement). Eligible Receivables do not include certain other receivables deemed ineligible by the Senior Lender. On August 10, 2015, the Company entered into and consummated a Fourth Amendment to the Loan and Security Agreement (the "Fourth Amendment") (as amended, the "2013 Loan and Security Agreement") with ACF FinCo I LP ("ACF" or the "Senior Lender"), the assignee of Keltic Financial Partners II, LP ("Ares"). The Fourth Amendment added the AHS receivables to the borrowing base. Available borrowing capacity, net of the discretionary reserve and current amounts outstanding, was $2.2 million as of November 10, 2015. As of September 30, 2015, the Company had $3.4 million borrowings outstanding under the 2013 Loan and Security Agreement.

The 2013 Loan and Security Agreement and the Third Amendment contain various covenants, including financial covenants which require the Company to achieve a minimum EBITDA amount beginning with the twelve month period ended September 30, 2015. Refer to Note 2 regarding additional discussion of financial covenants. As of September 30, 2015, the Company had not met the minimum required EBITDA amount of negative $3.0 million and has obtained a Waiver and Fifth Amendment related to the EBITDA measurement period ended September 30, 2015. The Fifth Amendment requires the Company to raise an aggregate amount in additional equity of not less than $4.0 million of which not less than $1.5 million shall be received on or before February 28, 2016, and the balance shall be received on or before June 30, 2016, which is outside the Company’s control.

Interest on revolving credit loans is calculated based on the greater of (i) the annualized prime rate plus 2.75%, (ii) the 90 day LIBOR rate plus 5.25%, and (iii) 6% per annum. The interest rate on the 2013 Loan and Security Agreement was 6% as of September 30, 2015. The Company is obligated to pay, on a monthly basis in arrears, an annual facility fee equal to 1% of the revolving credit limit. During the three month periods ended September 30, 2015 and 2014, the Company incurred facility fees of $0.03 million and $0.05 million, respectively. During the nine month periods ended September 30, 2015 and 2014, the Company incurred facility fees of $0.1 million and $0.1 million, respectively.

The revolving credit loans are payable in full, together with all accrued interest and fees, on February 28, 2019. The 2013 Loan and Security Agreement provides for the prepayment of the entire outstanding balance of the revolving credit loans. The Company would be required to pay an early termination fee equal to 3% if the termination occurs prior to February 28, 2017; 2% if the termination occurs prior to February 28, 2018; and 1% if the termination occurs after February 28, 2018, but prior to February 28, 2019.

2015 Credit Agreement

In order to fund the Acquisition, the Company entered into and consummated a Credit Agreement with SWK Funding LLC on April 17, 2015. The Credit Agreement provides the Company with a $5.0 million Term Loan. The proceeds of the Term Loan were used to pay certain fees and expenses related to the negotiation and consummation of the Purchase Agreement and the Acquisition described in Note 3 and general corporate purposes. The Company paid SWK Funding LLC an origination fee of $0.1 million. The Term Loan is due and payable on April 17, 2018. The Company is also required to make quarterly revenue-based payments in an amount equal to eight and one-half percent (8.5%) of yearly aggregate revenue up to and including $20 million, seven percent (7%) of yearly aggregate revenue greater than $20 million up to and including $30 million, and five percent (5%) of yearly aggregate revenue greater than $30 million. The revenue-based payment will be applied to fees and interest, and any excess to the principal of the Term Loan. Revenue-based payments commence in February 2016, and the maximum aggregate revenue-based principal payment is capped at $600,000 per quarter.

The outstanding principal balance under the Credit Agreement bears interest at an adjustable rate per annum equal to the LIBOR Rate (subject to a minimum amount of one percent (1.0%)) plus fourteen percent (14.0%) and will be due and payable quarterly, in arrears, commencing on August 14, 2015. Upon the earlier of (a) the maturity date on April 17, 2018, or (b) full repayment of the Term Loan, whether by acceleration or otherwise, the Company is required to pay an exit fee equal to eight percent (8%) of the aggregate principal amount of all term loans advanced under the Credit Agreement. The Company is recognizing the exit fee over the term of the Term Loan through an accretion accrual to interest expense using the effective interest method.

The following table summarizes the components of interest expense for the three and nine month periods ended September 30, 2015:



(in thousands)	Three Months Ended			Nine Months Ended
	September 30, 2015			September 30, 2015
Interest expense Term Loan (interest at LIBOR, plus 14%)	$	188		$	342
Accretion of termination fees (over term of Term Loan at rate of 8%)	21			48
Amortization of deferred financing costs	48			328
Accretion of debt discount associated with Warrant	138			320
Accretion of discount associated with additional warrant feature	47			109
Mark to market of the additional warrant feature	(74		)	(74		)
Other interest expense	20			24
Total	$	388		$	1,097

The Credit Agreement also contains certain financial covenants, including certain minimum aggregate revenue and EBITDA requirements and requirements regarding consolidated unencumbered liquid assets. Refer to Note 2 regarding additional discussion of financial covenants.

As security for payment and other obligations under the 2013 Loan and Security Agreement, the Senior Lender holds a security interest in all of the Company's, and its subsidiary guarantors', existing and after-acquired property, including receivables (which are subject to a lockbox account arrangement), inventory and equipment. Additionally, SWK Funding, LLC holds a security interest for final and indefeasible payment. The security interest held by SWK Funding, LLC is in substantially all of the Company's assets and the Company's subsidiaries. The aforementioned security interest is collectively referred to herein as the "collateral". Refer to Note 2 regarding additional discussion of the Warrant and additional warrant feature issued to SWK in connection with the Acquisition.