Note 6.

Line of Credit

On September 18, 2015, we entered into a loan agreement with Venture Bank, a Minnesota banking corporation, providing us with a committed $7 million secured revolving credit facility (“Facility”), subject to eligible accounts receivable and inventory. The Facility will expire on March 18, 2017 and any loans outstanding on such date will mature and become payable. The Facility is secured by substantially all of our assets.

Under the Facility, we may borrow the lesser of: (a) the sum of (i) eighty percent (80%) of the value of eligible accounts receivable; and (ii) forty percent (40%) of the value of eligible inventory capped at the lesser of (1) $2 million or (2) fifty percent (50%) of the principal balance outstanding; or (b) $7 million. As of September 30, 2016, based on eligible receivables and inventory, our total available borrowing base was $6,028,000. We did not have any borrowings under the Facility as of September 30, 2016 and December 31, 2015.

Loans under the Facility bear interest at a rate per annum equal to the Wall Street Journal Prime Rate plus 2.25%, provided that in no case will the interest charged be less than 5.5%. In the event that there is an event of default under the Facility, the interest rate will be increased by 6.0% for the entire period that an event of default exists. In addition, we pay a non-usage fee of 0.25% based on the average unused and available portion of the Facility on a monthly basis.