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LINE OF CREDIT | 12 Months Ended
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Jun. 30, 2014
Line Of Credit Facility [Abstract] |
LINE OF CREDIT | 7. LINE OF CREDIT On July 10, 2012, the Company entered into a Loan and Security Agreement and other ancillary documents (the “Loan Documents”) with Avidbank Corporate Finance, a division of Avidbank (the “Bank”), providing for a secured asset-based revolving line of credit in an amount of up to $3 million (the “Line of Credit”). The Company intends to use advances under the Line of Credit towards the financing of growth initiatives like its JumpStart Program and other working capital needs. The Loan Documents provide that the aggregate amount of advances under the Line of Credit shall not exceed the lesser of (i) $3.0 million, or (ii) 75% of eligible accounts receivable as defined in the Loan Documents plus 80% of the prior two months transaction processing revenues and networking service fees as defined in the Loan Documents, provided that the amounts advanced on account of such processing revenues and service fees shall not exceed $2,000,000 without the Bank’s prior consent, after the First Amendment entered into on January 2, 2013. As a condition of the Bank entering into the First Amendment, the Company issued to the Bank warrants to purchase up to 45,000 shares of common stock of the Company. The warrants are exercisable at any time prior to December 31, 2017 at an exercise price of $2.10 per share. Upon the issuance of the 45,000 shares of common stock, the fair value of the warrants is $55,962 using a Black Scholes model, which was recorded as prepaid interest and included in other assets on the Consolidated Balance Sheet, and is being amortized as non-cash interest expense over the remaining term of the Line of Credit as amended in January 2013. Non-cash interest of $53,867 has been recognized for the year ended June 30, 2013. The outstanding balance of the amounts advanced under the Line of Credit will bear interest at 2% above the prime rate as published in The Wall Street Journal or 5% whichever is higher. Interest is payable by the Company to the Bank on a monthly basis, provided, that the minimum interest payable by the Company to the Bank with respect to each six month period shall be $20,000. The Line of Credit and the Company’s obligations under the Loan Documents are secured by substantially all of the Company’s assets, including its intellectual property. The term of the Line of Credit is one year. At the time of maturity all outstanding advances under the Line of Credit as well as any unpaid interest is due and payable. Prior to maturity of the Line of Credit, the Company may prepay amounts due under the Line of Credit without penalty, and subject to the terms of the Loan Documents, may re-borrow any such amounts. On April 2, 2013, the Company and the Bank, entered into a Second Amendment (the “Second Amendment”) to the Loan and Security Agreement. The Second Amendment provided a change to the definition of Adjusted EBITDA for covenant calculations for the fiscal quarters ended through March 31, 2014. On April 15, 2013, the Company and the Bank, entered into a Third Amendment (the “Third Amendment”) to the Loan and Security Agreement. The Third Amendment provides that, among other things, the aggregate amount available under the Line of Credit will be increased from $3.0 million to $5.0 million, and the maturity date of the Line of Credit will be extended for another twelve months, or until June 21, 2014.The Third Amendment provides that the aggregate amount of advances now available to the Company under the Line of Credit cannot exceed the lesser of (i) $5.0 million, or (ii) 80% of the prior three months transaction processing revenues and networking service fees as defined in the Loan Agreement. On April 29, 2013, the Company and the Bank entered into a Fourth Amendment (“Fourth Amendment”) to the Loan and Security Agreement to change the RML from the monthly “net cash provided by (used in) operating activities” including Jumpstart investments to the average monthly amount (based on the prior three months) of the Company’s “net cash provided by (used in) operating activities” including JumpStart investments, as set forth in the Company’s monthly cash flow statements prepared in accordance with GAAP. On September 26, 2013, the Company and the Bank entered into a Fifth Amendment (“Fifth Amendment”) to the Loan and Security Agreement to change the definition of Adjusted EBITDA for covenant calculations for the four fiscal quarters ending through June 30, 2014. On May 15, 2014, the Company and the Bank entered into a Sixth Amendment (“Sixth Amendment”) to the Loan and Security Agreement in which the Bank consents to the sale and disposition of the rental equipment in connection with the Sale Leaseback transactions entered into by the Company in June 2014 (see Note 16 and Note 17). On June 17, 2014, the Company and the Bank entered into a Seventh Amendment (“Seventh Amendment”) to the Loan and Security Agreement. The Seventh Amendment increased the aggregate amount of advances available under the line of credit to $7,000,000 and extended the maturity date to June 21, 2015. In addition, it provided a change to the definition of Adjusted EBITDA for exclusion of lease expense pursuant to the Sale Leaseback transactions (Note 16). As of June 30, 2014, the Company and the Bank entered into an Eighth Amendment (“Eighth Amendment”) to the Loan and Security Agreement to change the minimum Adjusted EBITDA covenant for the quarter ended June 30, 2014. The Loan Documents contain customary affirmative and negative covenants, including achieving a minimum Adjusted EBITDA and Minimum Liquidity, as defined in the Loan Documents and amendments. The Loan Documents also contain customary events of default, including, among other things, payment defaults, breaches of covenants, and bankruptcy and insolvency events, subject to grace periods in certain instances. Upon an event of default, the Bank may declare all of the outstanding obligations of the Company under the Line of Credit and Loan Documents to be immediately due and payable, and exercise any other rights provided for under the Loan Documents. During the year ended June 30, 2014, the Company obtained waivers from the Bank for failure to satisfy two Minimum Liquidity covenants and one Adjusted EBITDA covenant. During the year ended June 30, 2013 the Company obtained waivers from the Bank for failure to satisfy two covenants – Minimum Liquidity and Adjusted EBITDA. The balance due on the Line of Credit was $5,000,000 and $3,000,000 at June 30, 2014 and 2013, respectively. At June 30, 2014, $2,000,000 was available under the Line of Credit.

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