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Line of Credit
12 Months Ended
Dec. 31, 2011
Line of Credit [Abstract]  
LINE OF CREDIT

(6) LINE OF CREDIT

On March 19, 2010, the Company entered into a Revolving Credit and Security Agreement (the “Credit Agreement”) with CapitalSource, which was amended on February 11, 2011. The Credit Agreement provided the Company with a revolving credit facility of up to $3,500.

On December 19, 2011, the Company entered into a Loan and Security Agreement (the “Doral Agreement”) with Doral Healthcare Finance, a division of Doral Money, Inc. (the “Lender”). The Doral Agreement provides for an asset-backed revolving credit facility of up to $7 million, subject to reserves and reductions to the extent of changes in the Company’s asset borrowing base. Borrowings under the Doral Agreement may be used for fees and expenses related to the Doral Agreement and replaced Credit Agreement, working capital needs and permitted acquisitions. Borrowings under the Doral Agreement bear interest at a variable rate equal to the greater of (i) the British Bankers’ Association LIBOR rate as published in The Wall Street Journal for dollar deposits in the amount of $1 million with a maturity of one month and (ii) 3% per annum plus, in each case, a margin of 3.75%. The Doral Agreement requires monthly interest payments in arrears on the first day of each month. The Doral Agreement will mature on December 19, 2014. The Company may terminate the Doral Agreement at any time prior to the maturity date upon thirty (30) days’ prior written notice and upon payment in full of all outstanding obligations under the Doral Agreement. If the Company terminates the Doral Agreement after December 19, 2012 but before the maturity date, the Company must pay a specified early termination fee.

 

The Doral Agreement contains customary restrictive and financial covenants, including without limitation, (a) covenants requiring the Company to (i) pay certain fees, (ii) maintain, at the end of each fiscal quarter, a debt service coverage ratio of not less than 1.10 to 1.0 and (ii) maintain, at the end of each fiscal quarter, a current ratio (current assets divided by current liabilities) of not less than 1.50 to 1.00; and (b) covenants prohibiting the Company from (i) entering into certain merger, consolidation or other reorganization transactions with, or acquiring all or a substantial portion of the assets or equity interests of, any person or entity, (ii) selling, leasing or transferring any of its properties or assets, with certain exceptions, including sales of inventory in the ordinary course of business, (iii) creating certain liens on any of its properties or assets, (iv) declaring, paying or making any dividend or distribution, or (v) creating, incurring or assuming additional indebtedness, in each case subject to certain exceptions. The Doral Agreement also contains customary events of default. If an event of default under the Doral Agreement occurs and is continuing, then the Lender may declare any outstanding obligations under the Doral Agreement immediately due and payable and the Lender shall have the right to terminate the Doral Agreement. In addition, if any order for relief is entered under bankruptcy laws with respect to us, then any outstanding obligations under the Doral Agreement will be immediately due and payable. Borrowings under the Doral Agreement are secured by all of the assets of the Company, including all receivables, equipment and inventory. The Company incurred $139 of termination fees, recorded as loss on extinguishment of debt, associated with CapitalSource Credit Agreement, which were recorded to interest expense for the year ended December 31, 2011, and $147 of loan fees associated with the Doral Agreement, which were recorded to a deferred asset account and will be amortized to interest expense over the term of the Doral Agreement.

As of December 31, 2011, the combined, effective interest rate was 18% (10% interest rate, 8% standard line of credit fees and loss on extinguishment of debt). As of December 31, 2011, $3,289 was outstanding on the Doral Agreement and $3,669 was available for borrowing.

As of December 31, 2011, the Company was in compliance with the Doral Agreement financial covenants.