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Subsequent Event

12 Months Ended

Dec. 31, 2016

17.

Subsequent Event

On February 28, 2017, the Company entered into a third amendment to the loan and security agreement with EWB that provided for the following:

	●	The date on which the $2.0 million sublimit becomes zero was extended from March 31, 2017 to June 15, 2017. As was the case prior to the third amendment, if the aggregate amount of advances as of the date the sublimit becomes zero exceeds the lesser of the revolving line or the amount equal to our borrowing base, then the Company must pay EWB the amount of such excess.

	●	The minimum adjusted earnings before interest, taxes, depreciation and amortization, or adjusted EBITDA, targets for each of the Company’s 2017 fiscal quarters were established. The manner in which adjusted EBITDA is calculated was not changed.

	●	Compliance with the churn rate target is now measured only on trailing three-month basis; previously it was also measured monthly.

	●	The amount the Company must maintain on deposit with EWB (which amount is equal to 100% of the aggregate outstanding principal amount of advances) is now measured only at June 15, 2017, or if earlier, at such time that the $2.0 million sublimit has been paid off. Previously, compliance was going to be measured on March 31, 2017 and thereafter the Company was going to be required to maintain an amount determined by EWB based on the Company’s 2017 financial projections.

	●	The interest rates on amounts advanced was increased by 0.50%, such that under the third amendment, advances bear interest, at the Company’s option, at the rate of either of the following: (A) for amounts advanced as a prime rate loan, a variable rate per annum equal to the prime rate as set forth in The Wall Street Journal plus 3.25% (was previously 2.75%), and (B) for amounts advanced as a LIBOR loan, at a fixed rate per annum equal to the LIBOR rate for the interest period for the advance plus 6.00% (was previously 5.50%). After the earlier of June 15, 2017 (was previously March 31, 2017) or such time as the Company pays off in full in cash the $2.0 million sublimit, the additional margins decrease to 1.75% for prime rate loans (was previously 1.25%) and to 4.50% for LIBOR loans (was previously 4.00%).