NOTE 13—SUBSEQUENT EVENTS

Lines of Credit

On May 7, 2013, the Company amended the Credit Agreements with Comerica Bank to increase the borrowing capacity under the Domestic Revolver from $4.0 million to $6.0 million, reduce the interest rates, establish certain financial and non-financial covenants, and provide for increased mid-quarter borrowing capacity. The Company paid a one and one-half percent commitment fee of $30,000 for the $2.0 million increase in borrowing capacity under the Domestic Revolver. The interest rates on the outstanding principal balance of the Credit Agreements will bear interest at annual percentage rates equal to the daily prime rate (3.25% at March 31, 2013), plus 2.00% for the Domestic Revolver and 1.50% for the Ex-Im Revolver, a current reduction of 1.00% and 0.50% of the interest rates of the Domestic and Ex-Im Revolvers, respectively. The daily Prime rate is subject to a floor of the daily adjusting LIBOR rate plus 2.50% per annum, or if LIBOR is undeterminable, 2.50% per annum.

Warrants

Effective May 6, 2013, the Company entered an agreement (the “Affiliation Agreement”) with Sun Dental Laboratories, LLC (“Sun Dental Labs”) as part of business development collaboration to sell 3Shape Corporation’s Trios line of intra-oral scanners. In contemplation of the Affiliation Agreement, and in connection with an initial memorandum of understanding between the parties that preceded the Affiliation Agreement, the Company issued a warrant to Sun Dental Labs (the “Sun Dental Warrant”) on April 26, 2013, to purchase 500,000 shares of common stock at an exercise price of $5.90 per common share. The Sun Dental Warrant is performance-based and will vest at a rate of 1,000 shares for each intra-oral scanner system sold to a customer in conjunction with the Affiliation Agreement. Any unearned and unvested warrant shares will expire on April 24, 2014. Vested warrant shares may be exercised with a cash payment, or, in lieu of a cash payment, Sun Dental Labs may convert the vested warrant shares into a net number of whole common shares. The Company expects to begin recording the effects of the Affiliation Agreement during the three months ending June 30, 2013.