On March 3, 2015, Talon International, Inc., entered into an amendment to the Commercial Credit Agreement, originally entered into on December 31, 2013, between Talon and MUFG Union Bank, N.A. to change the terms under the Credit Agreement. The parties agreed to modify the fixed charge covenants for the first two quarters of 2015, and the minimum EBITDA covenant for all of 2015; to increase the interest rates on outstanding balances by 1% commencing as of March 1, 2015 (to the applicable reference plus 3.5% for the revolving loan and 3.75% for the term loan); to require certain prepayments to the term loan; and to re-amortize the regular term loan payments due for the remaining term of the Credit Agreement. The additional principal repayments total $600,000, of which $400,000 will be applied to the term loan during the second quarter of 2015 and $200,000 during the third quarter of 2015.

In connection with the Amendment Talon agreed to pay Union Bank a loan modification fee of $50,000, half of which shall be payable on March 31, 2015 and the other half on June 30, 2015. As outlined by the Amendment, financial covenants in the Credit Agreement require Talon and its subsidiaries to maintain the following (specific terms as defined in the Credit Agreement): a Fixed Charge Coverage Ratio between Adjusted EBITDA and future principal and interest payments of not less than 0.70:1.00 as of March 31, 2015, 1.00:1.00 as of June 30, 2015, and 1.25:1.00 as of the close of each fiscal quarter thereafter; a minimum EBITDA for the 12-month period ended as of the last day of each quarter of at least $1,750,000 as of the close of each of the fiscal quarters in 2015, and at least $2,750,000 as of the close of each fiscal quarter thereafter; and no incurrence of a net loss after taxes for more than two consecutive fiscal quarters commencing January 1, 2015.