|
Note 4 - Revolving Lines of Credit
|
12 Months Ended |
|---|---|
|
Sep. 30, 2011
|
|
| Line of Credit Facility, Description |
Note
4. Revolving Lines
of Credit
On
August 1, 2011, the Company entered into a Second Amended
and Restated Loan Agreement (the “Loan
Agreement”) with Heartland Bank (the
“Bank”) to extend the term of the
Company’s revolving line of credit to August 1, 2012
and revise the structure of the revolving line of credit.
The previous structure consisted of a revolving note for up
to $1,000,000 with borrowings limited to 50% of eligible
accounts receivable and a revolving note for up to
$1,000,000 with borrowings limited to the amount of a
supporting letter of credit issued by The World Bank or
another issuer of equivalent credit quality approved by the
Bank. The new structure consists of a single revolving note
for up to $2,000,000 with the Bank, with borrowings limited
to a borrowing base determined based on 70% to 80% of
eligible accounts receivable plus 50% of eligible
inventory. Significant restrictive covenants in the Loan
Agreement include prohibitions on any merger, consolidation
or sale of all or a substantial portion of the
Company’s assets and limits on the payment of
dividends or the repurchase of shares. The Loan Agreement
does not contain any financial covenants that require
compliance with ratios or amounts. Dividends and
share repurchases are permitted as long as after giving
effect to the dividend or share repurchase the Company has
a ratio of total liabilities to total stockholders’
equity of no more than 1:1. The revolving note
with the Bank will expire August 1,
2012. Borrowings on the revolving note bear
interest at a rate of the base rate (3.25% at September 30,
2011) plus 0.5%. The note is collateralized by
substantially all of the assets of the Company. No amounts
were outstanding under the revolving notes at either
September 30, 2011 or 2010.
|