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Note 4 - Line of Credit
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9 Months Ended |
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Jun. 30, 2012
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| Line of Credit Facility, Description |
NOTE
4 – Line
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”). The Loan Agreement provides for
maximum revolving credit borrowings of $2,000,000 with
the Bank, with borrowings limited to a borrowing base
determined based on 70% or 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. Borrowings on the revolving
note bear interest at a rate of the base rate (4.50% at
June 30, 2012) plus 0.5%. The note is collateralized by
substantially all of the assets of the Company. No
amounts were outstanding under the Loan Agreement at June
30, 2012 or September 30, 2011. The Company
expects that the revolving note with the Bank will be
renewed on August 1, 2012 for a one-year term expiring on
August 1, 2013 with no other significant change in the
terms of the facility.
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