Quarterly report pursuant to Section 13 or 15(d)

Note 4 - Line of Credit

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Note 4 - Line of Credit
9 Months Ended
Jun. 30, 2012
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.