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Note 4 - Revolving Lines of Credit
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12 Months Ended |
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Sep. 30, 2012
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| Short-term Debt [Text Block] |
Note
4. Revolving
Line of Credit
On
August 1, 2012, the Company entered into an amendment
to the Second Amended and Restated Loan Agreement (as
amended, the “Loan Agreement”) with
Heartland Bank (the “Bank”) to extend the
term of the Company’s revolving line of credit to
August 1, 2013. The credit facility 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. Borrowings on the revolving note bear
interest at a rate of the base rate (4.5% at September
30, 2012) plus 0.5%. The note is collateralized by
substantially all of the assets of the Company. No
amounts were outstanding under the revolving note at
either September 30, 2012 or 2011.
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