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Note 4 - Line of Credit
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3 Months Ended |
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Dec. 31, 2012
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| Debt Disclosure [Text Block] |
NOTE
4 – 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 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 million with Heartland Bank, with
borrowings limited to a borrowing base determined based on 70
percent to 80 percent of eligible accounts receivable plus 50
percent 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 (4.0%
at December 31, 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 either December
31, 2012 or September 30, 2012.
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