6.	Capital Lease

On October 28, 2011, we entered into a sale-leaseback agreement that included the sale of certain machinery and equipment. We then leased a total of $3.5 million of machinery and equipment to increase production capacity. The lease has an effective interest rate of 5.76% and is payable in 60 monthly installments through fiscal 2017. Leases are accounted for under the provisions of ASC 840-10, Leases , which requires that leases be evaluated and classified as operating or capital leases for financial reporting purposes. Based on our evaluation under ASC 840-10, we determined that the lease qualifies as a capital lease because the net present value of future lease payments exceed 90% of the fair market value of the leased machinery and equipment. We have pledged the assets financed to secure the amounts outstanding. We included $469,000 of short-term capital lease obligation in accrued expenses and $2.0 million in other non-current liabilities.

The following sets forth the future minimum lease payments as of April 30, 2014 (dollars in thousands):


	Capital Lease Obligation
2015		596
2016		596
2017		1,493

Total future minimum lease payments		2,685
Less amounts representing interest		(265	)

Present value of minimum lease payments		2,420
Less current maturities of capital lease		(469	)

Long-term maturities of capital lease	$	1,951