XML 35 R16.htm IDEA: XBRL DOCUMENT v2.4.0.6
Bank Line of Credit
12 Months Ended
Dec. 31, 2011
Debt Disclosure [Abstract]  
Debt Disclosure [Text Block]

Note 9 – Bank Line of Credit

 

Bank Line of Credit - 2010

 

During March 2010, DCT amended its existing $2,000,000 line of credit (“LOC”) to increase the borrowing base as follows: (i) increase the percentage of borrowings from 75% to 80% of eligible accounts receivable, and (ii) add 40% of eligible inventory (all as defined in the LOC agreement) to the borrowing base. In connection with increasing the amendment, DCT paid the lender a loan modification fee of $6,000, which was recorded as deferred financing costs and amortized over the life of the loan to interest expense.

 

During August 2010, DCT extended the maturity date of its $2,000,000 LOC to November 1, 2010. As part of the extension, the borrowing base was modified to only include borrowings against 80% of eligible accounts receivable (as defined in the LOC agreement). The inventory borrowing base was not extended as DCT did not require the borrowing capacity. In connection with the extension, DCT paid the lender a loan modification fee of $2,000, which was recorded as deferred financing costs and amortized over the life of the loan extension to interest expense.

 

During November 2010, DCT amended its LOC (“2010 Amended LOC”). The 2010 Amended LOC lowered the annual interest rate from prime plus 2.75% to prime plus 1.0% and extended the maturity date to November 15, 2011. 

 

In connection with the 2010 Amended LOC, DCT paid the lender a fee of $5,000, which was recorded as deferred financing costs and was amortized over the life of the loan to interest expense.

 

Bank Line of Credit – 2011

 

During November 2011, DCT amended its LOC (“2011 Amended LOC”). The 2011 Amended LOC increases the available borrowings from $2,000,000 to $3,000,000 and extends the maturity date to November 15, 2012.  All other significant terms and conditions remain unchanged.

 

In connection with the 2011 Amended LOC, DCT paid the lender a loan origination fee of $8,000, which was recorded as deferred financing costs and is being amortized over the life of the loan to interest expense.

 

As of December 31, 2011, DCT was in compliance with all 2011 Amended LOC debt covenants and had unused borrowing capacity of $1,172,000.   

  

Standby Letter of Credit

 

In June 2011, DCT entered into a distribution agreement that required the Company to provide a $300,000 standby letter of credit. At December 31, 2011, DCT’s LOC borrowing capacity was reduced from $1,472,000 to $1,172,000 to reflect the entire standby letter of credit. DCT’s LOC borrowing capacity will continue to be reduced by $300,000 until the supplier no longer requires the guarantee, or until July 6, 2012, at which time the current guarantee terminates.

 

Interest Expense Related to Amortization of Warrant Fair Values and Loan Origination Fee

 

During the year ended December 31, 2011, DCT recorded interest expense of $5,000 for the amortization of deferred financing costs. 

 

During the year ended December 31, 2010, DCT recorded interest expense totaling $45,000 of which $23,000 was non-cash amortization of the fair value of warrants issued to the lender in 2009, and $22,000 related to amortization of deferred financing costs.