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Note 5 - Short-term Financing
9 Months Ended
Jun. 30, 2014
Disclosure Text Block [Abstract]  
Short-term Debt [Text Block]

5. Short-term Financing


The Company had a credit agreement of $250,000 with Robert L. Bauman, one of its major shareholders who is also an employee of the Company. The agreement was to expire in April 2013 but was modified on December 31, 2012 to extend the maturity date to December 2013. Effective October 30, 2012 for the remainder of the agreement, the lender may terminate the agreement with 45 days written notice, but it is at the discretion of the Company to deny the termination notice until December 2013 if it will have a negative effect on the solvency of the Company.

The agreement provided for a revolving credit facility of $250,000 with interest at 0.24% per annum and was unsecured and included a three year warrant for 100,000 shares of Class A common stock at a price of $2.50 per share. In addition, the agreement generally allowed for borrowing based on an amount equal to eighty percent of eligible accounts receivables or $250,000. The revolving line of credit was not extended.


In partial consideration for the original extension of the revolving credit facility the Company and Bauman entered into a Warrant Agreement, dated December 30, 2012 whereby the Company issued a warrant to Bauman to purchase, at his option, up to 100,000 shares of Class A Common Stock of the Company at an exercise price of $2.50 per share, subject to certain anti-dilution and other adjustments. If not exercised, this warrant will expire on December 30, 2015.


The Company used the Black-Scholes option pricing model to determine the fair value estimate for recognizing the cost of services received in exchange for an award of equity instruments. The Black-Scholes option pricing model requires the use of subjective assumptions which can materially affect the fair value estimates. The warrants are immediately exercisable and expire in December 2015. The fair value of the warrants issued is amortized over the one year credit agreement period. During the three and nine month periods ended June 30, 2013, $11,375 and $34,125 was expensed as non-cash interest expense. The following weighted-average assumptions were used in the option pricing model for the three and nine month month periods ended June 30, 2013: a risk free interest rate of 0.42%; an expected life of 3 years; an expected dividend yield of 0.0%; and a volatility factor of .84.


During the quarter ended June 30, 2014 the Company entered into various short-term unsecured demand notes with Robert L. Bauman. The Company has borrowed $683,400 with interest at 4.0%. The Company recorded interest expense during the three months ended June 30, 2014 in the amount of $2,591 and as of June 30, 2014 no interest was paid. As of June 30, 2014 the outstanding balance of these notes was $683,400. The Company repaid $200,000 of the outstanding balance of these notes on July 29, 2014.