Line of Credit and Equipment Lease Facility Agreements

3 Months Ended

Jul. 02, 2011

Notes to Financial Statements

Line of Credit and Equipment Lease Facility Agreements

(7) Line of Credit and Equipment Lease Facility Agreements
The Company has a $1 million revolving line of credit and a $1.25 million equipment finance facility with Sovereign Bank through maturity in May 2012. The line of credit is secured by the accounts receivable and other assets of the Company, has an interest rate of prime plus one percent (1%) and a one-year term. Under the terms of the agreement, the Company is required to maintain its operating accounts with Sovereign Bank. The line of credit and the equipment finance facility are cross defaulted and cross collateralized. The Company is also subject to certain financial covenants within the terms of the line of credit that require the Company to maintain a targeted rolling four quarter debt service coverage ratio as well as targeted debt to equity and current ratios. At July 2, 2011, the Company was in compliance with these covenants. The Company believes but can give no assurance that it could obtain similar lease facilities from other lenders. At July 2, 2011 there were no borrowings under this line of credit. At July 2, 2011, the Company had capital lease obligations outstanding totaling $290,518 related to equipment financed by the Sovereign equipment lease and finance facility and $959,482 available remaining on the Sovereign lease line.