Line of Credit and Equipment Facility Agreements

3 Months Ended

Mar. 31, 2012

Notes to Financial Statements

Line of Credit and Equipment Lease Facility Agreements

(7) Line of Credit and Equipment Lease Facility Agreements

In early May 2012 the Company increased its $1 million revolving line of credit (“LOC”) to $ 2 million and renewed it $ 1.25 million equipment finance facility (“Lease Line”) with Sovereign Bank.   Both agreements mature in May 2013.  The LOC 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 LOC and the Lease Line 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 coverage ratio as well as targeted debt to equity and current ratios. At March 31, 2012, the Company was in compliance with existing covenants and there were no borrowings outstanding. At March 31, 2012, the Company had $0.33 million net carrying value of capital equipment financed by the Sovereign equipment finance facility and $0.92 million available remaining on the Sovereign equipment finance facility.