Note 3 - Borrowings Under Line of Credit and Note Payable

12 Months Ended

Jun. 30, 2015

3. Borrowings Under Line of Credit and Note Payable

On February 29, 2012, the Company entered into an $8 million line of credit facility, including a $1,000,000 sublimit for the issuance of standby or trade letters of credit, with PNC Bank, National Association (“PNC”). The interest rate was the “Eurodollar Rate”, which was calculated by using the LIBOR rate, plus a margin of 2.0%. The Company had no outstanding borrowings from PNC under its credit line of as of June 30, 2014. The line expired on November 30, 2014.

On November 4, 2014, the Company entered into two credit facilities with JP Morgan Chase Bank National Association (“Chase”) which replaced the Company’s existing facilities with PNC. The first is a five-year $10 million line of credit, secured by all assets of the Company with borrowing levels subject to borrowing base limits. The interest rate on the line of credit is the LIBO rate, plus a margin of 2.5%. The second facility is a five-year $21 million term loan with an interest rate equal to the LIBO rate, plus a margin of 3.15%. The principal of this loan is amortized over five years with quarterly repayments of $787,500 for the first two years, $1,050,000 for the third year, and $1,312,500 for the fourth and fifth years. The new loans contain certain financial covenants including a maximum leverage ratio, a maximum fixed charge coverage ratio, and minimum adjusted earnings before interest, taxes, depreciation and amortization. The Company was in compliance with the loans’ financial covenants during the year ended June 30, 2015. The Company had no outstanding borrowings from Chase under its line of credit as of June 30, 2015.

Principal payments on the term loan are due as follows

Year ending June 30:
2016	$	3,150,000
2017		3,675,000
2018		4,725,000
2019		5,250,000
2020		1,125,000

Total payments	$	17,925,000