Note 4 – Debt

Line of Credit

The Company entered into a loan agreement with JPMorgan Chase Bank, NA ("Chase") on May 31, 2011. The agreement provided a revolving line of credit up to $1,000,000 with availability based on 80% of eligible assets (as defined). The line of credit provided that interest would accrue at an annual rate of LIBOR plus 2%, was collateralized by the Company's accounts receivable, had a term of 12 months, and provided for financial covenants. During the time the loan agreement was in effect, the Company had not drawn any funds from the line of credit.

On May 11, 2012, the Company was notified by Chase that it was not in compliance with one of the financial covenants of the loan agreement, and although no funds had been drawn, the line of credit had been cancelled.

Notes Payable

As of September 30, 2012 and December 31, 2011, notes payable consist of approximately $45,000 and $95,000, respectively, of borrowings for the purchase of equipment. These notes bear interest at rates ranging from 8.0% to 9.5% per year and mature through August 2013. The notes are collateralized by the equipment purchased with net book values of approximately $46,000 and $95,000, as of September 30, 2012 and December 31, 2011, respectively.

Capital Lease Obligations

The Company has equipment under four capital lease obligations expiring at various times through August 2015. The assets and liabilities under capital leases are recorded at the lower of the present value of the minimum lease payments or the fair values of the assets.

As of September 30, 2012, future minimum payments under these capital leases are (in thousands):

For the Twelve Months Ending
September 30,	Amount
2013	$	201
2014		198
2015		25
Total minimum lease payments		424
Less: amounts representing interest		(16)
Net minimum lease payments		408
Less: current portion		(190)
Long-Term Portion	$	218

The implied interest rates related to these capital leases are 0.0%, 3.0%, 3.3% and 8.0%. The gross book value and the net book value of the related assets are approximately $589,000 and $423,000, respectively, as of September 30, 2012.