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Line of Credit
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6 Months Ended |
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Mar. 31, 2012
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| Line of Credit [Abstract] | |
| Line of Credit |
11. Line of Credit
The Company had a loan and security agreement with Crestmark Bank for financing of its accounts receivable which was terminated in December 2010. Interest expense under this agreement was $4,500 for the three months ended December 31, 2010. In addition, the agreement required a maintenance fee of $3,500 per month and an annual loan fee of 1% of the maximum borrowing amount under the agreement. The Company incurred $29,000 of fees related to this agreement during the three months ended December 31, 2010.
In December 2010, the Company entered into a two-year, $3,000,000 account purchase agreement ("AR Credit Facility") with Wells Fargo Bank N.A. ("Wells Fargo"). The AR Credit Facility provides for borrowings, on a revolving basis, of up to 85% of the Company's eligible accounts receivable less than 90 days old and bears interest at a rate equal to the three month LIBOR plus 5.25% (effective rate was 5.75% as of March 31, 2012).
In February 2012 the AR Credit Facility with Wells Fargo Bank N.A. was amended whereby the facility maximum increased to $4,500,000 from $3,000,000.
The Company believes that the borrowing availability provided by the Wells Fargo agreement will be adequate to fund the increase in working capital needs resulting from the prior year acquisitions of certain assets.
The outstanding borrowings under this agreement, which are classified as short-term debt on the consolidated balance sheets were $2,299,000 and $1,938,000 as of March 31, 2012 and September 30, 2011, respectively. As of March 31, 2012, the borrowing base availability under this agreement was $639,000. Total interest expense related to the line of credit for the three months ended March 31, 2012 and 2011 was $50,000 and $18,000 respectively, and $88,000 and $19,000 for the six months ended March 31, 2012 and 2011, respectively.
The loan and security agreement with Wells Fargo Bank includes certain covenants which require compliance until termination of the agreement. As of March 31, 2012, the Company was in compliance with all such covenants.
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