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Line of Credit
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9 Months Ended |
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Jun. 30, 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 during the nine months ended June 30, 2011. 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 nine months ended June 30, 2011.
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 June 30, 2012). Wells Fargo may determine which receivables are eligible receivables, may determine the amount it will advance on any such receivables, and may require the Company to repay advances made on receivables and thereby repay amounts outstanding under the AR Credit Facility.
In February 2012 the AR Credit Facility 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 its acquisitions.
The outstanding borrowings under this agreement, which are classified as short-term debt on the consolidated balance sheets were $2,519,000 and $1,938,000 as of June 30, 2012 and September 30, 2011, respectively. As of June 30, 2012, the borrowing base availability under this agreement was $304,000. Total interest expense related to the line of credit for the three months ended June 30, 2012 and 2011 was $44,000 and $35,000 respectively, and $148,000 and $73,000 for the nine months ended June 30, 2012 and 2011, respectively.
The loan and security agreement with Wells Fargo Bank includes certain customary covenants which require compliance until termination of the agreement. As of June 30, 2012, the Company was in compliance with all such covenants.
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