SUBSEQUENT EVENTS

12 Months Ended

Mar. 31, 2012

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

NOTE 20 — SUBSEQUENT EVENTS

In connection with a shareholder transaction in May 2012, Series A Convertible Preferred Stock of 482,984 shares were converted into 631,352 shares of common stock.

On April 30, 2012 the Company received $553,071 representing a refund of estimated federal tax payments made during the first two quarters of fiscal 2012.

On July 6, 2012, the Company executed an Eleventh Amendment and obtained a waiver for failure to comply with the fixed charge coverage ratio and the interest coverage ratio covenants at March 31, 2012. The Eleventh Amendment also waived the covenant testing requirement related to the ratio of earnings available to cover fixed charges and the interest coverage ratio covenants for the fiscal quarters ended June 30, 2012 and September 30, 2012. The leverage ratio covenant will remain in effect. Without the execution of the Eleventh Amendment for the applicable periods, the Company would have been required to reclassify all of its long-term debt as a current liability at March 31, 2012. Although there will be no testing of the covenants to comply with the ratio of earnings available to cover fixed charges and the interest coverage ratio covenant testing at June 30 and September 30, 2012, the Bank will require that the Company have EBIT greater than $1 for the fiscal quarter ended September 30, 2012. Additionally, the Bank required the Company to transfer $840,000 into a restricted cash account as additional collateral. This amount equals the total due for the next two quarters of debt service. This collateral will be released back to the Company upon successful compliance with all debt covenant tests. The ratio of earnings available to cover fixed charges and the interest coverage covenant testing will resume at December 31, 2012 on a trailing six month basis, and continue at March 31, 2013 on a trailing nine month basis and quarterly thereafter on a trailing twelve month basis beginning on June 30, 2013. Under the Eleventh Amendment the Company shall not permit earnings available for fixed charges to be less than 125%, interest coverage to be less than 2:1, and the leverage ratio to be greater than 2:1 at any time, tested quarterly. The Company believes that it will remain in compliance with all of the revised covenants through at least June 30, 2013.