Revolving Line of Credit

3 Months Ended

Oct. 31, 2011

Debt Disclosure [Abstract]

Revolving Line Of Credit [Text Block]

NOTE 7 – Revolving Line of Credit

On May 9, 2011, the Company completed negotiations to renew and expand its secured line of bank credit for up to one million three hundred thousand dollars and extend the line by one year to July 2012. Advances under the credit line will be secured with substantially all of the Company’s assets, be subject to interest at 1% above the Wall Street Journal prime rate index, and be subject to the following restrictive covenants: (i) the current ratio shall not be less than 1.2 times; (ii) the debt to tangible net worth ratio shall not exceed 2.5 times; and (iii) the quarterly EBITDA shall not be less than $30,000 on a rolling four quarter basis.  At July 31, 2011, the company was in violation of the restrictive covenant pertaining to a minimum quarterly EBITDA of not less than $30,000.  The lender issued forbearance for the violation of the restrictive covenant.  The credit line will expire on July 14, 2012.  At October 31, 2011, the Company did not have any balance outstanding under this credit line.

The Company incurred interest expense of $3,093 and $5,611 during the three months ended October 31, 2011, and 2010, respectively.