Financing Arrangements

9 Months Ended

Mar. 31, 2022

Debt Disclosure [Abstract]

Financing Arrangements

Note 6. Financing Arrangements

The Company has a credit facility that provides for a revolving line of credit. Effective December 17, 2021, the Company renewed its $2,500,000 revolving line of credit. There was no outstanding principal balance on the line of credit as of March 31, 2022, or June 30, 2021. Interest on borrowings under the line of credit, if any, accrues at the prime rate (3.50% at March 31, 2022) less 1.0% and is payable monthly. The amount eligible for borrowing on the line of credit is limited to the lesser of $2,500,000 or 57.0% of eligible accounts receivable and the line of credit expires on December 18, 2023, if not renewed before such date. At March 31, 2022, the maximum $2,500,000 was eligible for borrowing. Payment obligations under the line of credit, if any, are secured by a security interest in substantially all of the tangible and intangible assets of the Company.

The documents governing the line of credit contain certain financial and nonfinancial covenants that include a minimum tangible net worth covenant of not less than $10,125,000 and restrictions on the Company’s ability to incur certain additional indebtedness or pay dividends.