NOTE 8. LINE OF CREDIT

Line of Credit

We have an $6 million secured revolving line of credit facility with PNC Bank N.A., which at December 31, 2011 had a zero balance. Advances under the $6 million line of credit are due on demand and bear interest at a rate of daily LIBOR plus 1.75% and are secured by a perfected first security interest in our inventory and accounts receivable.

In addition we have a separate additional credit facility with PNC Bank N.A. for up to $1 million specific to financing new equipment purchases. This credit facility provides for a 1 year draw up to the conversion date of October 31, 2012. Prior to the conversion date amounts outstanding will bear an interest rate of daily LIBOR plus 2.25%. Once the note is converted the term will be 5 years and will bear an interest rate of daily LIBOR plus 2.50%. The note would be secured by a perfected first security interest in the new equipment purchased.

Subsequent available borrowings for both these credit facilities is subject to a borrowing base utilizing a percentage of eligible receivables, inventories, and any assigned cash along with certain financial ratios, specifically maintaining: a ratio of total funded debt to EBITDA of less than 3.25 to 1.0 and a ratio of minimum Fixed Charge of 1.5 to 1.0 measured on a rolling four quarter basis.

At December 31, 2011 we were in compliance with the loan covenants and ratios of both the credit facilities. According to our most recent borrowing base calculation, we had approximately $3.0 million total availability under the $6 million credit line, of which we currently have a zero balance. We also have available approximately $1.0 million under the equipment line of credit.

Mortgage Note Payable

We currently have approximately $3.5 million borrowed under industrial revenue bonds which we previously used for the purchase and renovation of our Clearwater, Florida facility. During 2011 these bonds were refinanced through PNC Bank N.A. The bonds, which are being amortized over a 20-year term, balloon in November 2018 and bear interest at a fixed interest rate of 5.6%. Scheduled maturities of this indebtedness are shown below:

	Years Ending December 31,
	2012		2013		2014		2015		2016		Thereafter
Mortgage scheduled maturities	$	130	$	137	$	145	$	153	$	162	$	2,823