(6) Line of Credit

12 Months Ended

Jun. 30, 2016

Notes

(6) Line of Credit

(6)     Line of Credit

In March 2016, the Company retired its working capital line of credit.  That line of credit has been re-instated effective September 2016 in the amount of $1.0 million.  Interest on the line of credit is based on the prime rate plus 5%.  It is collateralized by inventory and accounts receivable.  Borrowing limitations are based on 85% of eligible accounts receivable and $700,000 of eligible inventory.  The current borrowing base on the line of credit would be approximately $3.4 million.  Presently the line of credit is on stand-by status.  The Company will pay $2,000 per month as a minimum access fee to the line of credit.  If the Company determines to activate the line it is required to provide the lender with 45 days’ notice of intent to begin borrowing.  The line of credit has a maturity date of September 2017.  The line of credit has no negative loan covenants.  However, once the line of credit is activated there are affirmative covenants to provide regular accounts receivable reports and financial statements within 90 days of month end.