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4. Commitments
3 Months Ended
Jun. 30, 2014
Commitments and Contingencies Disclosure [Abstract]  
Commitments

Line of Credit

 

The Company has a line of credit with ANB Bank in the amount of $750,000. As of June 30, 2014, the Company did not have a balance due outstanding on the line of credit. The line of credit is subject to certain borrowing base requirements, requires monthly interest payments calculated at prime plus 1% with a minimum rate of 5.5%. The borrowing base was $750,000 as of June 30, 2014. The line includes certain reporting and financial covenants, is cross-collateralized by accounts receivable and inventory and is guaranteed by two Company executives who are also directors of the Company: Doug Larson, President, and Jeremy Martin., Vice President of Marketing, and Kevin Sipple, director and former Vice President of Operations. The line has a maturity date of December 27, 2014.

 

Notes Payable

 

The Company has a note payable with ANB Bank. The note bears interest at a fixed rate of 5.0%. The loan is payable at a rate of $17,690 per month, which includes principal and interest. A single “balloon payment” of the entire unpaid balance of principal and interest will be due on February 2, 2022. The Company has a note payable obtained from the Small Business Administration (“SBA). The SBA loan bears interest at a fixed rate of 4.951% for its full 20 year term and is payable at a rate of $10,089 per month until maturity on April 1, 2032.

 

The above loans are secured by substantially all of the assets of the Company, including the real estate in Eldorado Springs and Louisville, Colorado. The loan agreements specify events of default customary to facilities of their type, including any non-payment of principal, interest or other amounts, misrepresentation of representations and warranties, violation of covenants, certain events of bankruptcy or insolvency, certain material judgments, seizure of assets, or other material adverse changes. Upon the occurrence of an event of default, the payments by the Company of all of its outstanding obligations may be accelerated, and the commitments under the loan agreements may be terminated by the respective lender. The loans are guaranteed by Messrs. Larson, Martin and Sipple. The loan agreements also include certain performance and reporting covenants.