DEBT ARRANGEMENTS

12 Months Ended

Jun. 30, 2012

DEBT ARRANGEMENTS

NOTE 4 - DEBT ARRANGEMENTS

The Company’s debt obligations consisted of the following:

	June 30,		June 30,
	2012		2011
Notes payable
Term note due in monthly principal installments of $42, plus interest at 4.5% through April 2012. The loan was secured by all of the assets of the Company and was personally guaranteed by the Company’s chairman and majority shareholder.	$	-	$	417
Total debt obligations		-		417
Less current maturities		-		(417	)
Long-term portion of outstanding debt	$	-	$	-

Term Notes

Effective May 29, 2009, the Company entered into a $250 term loan note with a bank. The term loan note matured on October 28, 2009 and incurred interest at the Prime Rate plus 2.0%. The note was collateralized by certain assets of the Company’s majority shareholders. The loan required the Company to maintain a minimum debt service coverage ratio of 1.25 to 1.0 among other covenants. In January 2010, the Company was held harmless on the note and was released from the obligation by the bank.  The amount forgiven of $250 is included in the Company’s Consolidated Statements of Changes in Shareholders’ Equity as additional paid-in capital.

In May 2010, the Company entered into a $1.0 million term note with a bank. The term loan matured on April 30, 2012 and bore interest at the fixed rate of 4.5%. The note amortized equally over a 24 month period and required monthly principal payments of $42. The note was collateralized by substantially all the assets of the Company and was personally guaranteed by the Company’s chairman and majority shareholder. The loan required the Company to maintain a minimum cash flow coverage ratio of 1.2 to 1.0 and a minimum current ratio of 1.0 at June 30, 2010, escalating to 1.15 and 1.20 at December 31, 2010 and June 30, 2011, respectively.

Line of Credit

Effective April 15, 2011, the Company entered into a $2.0 million revolving line of credit agreement with a bank. The line of credit matures February 28, 2013 and bears interest at the Prime Rate plus 0.75%. The note is collateralized by substantially all the assets of the Company. The loan requires the Company to maintain a maximum total senior liabilities to adjusted tangible capital ratio of 1.5 to 1.0 and a minimum operating cash flow to fixed charge ratio of 1.25 to 1.0. There were no draws on the line of credit at June 30, 2012.