Revolving Line of Credit

9 Months Ended

Jun. 30, 2011

Revolving Line of Credit

On March 15, 2010, the Company entered into an $8.0 million amended and restated unsecured revolving line of credit facility with a termination date of January 31, 2011. On December 28, 2010, the Company further amended its credit agreement to increase the revolving credit availability from $8.0 million to $10.0 million, extend its termination date to January 31, 2012 and modify the required levels of after tax net income (or loss) under its financial covenants for periods commencing December 31, 2010 and thereafter. On June 30, 2011, the Company entered into a Second Amendment to its credit facility. Pursuant to the amendment, the Company received relief under a financial covenant. The Company’s revolving line of credit is classified as a current liability on the accompanying balance sheets because provisions in the credit agreement include deposit account requirements and a material adverse effect covenant which is subjective in nature. Borrowings under the amended credit facility bear interest at a rate equal to LIBOR plus 2.50%. The Company is required to pay a non-usage fee of .50% per annum on the unused portion of the facility.

Availability under the facility is based upon specified percentages of eligible accounts receivable and inventory. The credit agreement is unsecured. The credit agreement contains certain covenants, including requirements to maintain a minimum tangible net worth and net income (or net loss) within specified levels.

As of June 30, 2011, the Company had approximately $2.5 million available and $7.5 million outstanding under its revolving credit line pursuant to its credit agreement.