FINANCING AGREEMENTS

12 Months Ended

Apr. 30, 2016

NOTE 3—FINANCING AGREEMENTS

On September 27, 2010, Torotel Products entered into a new financing agreement (the “agreement”) with Commerce Bank, N.A (the “Bank”). The agreement provides for a revolving line of credit, a guidance line of credit, and a real estate term loan. Torotel serves as an additional guarantor to all notes described below. A summary of the notes issued under the agreement are provided below:


		2016		2015
4.05% mortgage note payable in monthly installments of $4,873, including interest, with final payment of $349,000 due January 27, 2019	$	456,000	$	495,000
4.00% line of credit with a maturity date of September 27, 2016		-		-
Borrowings under an equipment financing line of credit:
4.63% note payable in monthly installments of $7,123, including interest, with final payment due September 26, 2015		-		36,000
4.75% note payable in monthly installments of $2,269, including interest, with final payment due May 27, 2018		53,000		77,000
3.75% note payable in monthly installments of $2,112, including interest, with final payment due April 10, 2018		49,000		73,000
Total long-term debt		558,000		681,000
Less current installments		90,000		122,000
Long-term debt, excluding current installments	$	468,000	$	559,000

The revolving line of credit, which is available for working capital purposes, is renewable annually. The associated interest rate is equal to the greater of the floating Commerce Bank Prime Rate (currently 3.25%) or a floor of 4% (as listed above). Monthly repayments of interest only are required with the principal due at maturity. The maximum borrowing of this line of credit is $500,000. This facility is cross collateralized and cross defaulted with all other facilities and is secured by a first lien on all business assets of Torotel Products.

On February 21, 2014, Torotel Products refinanced its mortgage note under the agreement with the Bank. No cash proceeds were received as a result of the refinancing. Prepayment of the new note up to $100,000 per year is allowed without penalty so long as these funds are generated through internal cash flow and not borrowed from a separate financial institution. The new note is cross collateralized and cross defaulted with all other facilities of Torotel Products and is secured by a first real estate mortgage on the property located at 620 North Lindenwood Drive in Olathe, Kansas.

The equipment note is a guidance line of credit to be used for equipment purchases. Monthly repayments consisting of both interest and principal are required. This facility is cross collateralized and cross defaulted with all other facilities of Torotel Products and is secured by a purchase money security interest in the assets purchased as well as a first lien on all business assets of Torotel Products. The maximum borrowing of this line of credit is $500,000.

Torotel Products is also required to comply with specified financial covenants and as of April 30, 2016, Torotel Products was in compliance with these covenants.

The amount of long-term debt maturities by year is as follows:


Year Ending April 30,	Amount
2017	$	90,000
2018		96,000
2019		372,000
	$	558,000