Quarterly report pursuant to sections 13 or 15(d)

NOTE 7 - LINE OF CREDIT

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NOTE 7 - LINE OF CREDIT
6 Months Ended
Jun. 30, 2012
Debt Disclosure [Text Block]
NOTE 7 – LINE OF CREDIT

In October 2011 the Company negotiated a line of credit from a bank. The agreement included a borrowing base calculation tied to accounts receivable with a maximum availability of $750,000. Interest on outstanding balances is payable daily at an interest rate that is two and three quarter’s percentage points (2.75%) above the Prime Rate.  The Company’s interest rate was 6% as of June 30, 2012.   The line is collateralized by substantially all of the assets of the Company and is guaranteed by the Company’s Chief Executive Officer.  The credit facility required the Company to pay a monitoring fee of 0.315% of eligible collateral to be paid monthly. An annual facility fee equal to one percent (1%) of the Maximum Credit is assessed upon the initial funding, annually thereafter. The term of the agreement is for three years and expires in October 2014. At June 30, 2012, the Company was in compliance with the required financial covenants, which include both  the fixed charge ratio and debt to net worth.

The fixed charge coverage ratio requires the Company’s subsidiary SWK Technologies, Inc. (SWK) at all times a ratio of Operating Cash Flow to Fixed Charges, as defined in the agreement, of not less than two to one (2:1) measured of the last day of each fiscal quarter, for the four (4) most recent quarters just ended.  The debt to net worth ratio requires SWK to maintain at all times a ratio of Debt to Net Worth, as defined in the agreement, not in excess of one point one five to one (1.215:1) for each quarter during fiscal 2012.


As of June 30, 2012 the outstanding balance open under this agreement was $579,824. As of June 30, 2012, the availability under this line was $160,249.