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Subsequent Events
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3 Months Ended |
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Jan. 31, 2012
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| Notes to Financial Statements | |
| Subsequent Events |
(13) Subsequent Events
In connection with the consolidation of the Companys manufacturing facilities the Companys lease expired in Ivyland, PA. The landlord has filed suit against the Company claiming damages related to restoring the demised premises to its original condition and unpaid rent. The Company believes the amounts claimed for the restoration of the demised premises is without merit and plans to defend its position aggressively. The Company believes that any amounts paid in this matter will not have a material effect on the Companys financial condition.
On March 2, 2012, the Company amended its secured credit facility with its bank which reduced the credit available under the facility from $5,000,000 to $3,500,000 and redefined the Tangible Net Worth covenant. Based on the Companys twelve month projections, the reduction in credit facility will not affect the Companys ability to borrow the maximum amount allowed based on the advance formula. At January 31, 2012, the Company was in default of the Tangible Net Worth covenant which has been waived by the bank.
On March 9, 2012, the Company received an offer to sell a portfolio of patents. If this sale is consummated, the net proceeds will allow the Company to reduce debt and acquire inventory on a more programmed basis. However, there can be no assurance that the Company will consummate this transaction which is still subject to final documentation and closing. |