On December 20, 2005, the Company entered into a revolving line of credit agreement with TD Bank providing for demand or short-term borrowings up to $1,000,000.  The credit agreement includes an interest rate indexed to 3.75% above the British Bankers’ Association London Interbank Offered Rate (BBA LIBOR).  The line of credit was renewed on November 30, 2011, and next expires on December 1, 2012.  Draws against the line are limited by varying percentages of the Company’s eligible accounts receivable balances.  The bank is granted a security interest in all company assets if there are borrowings under the line of credit.  Interest on outstanding balances is payable monthly.  The effective rate at December 31, 2011, was 4.02%.  At December 31, 2010, the effective rate was 4.01%. 

The bank has a first priority security interest in the Company’s receivables and a direct assignment of its U.S. government contracts.  Under the loan agreement, the Company has agreed to be bound by certain covenants, including maintaining positive net income as tested on an annual basis, maintaining a minimum tangible net worth, and producing a number of periodic financial reports for the benefit of the bank.  There was no outstanding balance on the line of credit at December 31, 2011 or 2010.