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DUE FROM FACTOR
 6 Months Ended
Dec. 31, 2015
Due From Factor  
DUE FROM FACTOR

NOTE 4. DUE FROM FACTOR

 

On September 9, 2015, we entered a Loan and Security Agreement (the “Summit Loan”) with Summit Financial Resources LP, (the “Factor”) whereby we can borrow up to $1.0 million against our eligible receivables, as defined in the agreement. Borrowed funds will bear interest at a rate of prime plus 2 percent, and incur an additional administrative fee of 0.7 percent on the monthly average outstanding balance. The Summit Loan has an initial period of 18 months with successive one year renewal options and requires an annual facility fee of $10,000.

 

As of December 31, 2015, the total amount of receivables that have been assigned to the Factor pursuant to the Summit Loan is $912,000 and we bear the risk of loss in the event of non-payment by the customers. During the three and six months ended December 31, 2015, we borrowed $1.3 million and $1.6 million, respectively, under the Summit Loan, which amounts were paid in full by December 31, 2015. Therefore, at December 31, 2015, we had no outstanding borrowings against the Summit Loan.