Note

Debt

The Company has a credit agreement with Amegy Bank which provides a

$4.0

million revolving line of credit and previously provided up to a

$3.0

million term loan which could be drawn through

October 24, 2016.

Amounts outstanding under the term loan reduce the availability under the revolving line of credit. The revolving line of credit is also subject to a borrowing base derived from

80%

of eligible accounts receivable (as defined) and the Company’s minimum net worth covenant of

$22.0

million. The revolving line of credit bears interest at prime plus

0.50%

payable monthly. As of

December 31, 2019,

the Company had a

$0.2

million irrevocable standby letter of credit outstanding under the revolving line of credit and had additional borrowing capacity of

$1.4

million. The revolving line of credit presently expires

October 24, 2022.

August 16, 2016,

the Company drew

$2.7

million of the term loan and used the proceeds to fund the purchase of shares of its common stock in a private transaction. The term loan bears interest at

4.5%

per annum and is payable in monthly payments of interest only until

November, 2016,

followed by

equal monthly payments of principal and interest computed on a

-month amortization schedule and a final payment of principal and interest due on

October 24, 2020.

July 16, 2018,

the Company amended its credit agreement with Amegy Bank to provide for an additional term loan of up to

$1.0

million that could be drawn by the Company through

July 12, 2019,

for the purpose of repurchases of its common stock. The additional term loan is evidenced by a promissory note bearing interest at

5.15%

per annum and was payable in monthly installments of interest only through

July 12, 2019.

Thereafter, the note is payable in monthly installments sufficient to fully amortize the outstanding principal balance in

months with the balance of principal and accrued interest due on

July 12, 2023.

The amendment also revised the calculation of the fixed charge coverage ratio for the

three

quarters following the maturity date of the previous term loan.

Amounts outstanding under the additional term loan further reduce the availability under the Company’s revolving line of credit with Amegy Bank. On

August 1, 2018,

the Company drew

$0.7

million of the additional term loan and used the proceeds to fund the purchase of

100,000

shares of its common stock in a private transaction. On

December 12, 2018,

the Company drew

$0.3

million of the additional term loan and used the proceeds to partially fund a purchase of

50,000

shares of its common stock in a private transaction. As of

December 31, 2019,

a total of

$2.0

million was outstanding on the

two

term loans.

As of

December 31, 2019,

future maturities of long term debt were as follows (in thousands):


2020	$	1,257
2021		194
2022		204
2023		345
Total		2,000