Note 4 - Revolving Line of Credit

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Debt Disclosure [Text Block]

Note

4

- Revolving Line of Credit

On

December 31, 2018,

we entered into a revolving line of credit (the “credit facility”) with Texas Capital Bank, National Association (“Lender”) pursuant to a Business Loan Agreement (Asset Based) (the “Loan Agreement”). The obligations under the credit facility are secured by substantially all our assets. Our wholly-owned subsidiaries, Vortech, L.L.C., and VTC, L.L.C. jointly and severally guaranteed our obligations under the credit facility.

The maximum principal amount of the credit facility is

$1,500,000.

The credit facility is subject to a borrowing base of

80%

of eligible accounts receivables, subject to customary exclusions and limitations. Borrowings under the credit facility will bear interest at LIBOR plus

3%

(effective rate of

4.80%

and

5.37%

at

December 31, 2019

and

2018,

respectively). Certain accounts receivables subject to a vendor payment program with a customer are excluded from the definition of eligible accounts receivables under the credit facility. In addition to interest payable on the principal amount of indebtedness outstanding from time to time under the credit facility, we will pay a

0.25%

unused facility fee, payable quarterly in arrears. The credit facility matures on

December 31, 2020.

The credit facility requires that we maintain a minimum liquidity of

$500,000

at all times excluding availability under the loan. It also requires us to comply with certain financial covenants including a maximum Total Leverage Ratio of

3.00,

a minimum Total Interest Coverage Ratio of

2.50,

and a minimum Total Fixed Charge Coverage Ratio of

1.25.

The credit facility also limits the amount of new indebtedness to

$250,000

per fiscal year without Lender’s prior written approval.

      The Loan Agreement and ancillary documents include customary affirmative covenants for secured transactions of this type, including maintaining adequate books and records, periodic financial reporting, compliance with laws, maintenance of insurance, maintenance of assets, timely payment of taxes, and notice of adverse events. The Loan Agreement and ancillary documents include customary negative covenants, including incurrence of other indebtedness, mergers, consolidations and transfers of assets and liens on assets of the Company. The Loan Agreement and ancillary documents include customary events of default, including payment defaults, failure to perform or observe terms, covenants or agreements included in the Loan Agreement and ancillary documents, insolvency and bankruptcy defaults, judgment defaults, material adverse change defaults, and change of ownership defaults.

There were

no

amounts outstanding under this credit facility at

December 31, 2019

and

2018

and we were in compliance with all financial covenants except for the interest coverage ratio at

December 31, 2019

and the bank has waived the requirement for that period. The maximum amount we were eligible to borrow at

December 31, 2019

and

2018

was approximately

$135,000

and

$100,000,

respectively.