Note

– Revolving Credit Facilities

PNC

Revolving

Credit Facility

September 2014,

the Company entered into an Amended and Restated Revolving Credit and Security Agreement (the

"2014

Credit Agreement") with PNC Bank, National Association ("PNC") which provided for a

five

-year

$30

million senior secured revolving credit facility. The

2014

Credit Agreement allowed the Company to borrow up to

85%

of eligible receivables and up to

75%

of the appraised value of trucks and equipment. Under the

2014

Credit Agreement, there are

required principal payments until maturity and the Company has the option to pay variable interest rate based on (i)

month LIBOR plus an applicable margin ranging from

4.50%

5.50%

for LIBOR Rate Loans or (ii) interest at PNC Base Rate plus an applicable margin of

3.00%

4.00%

for Domestic Rate Loans. Interest is calculated monthly and added to the principal balance of the loan. Additionally, the Company incurs an unused credit line fee of

0.375%.

The revolving credit facility is collateralized by substantially all of the Company’s assets and subject to financial covenants. The outstanding principal loan balance matures on

April 30, 2018.

The Company has entered into various amendments to the

2014

Credit Agreement that among other things,

(i) modified certain financial covenants, (ii) increased the then applicable margin for Domestic Rate Loans and LIBOR Rate Loans; (iii) modified the advance rates on appraised equipment (iv) reinstated a full cash dominion requirement; and (iv) change various administrative terms under the agreement. As of

June 30, 2017,

the Company is subject to the following financial covenants:

(

)

To maintain a

Fixed Charge Coverage Ratio of

not

less than

1.25

1.00

at the end of each fiscal quarter. For the purpose of this covenant, the Fixed Charge Coverage Ratio shall be determined on the basis of Adjusted EBITDA, as defined in the

2014

Credit Agreement, for the trailing

four

-quarter period ended on the applicable quarterly compliance test date, based on a quarterly build beginning with the

fourth

quarter of

2016.

(

)

To maintain of leverage ratio as follows:

Fiscal Quarter Ending:	Maximum Leverage Ratio
June 30, 2017	4.50	:	1.00
September 30, 2017	4.50	:	1.00
December 31, 2017	7.00	:	1.00
March 31, 2018	5.50	:	1.00

March 31, 2017,

the Company entered into the Tenth Amendment to the

2014

Credit Agreement that among other things (i) required the Company to raise

$1.5

million in subordinated debt or post a letter of credit in favor of the bank by

March 31, 2017; (

ii) raise an additional

million of subordinated debt by

May 15, 2017; (

iii) reduced the maturity date of the loan from

September 12, 2019

April 30, 2018; (

iv) changed the definition of Adjusted EBITDA to include proceeds from subordinated debt; and (v) changed the calculation of fixed charge and leverage ratio from a trailing

four

-quarter basis to a quarterly build from the quarter ended

December 31, 2016.

March 31, 2017,

the Company’s largest shareholder, Cross River Partners, L.P. ("Cross River"), whose managing member is the chairman of our Board of Directors, posted a letter of credit in the amount of

$1.5

million in accordance with the terms of the Tenth Amendment. The letter of credit was converted into subordinated debt with a maturity date of

June 28, 2022

with a stated interest rate of

10%

per annum and a

five

-year warrant to purchase

967,741

shares of our common stock at an exercise price of

$.31

per share. On

May 10, 2017,

Cross River also provided

$1.0

million in subordinated debt to the Company as required under the terms of our Tenth Amendment to the PNC Credit Agreement. This subordinated debt has a stated annual interest rate of

10%

and maturity date of

June 28, 2022.

In connection with this issuance of subordinated debt, Cross River was granted a

five

-year warrant to purchase

645,161

shares of our common stock at an exercise price of

$0.31

per share. We accounted for the warrants issued in connection with the subordinated debt as a liability in the accompanying consolidated balance sheet as of

June 30, 2017.

As of

June 30, 2017,

the Company had an outstanding principal loan balance under the

2014

Credit Agreement of approximately

$20.4

million. The interest rate at

June 30, 2017

ranged from

5.55%

5.72%

per year for the

$18.5

million of outstanding LIBOR Rate Loans and

7.25%

per year for the

$1.9

million of outstanding Domestic Rate Loans. As of

June 30, 2017,

approximately

$1.5

million was available under the

2014

Credit Agreement.

As of

December 31, 2016,

the Company had an outstanding principal loan balance under the

2014

Credit Agreement of

$23.2

million. The interest rate at

December 31, 2016

ranged from

5.21%

5.27%

per year for the

$21.3

million of outstanding LIBOR Rate Loans and

6.75%

per year for the

$1.9

million of outstanding Domestic Rate Loans. As of

December 31, 2016,

approximately

$4.5

million was available under the

2014

Credit Agreement.

As of

June 30, 2017

and

December 31, 2016,

the Company was in compliance with its covenants under the

2014

Credit Agreement.

As described in more detail in Note

13,

Subsequent Events

, subsequent to

June 30, 2017,

the Company entered into a Loan and Security Agreement with East West Bank (the

"2017

Credit Agreement"). On

August 10, 2017

we repaid all amounts due under the

2014

Credit Agreement using proceeds from

2017

Credit Agreement, and therefore have classified the

$20.4

million loan balance outstanding under the

2014

Credit Agreement as a long-term liability in the accompanying consolidated balance sheet.

Debt Issuance Costs

The Company has capitalized certain debt issuance costs incurred in connection with the PNC senior revolving credit facility discussed above

and these costs are being amortized to interest expense over the term of the credit facility on a straight-line basis. As of

June 30, 2017

and

December 31, 2016,

approximately

$147,000

and

$171,000,

respectively of unamortized debt issuance costs were included in Prepaid Expenses and Other Current assets in the accompanying consolidated balance sheet. The remaining long-term portion of debt issuance costs of

$51,000

and

$259,000

is included in Other Assets in the accompanying consolidated balance sheets as of

June 30, 2017

and

December 31, 2016,

respectively. During the

three

and

six

months ended

June 30, 2017,

the Company amortized approximately

$37,000

and

$292,000

of these costs to Interest Expense. During the

three

and

six

months ended

June 30, 2016,

the Company amortized approximately

$39,000

and

$74,000

of these costs to Interest Expense, respectively. Due to the maturity date moving from

September 12, 2019

April 30, 2018,

the Company recognized an additional

$217,000

of debt issuance amortization expenses during the

six

months ended

June 30, 2017.

Upon the repayment of the

2014

Credit Agreement subsequent to

June 30, 2017,

we expect to write off all remaining debt issuance costs incurred in connection with the facility. Such unamortized debt issuance costs totaled approximately

$197,000

as of

June 30, 2017.

Interest Rate Swap

September 17, 2015,

the Company entered into an interest rate swap agreement with PNC in order to hedge against the variability in cash flows from future interest payments related to the

2014

Credit Agreement. The terms of the interest rate swap agreement include an initial notional amount of

$10.0

million, a fixed payment rate of

1.88%

plus applicable a margin ranging from

4.50%

5.50%

paid by the Company and a floating payment rate equal to LIBOR plus applicable margin of

4.50%

5.50%

paid by PNC. The purpose of the swap agreement is to adjust the interest rate profile of the Company’s debt obligations and to achieve a targeted mix of floating and fixed rate debt.

During the

three

months ended

June 30, 2017,

the fair market value of the swap instrument decreased by approximately

$11,000

and resulted in an increase to the liability and an increase in interest expense. During the

six

months ended

June 30, 2017,

the fair market value of the swap instrument increased by approximately

$19,000

and resulted in a decrease to the liability and a reduction in interest expense. During the

three

and

six

months ended

June 30, 2016,

the fair market value of the swap instrument decreased by

$74,000

and

$172,000,

respectively, and resulted in an increase in the liability and an increase in interest expense. The interest rate swap liability is included in accounts payable and accrued liabilities on the Company’s balance sheet. As of

June 30, 2017

and

December 31, 2016

the interest rate swap liability was

$72,000

and

$91,000,

respectively.

In connection with the termination of the

2014

Credit Agreement, subsequent to

June 30, 2017,

we terminated the interest rate swap agreement with PNC. We expect to enter into a similar interest rate swap agreement in connection with the

2017

Credit Agreement.