Note 3 - Notes Payable

3 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Debt Disclosure [Text Block]

4.   NOTES PAYABLE

The

Company’s term note is payable in monthly installments of

$212,468.

Borrowings under the term note bear interest at an annual rate of

3.12%.

The outstanding balance of the term note at

March

31,

2017

was

$2.7

million.

The Company also has a revolving credit no

te that was renewed in

June

2016

to extend the term to

June

30,

2017.

The maximum aggregate amount available under the revolving credit note is

$6.5

million, subject to a borrowing base equal to

75.0%

of the Company’s eligible accounts receivable. Borrowings under the revolving credit note bear interest at a variable annual rate, with

three

rate options at the discretion of management as follows:

(1)

2.5%

plus the daily reset

one

-month London Interbank Offered Rate (“LIBOR”) or

(2)

2.2%

plus the

one

-,

two

- or

three

- month LIBOR rate, or

(3)

the bank’s

one

-,

two,

three,

six,

or

twelve

month Money Market Loan Rate. As of

March

31,

2017

the revolving credit note did

not

have a balance. According to the borrowing base requirements, the Company had the capacity to borrow

$6.5

million as of

March

31,

2017.

The term note

and revolving credit note are secured by certain of the Company’s assets, including the Company’s land, building, trade accounts receivable and intangible assets. The term note and revolving credit note contain various restrictions and covenants applicable to the Company, including requirements that the Company maintain certain financial ratios at prescribed levels and restrictions on the ability of the Company to consolidate or merge, create liens, incur additional indebtedness or dispose of assets. As of

March

31,

2017,

the Company was in compliance with its financial covenants.