Note 4 - Debt

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Debt Disclosure [Text Block]

Note 4 -- Debt

	September 30		December 31
	2017		2016
Term loan	$	2,626,661	$	2,843,301
Notes payable		-		64,136
		2,626,661		2,907,437
Less current portion		2,626,661		389,096
Total long-term debt	$	-	$	2,518,341

Effective

September 30, 2015,

the Company entered into a series of lending agreements with a new primary lender which include agreements for a

$3.25

million term loan and a

$3.5

million revolving credit facility.

  These lending agreements replaced similar borrowings under agreements with the Company’s former primary lender.

The

$3.25

million term loan is for a period of

three

years and requires monthly term loan payments, under a

ten

-year amortization, consisting of principal of

$27,080

plus interest with a balloon payment for the outstanding balance due and payable on

September 30, 2018.

  Accordingly, the outstanding term loan balance is presented as a current liability in the

September 30, 2017

consolidated balance sheet.  The term loan's interest rate is based on the

30

-day LIBOR plus

2.25%

and was

3.48%

at

September 30, 2017.

The

$3.5

million revolving line of credit agreement, originally dated

September 30, 2015,

accrues interest at a floating interest rate based on the

30

-day LIBOR plus

2.25%

and had an original term of

one

year.

  Effective

September 30, 2016,

the revolving line of credit agreement was extended under similar terms to

April 30, 2018. 

As of

September 30, 2017,

there were

no

outstanding borrowings on the revolving line of credit.  In

October 2017,

the Company borrowed

$500,000

under the revolving line of credit.

Borrowings under the lending agreements are secured by all tangible and intangible assets of the Company, a whole life insurance policy on the life of the Company's Chief Executive Officer, and by a mortgage on the real estate of the Company's headquarters.

The lending agreements include quarterly financial covenants requiring the Company to maintain net tangible worth of

not

less than

$9.5

million, and

  i) a cumulative minimum EBITDA requirement of

$600,000

and

$800,000

for the fiscal periods ending

September 30, 2017

and

December 31, 2017,

respectively; and  ii) a minimum EBITDA of

$200,000

for the quarter ended

March 31, 2018.

As defined, EBITDA equals the Company's consolidated net income for such period, before interest expense, income tax expense, depreciation and amortization, and management fees, and further adjusted to exclude any gain or loss on the sale of assets, other extraordinary gains or losses, and any

one

-time adjustment approved by the lender.

  At

September 30, 2017,

the Company was in compliance with its loan covenant requirements.

The Company anticipates it will be able to refinance its term loan and renew its revolving line of credit with its current lender prior to the respective maturity dates of each agreement; however, there can be

no

assurance that the Company will be successful in refinancing its outstanding loan balances prior to maturity.

  Company management believes that the Company's cash on hand and its ability, if necessary, to borrow a significant portion of or liquidate the cash surrender value of the Company's key-man life insurance policy, will be sufficient to meet the Company's working capital requirements and debt service requirements for the next

twelve

months.