Debt

	March 31		December 31
	2018		2017

Term loan	$	2,437,101	$	2,545,421
Revolving line of credit		500,000		500,000
		2,937,101		3,045,421
Less current portion		2,937,101		3,045,421
Total long-term debt	$	-	$	-

Effective

September 30, 2015,

the Company entered into a series of lending agreements with its primary lender which included 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 was for an initial period of

three

years and required 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.

Effective with an

April 11, 2018

loan agreement amendment, under similar monthly payment and interest rate terms, the term loan’s balloon payment due date has been extended from

September 30, 2018

April 29, 2019.

The term loan's interest rate is based on the

-day LIBOR plus

2.25%

and was

3.94%

March 31, 2018.

The

$3.5

million revolving line of credit agreement, originally dated

September 30, 2015,

accrues interest at a floating interest rate based on the

-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.

Effective with an

April 11, 2018

loan amendment, the revolving line of credit’s term has been extended from

April 30, 2018

April 29, 2019

and the revolver’s maximum borrowing amount has been reduced from

$3.5

million to

$2.0

million. At

March 31, 2018,

outstanding borrowings under the revolving line of credit are

$500,000.

The interest rate on revolver borrowings is identical to the term loan.

Borrowings under the lending agreements continue to be 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, which was assigned to the lender, and by a mortgage on the real estate of the Company's headquarters.

The loan agreements, including the

April 2018

loan amendment, 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

$200,000;

$400,000;

$600,000;

and

$800,000

for the fiscal periods ending

March 31, 2018;

June 30, 2018;

September 30, 2018;

and

December 31, 2018;

respectively; and ii) a minimum EBITDA of

$200,000

for the quarter ended

March 31, 2019.

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.

March 31, 2018,

the Company was

not

in compliance with its quarterly financial loan covenant requirements. On

May 4, 2018,

the Company’s lender agreed to waive the Company’s non-compliance with the tangible net worth and minimum EBITDA covenants for the

March 31, 2018

reporting period; however, the Company cannot provide any assurance that the lender will waive any financial loan covenant non-compliance in any future quarterly reporting periods. Furthermore, the Company is unable to provide reasonable assurance that future operating results will achieve compliance with its quarterly financial loan covenant requirements. Accordingly, the Company has presented its outstanding loan balances as current liabilities in the

March 31, 2018

condensed consolidated balance sheets.

March 31, 2018,

the Company is current on all principal and interest payments due to its lender. 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.