DEBT

6 Months Ended

Jun. 30, 2020

DEBT

DEBT

5. DEBT

Dominion Loan Agreement

On September 30, 2019, the Company entered into a Loan and Security Agreement (the “Loan Agreement”) with Dominion Bank, a Texas state bank (“Dominion Bank”). The Loan Agreement provides for a revolving credit facility (the “Revolving Credit Facility”) in an amount up to the lesser of (i) $15,000,000 or (ii) a sum equal to (a) 80% of the Company’s eligible accounts receivable plus 100% of the amount on deposit with Dominion Bank in the Company’s collateral account, consisting of a restricted CDARS account of $5,000,000 (the “Deposit”).

Under the Revolving Credit Facility, interest will accrue at an annual rate equal to the lesser of (i) 6.00% and (ii) the greater of (a) the prime rate as published from time to time in The Wall Street Journal or (b) 3.50%. The Company will pay a commitment fee of 0.10% per annum on the difference of (a) $15,000,000 minus the Deposit minus (b) the daily average usage of the Revolving Credit Facility. The Loan Agreement contains customary covenants for credit facilities of this type, including limitations on disposition of assets. The Company is also obligated to meet certain financial covenants under the Loan Agreement, including maintaining a tangible net worth of $75,000,000 and specified ratios with respect to current assets and liabilities and debt to tangible net worth. The Company’s obligations under the Loan Agreement are secured by a security interest in the collateral account (including the Deposit) with Dominion Bank and future accounts receivable and related collateral. As of June 30, 2020, the Company has not borrowed any amounts under the Revolving Credit Facility. The maturity date of the Loan Agreement is September 30, 2020.

The Company does not currently have any notes payable under the Revolving Credit Facility.

Veritex Letters of Credit

As of June 30, 2020, Veritex Community Bank (“Veritex”) has issued two letters of credit to the Company, each of which are secured by a certificate of deposit with Veritex. The first letter of credit is in the amount of $1,767,000 to support payment of certain insurance obligations of the Company. The second letter of credit is in the amount of $583,000 to support the Company’s workers compensation insurance.

Other Indebtedness

As of June 30, 2020, the Company has two notes payable to a finance company for various insurance premiums totaling $711,000.

In addition, the Company leases certain seismic recording equipment and vehicles under leases classified as finance leases. The Company’s Condensed Consolidated Balance Sheets as of June 30, 2020 include finance leases of $918,000.

Maturities and Interest Rates of Debt

The following tables set forth the aggregate principal amount (in thousands) under the Company’s outstanding notes payable and the interest rates as of June 30, 2020 and December 31, 2019:

	June 30, 2020		December 31, 2019
Notes payable to finance company for insurance
Aggregate principal amount outstanding	$	711	$	1,746
Interest rate		4.05% - 4.99%		4.05% - 4.99%

The aggregate maturities of notes payable as of June 30, 2020 are as follows (in thousands):

July 2020 - June 2021	$	711
Total notes payable	$	711

The aggregate maturities of finance leases as of June 30, 2020 are as follows (in thousands):

July 2020 - June 2021	$	851
July 2021 - June 2022		43
July 2022 - June 2023		24
Obligations under finance leases	$	918

Interest rates on these leases range from 4.65% to 5.37%.