NOTE 10 - NOTE PAYABLE - REVOLVER

6 Months Ended

Jun. 30, 2016

Disclosure Text Block [Abstract]

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NOTE 10 – NOTE PAYABLE - REVOLVER

In October 2014, the Company refinanced its factoring facility and replaced it with a new Asset Based Lending (ABL) revolver credit facility that has a term of 36 months and a maximum availability of $10,000,000. The ABL was priced at 4.5% over 30-day LIBOR (with a minimum floor of 2%) plus an administrative fee of 0.1% per month on the outstanding balance and 0.084% per month on the unused portion of the facility. As of June 30, 2016, the Company had borrowings of $9,863,260 under the facility. As of December 31, 2015, the Company had borrowings of $7,601,904 under the facility.

The credit agreement governing the facility includes two significant financial covenants: (a) the Company’s Fixed Charge Coverage Ratio (FCCR) for the trailing 12 months cannot be less than 1.3 and 1.0. (FCCR is defined as the ratio of Operating Cash Flows to Fixed Charges, as defined by the credit agreement); and (b) the Company’s Total Leverage Ratio for the trailing 12 months to be between 1.0 and 3.0 (Total Leverage Ratio is defined as the ratio of Total Debt to EBITDA, as defined by the credit agreement). As of December 31, 2015, the Company was in compliance with these financial covenants. Due to the Company repaying its debt in July 2016, the covenant requirements at June 30, 2016 were waived.

In addition, the Company entered into a term loan commitment with the lender for $3,000,000.

All borrowings under these credit facilities are collateralized by the Company’s accounts receivable and substantially all of its other assets.

In connection with the financing, the Company incurred legal, loan origination and advisory expenses totaling $600,583, which have been recorded as deferred financing costs and are being amortized over three years as interest expense. Amortization for the three months ending June 30, 2016 and 2015 on the deferred financing costs is $35,346 and $35,346, respectively. Amortization for the six months ending June 30, 2016 and 2015 on the deferred financing costs is $ 70,692 and $70,692, respectively.