NOTES PAYABLE AND LONG-TERM DEBT

On March 29, 2017, the Company entered into to a credit agreement with a commercial bank (“Credit Agreement”). The Credit Agreement, which replaced the Company’s prior credit agreement, provides for a $14.0 million credit facility, the proceeds of which may be utilized as follows: (i) $6.0 million for working capital, letters of credit (up to $2.0 million) and general corporate purposes and (ii) $8.0 million for acquisitions. Indebtedness under the Credit Agreement is secured by substantially all of the Company’s assets with advances outstanding under the working capital portion of the credit facility at any time limited to a Borrowing Base (as defined in the Credit Agreement) equal to 80% of eligible accounts receivable plus the lesser of 50% of eligible inventory and $3.0 million and was $2.1 million at March 31, 2018. Advances under the acquisition portion of the credit facility are limited to 75% of the purchase price of an acquired company and convert to a five-year term note at the time of the borrowing. Borrowings bear interest at the greater of (a) zero percent or (b) the One Month ICE LIBOR plus a LIBOR Margin of 2.5%. The LIBOR Margin may increase to as high as 3.0% depending on the Company’s cash flow leverage ratio. The interest rate as of March 31, 2018 was approximately 4.25%. The Company pays a fee of 0.25% per annum on the unused amount of the line of credit.

At March 31, 2018, long-term debt consisted of the following (in thousands):



Non-interest bearing, unsecured note payable assumed in acquisition, monthly payments of $7; maturing September 2018.	$	41

Term loan, bearing interest at 4.25%, monthly payments of $43; maturing March 2022.	2,111

Total long-term debt	2,152
Less: current portion	558
Long-term debt, net of current portion	$	1,594

The Company has availability under the Credit Agreement of $11.8 million ($6.0 million for the working capital and $5.8 million for the acquisitions) as of March 31, 2018. The Company also has $40,000 in letters of credit outstanding as of March 31, 2018.

The Credit Agreement contains affirmative and negative covenants that, among other things, require the Company to maintain a maximum cash flow leverage ratio of no more than 3.0 to 1.0 and a minimum debt service coverage ratio of not less than 1.15 to 1.00. The Credit Agreement, which expires on March 29, 2019 for the working capital portion of the Credit Agreement, also contains customary events of default which, if uncured, may terminate the Credit Agreement and require immediate repayment of all indebtedness to the lenders. The leverage ratio covenant may limit the amount available under the Credit Agreement.

Payments due on long-term debt during each of the five years subsequent to March 31, 2018 are as follows (in thousands):



Twelve Months Ending March 31,
2019	$	558
2020	517
2021	517
2022	517
2023	43
	$	2,152

The Company utilizes performance bonds to support operations based on certain state requirements. At March 31, 2018, the Company had performance bonds outstanding covering financial assurance up to $0.6 million.