Line of Credit	6 Months Ended
Jun. 30, 2023
Line Of Credit
Line of Credit	8. Line of Credit Relationship with First Horizon Bank (“FHB”) On February 3, 2021, the Company entered into an exclusive twenty-four month loan agreement with First Horizon Bank, our senior lender, for a revolving line of credit in the amount of $35,000,000, which was immediately funded for $25,974,695 to pay off the prior line of credit with a different lender. On this date, the prior line of credit was fully repaid and terminated. The Company recorded $180,350 of loan origination costs. In October 2021, the Company increased its line of credit with First Horizon Bank from $35,000,000 to $45,000,000. The Company recorded $25,771 of line of credit costs related to the credit increase. In November 2022, the Company extended the maturity on its line of credit agreement with FHB until November 30, 2025. This extension also changed the Index Rate of the line of credit from 30-Day Libor to 30-Day Secured Overnight Financing Rate (“SOFR”) in anticipation of the phase-out of Libor on June 30, 2023. The Company recorded $117,228 of line of credit costs related to this extension. At June 30, 2023 and December 31, 2022, the advance rate was 85% of the aggregate unpaid balance of the Company’s eligible accounts receivable. The line of credit is secured by all the Company’s assets and is personally guaranteed by our CEO and two members of the Board of Directors of the Company. The line of credit bears interest at 30-Day SOFR plus 2.35-2.85% per annum (7.91% at June 30, 2023 and 6.87% at December 31, 2022). The terms of the Line of Credit agreement provide for a minimum interest of 3.35% when the 30-day SOFR falls below 0.50%. As of June 30, 2023, the amount of principal outstanding on the line of credit was $38,083,393 and is reported on the consolidated balance sheet net of $50,684 of unamortized loan origination fees. As of December 31, 2022, the amount of principal outstanding on the line of credit was $32,821,347 and is reported on the consolidated balance sheet net of $107,722 of unamortized loan origination fees. Interest expense on this line of credit for the three months ended June 30, 2023 and 2022 totaled approximately $711,000 and $270,000, respectively. Interest expense on this line of credit for the six months ended June 30, 2023 and 2022 totaled approximately $1,297,000 and $528,000, respectively. The Company recorded amortized loan origination fees for the three months ended June 30, 2023 and 2022 of $28,519 and $11,650, respectively. The Company recorded amortized loan origination fees for the six months ended June 30, 2023 and 2022 of $57,038 and $33,508, respectively. The Company had availability on this line of credit of $4,889,826 as of June 30, 2023. The Company’s agreements with FHB contain certain financial covenants and restrictions. Under these restrictions, all the Company’s assets are pledged to secure the line of credit, the Company must maintain certain financial ratios such as an adjusted tangible net worth ratio, interest coverage ratio and adjusted leverage ratio. The loan agreement also provides for certain covenants such as audited financial statements, notice of change of control, budget, permission for any new debt, and copies of filings with regulatory bodies. Management believes it was in compliance with the applicable debt covenants as of June 30, 2023 and December 31, 2022.

Line of Credit

6 Months Ended

Jun. 30, 2023

8. Line of Credit

Relationship with First Horizon Bank (“FHB”)

On February 3, 2021, the Company entered into an exclusive twenty-four month loan agreement with First Horizon Bank, our senior lender, for a revolving line of credit in the amount of $35,000,000, which was immediately funded for $25,974,695 to pay off the prior line of credit with a different lender. On this date, the prior line of credit was fully repaid and terminated. The Company recorded $180,350 of loan origination costs. In October 2021, the Company increased its line of credit with First Horizon Bank from $35,000,000 to $45,000,000. The Company recorded $25,771 of line of credit costs related to the credit increase. In November 2022, the Company extended the maturity on its line of credit agreement with FHB until November 30, 2025. This extension also changed the Index Rate of the line of credit from 30-Day Libor to 30-Day Secured Overnight Financing Rate (“SOFR”) in anticipation of the phase-out of Libor on June 30, 2023. The Company recorded $117,228 of line of credit costs related to this extension.

At June 30, 2023 and December 31, 2022, the advance rate was 85% of the aggregate unpaid balance of the Company’s eligible accounts receivable. The line of credit is secured by all the Company’s assets and is personally guaranteed by our CEO and two members of the Board of Directors of the Company. The line of credit bears interest at 30-Day SOFR plus 2.35-2.85% per annum (7.91% at June 30, 2023 and 6.87% at December 31, 2022). The terms of the Line of Credit agreement provide for a minimum interest of 3.35% when the 30-day SOFR falls below 0.50%. As of June 30, 2023, the amount of principal outstanding on the line of credit was $38,083,393 and is reported on the consolidated balance sheet net of $50,684 of unamortized loan origination fees. As of December 31, 2022, the amount of principal outstanding on the line of credit was $32,821,347 and is reported on the consolidated balance sheet net of $107,722 of unamortized loan origination fees. Interest expense on this line of credit for the three months ended June 30, 2023 and 2022 totaled approximately $711,000 and $270,000, respectively. Interest expense on this line

of credit for the six months ended June 30, 2023 and 2022 totaled approximately $1,297,000 and $528,000, respectively. The Company recorded amortized loan origination fees for the three months ended June 30, 2023 and 2022 of $28,519 and $11,650, respectively. The Company recorded amortized loan origination fees for the six months ended June 30, 2023 and 2022 of $57,038 and $33,508, respectively. The Company had availability on this line of credit of $4,889,826 as of June 30, 2023.

The Company’s agreements with FHB contain certain financial covenants and restrictions. Under these restrictions, all the Company’s assets are pledged to secure the line of credit, the Company must maintain certain financial ratios such as an adjusted tangible net worth ratio, interest coverage ratio and adjusted leverage ratio. The loan agreement also provides for certain covenants such as audited financial statements, notice of change of control, budget, permission for any new debt, and copies of filings with regulatory bodies. Management believes it was in compliance with the applicable debt covenants as of June 30, 2023 and December 31, 2022.