Line of Credit	9 Months Ended
Sep. 30, 2024
Line Of Credit
Line of Credit	7. 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. 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”). The Company recorded $117,228 of line of credit costs related to this extension, which is included in the line of credit balance in the consolidated balance sheet at September 30, 2024. At September 30, 2024 and December 31, 2023, 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 2.55-2.96% per annum (7.95% at September 30, 2024 and 8.09% at December 31, 2023). As of September 30, 2024, the amount of principal outstanding on the line of credit was $43,791,747 and is reported on the consolidated balance sheet net of $1,839 of unamortized loan origination fees. As of December 31, 2023, the amount of principal outstanding on the line of credit was $42,377,736 and is reported on the consolidated balance sheet net of $3,021 of unamortized loan origination fees. Interest expense on this line of credit for the three months ended September 30, 2024 and 2023 totaled approximately $918,000 and $837,000, respectively. Interest expense on this line of credit for the nine months ended September 30, 2024 and 2023 totaled approximately $2,749,000 and $2,134,000, respectively. The Company recorded amortized loan origination fees for the three months ended September 30, 2024 and 2023 of $394 and $28,519, respectively, which is included in interest expense. The Company recorded amortized loan origination fees for the nine months ended September 30, 2024 and 2023 of $1,182 and $85,557, respectively, which is included in interest expense. Availability on this line of credit was $1,023,668 as of September 30, 2024. 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. On November 14, 2023, the Company executed an amendment of the loan agreement, which provided a waiver of default on its Interest Coverage Ratio as of September 30, 2023. The amendment also reduced the Minimum Interest Coverage Ratio for the following four quarters through September 30, 2024. Management believes it was in compliance with the applicable debt covenants as of September 30, 2024 and December 31, 2023.

Line of Credit

9 Months Ended

Sep. 30, 2024

7. 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. 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”). The Company recorded $117,228 of line of credit costs related to this extension, which is included in the line of credit balance in the consolidated balance sheet at September 30, 2024.

At September 30, 2024 and December 31, 2023, 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 2.55-2.96% per annum (7.95% at September 30, 2024 and 8.09% at December 31, 2023). As of September 30, 2024, the amount of principal outstanding on the line of credit was $43,791,747 and is reported on the consolidated balance sheet net of $1,839 of unamortized loan origination fees. As of December 31, 2023, the amount of principal outstanding on the line of credit was $42,377,736 and is reported on the consolidated balance sheet net of $3,021 of unamortized loan origination fees. Interest expense on this line of credit for the three months ended September 30, 2024 and 2023 totaled approximately $918,000 and $837,000, respectively. Interest expense on this line of credit for the nine months ended September 30, 2024 and 2023 totaled approximately $2,749,000 and $2,134,000, respectively. The Company recorded amortized loan origination fees for the three months ended September 30, 2024 and 2023 of $394 and $28,519, respectively, which is included in interest expense. The Company recorded amortized loan origination fees for the nine months ended September 30, 2024 and 2023 of $1,182 and $85,557, respectively, which is included in interest expense. Availability on this line of credit was $1,023,668 as of September 30, 2024.

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. On November 14, 2023, the Company executed an amendment of the loan agreement, which provided a waiver of default on its Interest Coverage Ratio as of September 30, 2023. The amendment also reduced the Minimum Interest Coverage Ratio for the following four quarters through September 30, 2024. Management believes it was in compliance with the applicable debt covenants as of September 30, 2024 and December 31, 2023.