Line of Credit	9 Months Ended
Sep. 30, 2022
Line Of Credit
Line of Credit	8. Line of Credit Relationship with Woodforest National Bank (“WNB”) On October 5, 2018, the Company entered into an exclusive twenty-four month loan agreement with Woodforest National Bank for a revolving line of credit in the amount of $25,000,000. The Company recorded $164,396 of loan origination costs. On July 30, 2019, the Company’s line of credit was modified to $27,500,000, maturing October 5, 2020. On October 5, 2020, the Company’s line of credit was extended to a maturity date of January 5, 2021. Interest expense on this line of credit for the nine months ended September 30, 2022 and 2021 totaled approximately $0 and $86,000, respectively. This line of credit was fully paid off on February 3, 2021 (see below). 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 WNB. On this date, the line of credit with WNB 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. At September 30, 2022 and December 31, 2021, 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 Libor plus 2.85% per annum (5.41% at September 30, 2022 and 3.35% at December 31, 2021). The terms of the Line of Credit agreement provide for a minimum interest of 3.35% when the 30 Day Libor falls below 0.50%. As of September 30, 2022, the amount of principal outstanding on the line of credit was $35,379,169 and is reported on the consolidated balance sheet net of $15,533 of unamortized loan origination fees. As of December 31, 2021, the amount of principal outstanding on the line of credit was $30,537,067 and is reported on the consolidated balance sheet net of $60,692 of unamortized loan origination fees. Interest expense on this line of credit for the three months ended September 30, 2022 and 2021 totaled approximately $452,000 and $202,000, respectively. Interest expense on this line of credit for the nine months ended September 30, 2022 and 2021 totaled approximately $980,000 and $603,000, respectively. The Company recorded amortized loan origination fees for the three months ended September 30, 2022 and 2021 of $11,650 and $37,856, respectively. The Company recorded amortized loan origination fees for the nine months ended September 30, 2022 and 2021 of $45,158 and $100,950, respectively. The Company had availability on this line of credit of $6,869,268 as of September 30, 2022. The Company’s agreements with WNB and 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 senior 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, copy of filings with regulatory bodies, minimum balances. Management believes it was in compliance with the applicable debt covenants as of September 30, 2022 and December 31, 2021. LIBOR will cease to be published after June 30, 2023. The Company expects that any of our future loan agreements will be based on a different benchmark rate.

Line of Credit

9 Months Ended

Sep. 30, 2022

8. Line of Credit

Relationship with Woodforest National Bank (“WNB”)

On October 5, 2018, the Company entered into an exclusive twenty-four month loan agreement with Woodforest National Bank for a revolving line of credit in the amount of $25,000,000. The Company recorded $164,396 of loan origination costs. On July 30, 2019, the Company’s line of credit was modified to $27,500,000, maturing October 5, 2020. On October 5, 2020, the Company’s line of credit was extended to a maturity date of January 5, 2021.

Interest expense on this line of credit for the nine months ended September 30, 2022 and 2021 totaled approximately $0 and $86,000, respectively. This line of credit was fully paid off on February 3, 2021 (see below).

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 WNB. On this date, the line of credit with WNB 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.

At September 30, 2022 and December 31, 2021, 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 Libor plus 2.85% per annum (5.41% at September 30, 2022 and 3.35% at December 31, 2021). The terms of the Line of Credit agreement provide for a minimum interest of 3.35% when the 30 Day Libor falls below 0.50%. As of September 30, 2022, the amount of principal outstanding on the line of credit was $35,379,169 and is reported on the consolidated balance sheet net of $15,533 of unamortized loan origination fees. As of December 31, 2021, the amount of principal outstanding on the line of credit was $30,537,067 and is reported on the consolidated balance sheet net of $60,692 of unamortized loan origination fees. Interest expense on this line of credit for the three months ended September 30, 2022 and 2021 totaled approximately $452,000 and $202,000, respectively. Interest expense on this line of credit for the nine months ended September 30, 2022 and 2021 totaled approximately $980,000 and $603,000, respectively. The Company recorded amortized loan origination fees for the three months ended September 30, 2022 and 2021 of $11,650 and $37,856, respectively. The Company recorded amortized loan origination fees for the nine months ended September 30, 2022 and 2021 of $45,158 and $100,950, respectively. The Company had availability on this line of credit of $6,869,268 as of September 30, 2022.

The Company’s agreements with WNB and 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 senior 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, copy of filings with regulatory bodies, minimum balances. Management believes it was in compliance with the applicable debt covenants as of September 30, 2022 and December 31, 2021.

LIBOR will cease to be published after June 30, 2023. The Company expects that any of our future loan agreements will be based on a different benchmark rate.