BANK DEBT

The Company,

entered into a Credit Agreement on

June 1, 2017

with JPMorgan Chase Bank, N.A. as lender (the “Credit Agreement”). The Credit Agreement is comprised of a revolving facility in the amount of

$8,000,000,

subject to a borrowing base (determined based on

80%

of Eligible Accounts, plus

50%

of Eligible Progress Billing Accounts, plus

50%

of Eligible Inventory, minus Reserves as defined in the Credit Agreement) and a term loan in the amount of

$2,000,000,

payable in consecutive monthly installments of

$41,667

commencing on

July 1, 2017.

The revolving facility includes a

million sublimit for the issuance of letters of credit.

Interest for borrowings under the revolving facility accrues at a per annum rate equal to Prime Rate or LIBOR plus applicable margins of (i)

0.00%

for Prime Rate loans and (ii)

2.00%

for LIBOR loans. The maturity date of the revolving facility is

June 1, 2020.

Interest for borrowings under the term loan accrues at

a per annum rate equal to Prime Rate or LIBOR plus applicable margins of (i)

0.25%

for Prime Rate loans and (ii)

2.25%

for LIBOR loans. The maturity date of the term loan is

June 1, 2021.

The Credit Agreement includes a commitment fee on the unused portion of the revolving facility of

0.25%

per annum payable quarterly. The obligations of the Company and other borrowers under the Credit Agreement are secured by a blanket lien on all the assets of the Company and its subsidiaries. The Credit Agreement also includes customary representations and warranties and applicable reporting requirements and covenants, including fixed charge coverage ratio and senior funded indebtedness to EBITDA ratio financial covenants.

In connection with entering into the Credit Agreement, the Company made a onetime prepayment of a portion of the outstanding principal under outstanding promissory notes held by First Francis Company Inc. (“First Francis”), in the amount of

$500,000.

The Company will

not

be required to make any of the scheduled quarterly payments due under these notes for the remainder of calendar

2017.

First Francis is owned by Edward Crawford and Matthew Crawford, who serve on the Board of Directors of the Company.

Bank debt

balances consist of the following at

September 30:

	2017		2016

Term Debt	$	1,875,000	$	-
Revolving Debt		5,044,486		-
Total Bank Debt		6,919,486		-
Less: Current Portion		500,000		-
Non-Current Bank Debt		6,419,486		-
Less: Unamortized Debt Costs		44,663		-
Net Non-Current Bank Debt	$	6,374,823	$	-

The Company had

$3.0

million available to borrow on the revolving credit facility at

September 30, 2017.

The minimum principal payments due on the term loan until it matures in

2021

are

$500,000

2018,

500,000

2019,

$500,000

2020,

and

$375,000

2021.