BANK DEBT

The Company entered into a Credit Agreement on

June 1, 2017

with JPMorgan Chase Bank, N.A. as lender, which was subsequently amended in connection with funding the acquisition of CAD Enterprises, Inc. (“CAD”) on

July 5, 2018 (

as amended, the “Credit Agreement”). As amended, the Credit Agreement is comprised of a revolving facility in the amount of

$12,000,000,

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, each as defined in the Credit Agreement) and a term A loan in the amount of

$6,000,000.

Outstanding borrowings on the term A loan are payable in consecutive monthly installments, which currently amount to

$111,111

per month.

The revolving facility under the Credit Agreement includes a

million sublimit for the issuance of letters of credit thereunder. The Credit Agreement also provides for a separate credit line for borrowings of up to an aggregate of

$1,000,000

for capital expenditures until

July 5, 2019,

at which time any outstanding capital expenditure borrowings will be converted into a term loan maturing at the earlier of

five

years after such conversion or the termination of the revolving credit facility. 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 A 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 A loan is

December 1, 2022.

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. The financial covenants under the amended Credit Agreement include a minimum fixed charge coverage ratio, a revised maximum senior funded debt to EBITDA ratio and a new maximum total funded debt to EBITDA ratio.

In connection with entering into the Credit Agreement in

2017,

the Company made a

one

-time prepayment of a portion of the outstanding principal under promissory notes held by First Francis Company Inc. (“First Francis”), in the amount of

$500,000.

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:

	September 30, 2018		December 31, 2017

Term Debt	$	5,777,778	$	1,750,000
Revolving Debt		6,457,258		3,524,235
Total Bank Debt		12,235,036		5,274,235
Less: Current Portion		1,333,333		500,000
Non-Current Bank Debt		10,901,703		4,774,235
Less: Unamortized Debt Costs		102,730		41,685
Net Non-Current Bank Debt	$	10,798,973	$	4,732,550