NOTE 3. FINANCING ARRANGEMENTS

We have a credit agreement with Bank of America which was entered into on June 15, 2017 and provides for a line of credit arrangement of $16,000,000 that expires on June 15, 2022. The credit arrangement also has a $5,000,000 real estate term note outstanding with a maturity date of June 15, 2022. The Bank of America credit agreement replaces our previous credit agreement with Wells Fargo Bank which terminated on June 20, 2017 and resulted in a loss on the extinguishment of debt of $174,834 primarily related to legal and terminations fees. Under the new credit agreement, both the line of credit and real estate term notes are subject to variations in the LIBOR rate. Our line of credit bears interest at one-month LIBOR + 2.00% (approximately 3.25% at June 30, 2017) while our real estate term notes bear interest at one-month LIBOR + 2.25% (approximately 3.50% at June 30, 2017). The combined weighted-average interest rate related to our new line of credit agreement and terminated credit agreement was 3.65% and 3.51% for the three and six months ended June 30, 2017, respectively. We had borrowings on our line of credit of $6,642,937 and $7,315,262 outstanding as of June 30, 2017 and December 31, 2016, respectively. There are no acceleration clauses under the credit agreement that would accelerate the maturity of our outstanding borrowings.

The Bank of America credit agreement provides for, among other things, a fixed charge coverage ratio of not less than (i) 1.00 to 1.00 for the trailing four fiscal quarters most recently ended. As of June 30, 2017, we were in compliance with this covenant.

The availability under the line is subject to borrowing base requirements, and advances are at the discretion of the lender. At June 30, 2017, we had unused availability under our line of credit of $7,392,337 supported by our borrowing base. The line is secured by substantially all of our assets.

As part of the July 1, 2015 Devicix acquisition we entered into two unsecured subordinated promissory notes payable to the seller in the principal amounts of $1,000,000 and $1,300,000. The $1,000,000 promissory note has a four-year term, bearing interest at 4.0% per annum, requiring monthly principal and interest payments of $22,579 and is subject to offsets if certain revenue levels are not met. The $1,300,000 promissory note has a four-year term and bears interest at 4.0% per annum, requiring monthly principal and interest payments of $29,353 and is not subject to offset.

Long-term debt at June 30, 2017 and December 31, 2016 consisted of the following:

	June 30,			December 31,
	2017			2016
Term note payable - Bank of America Real estate term note bearing interest at one-month LIBOR + 2.25% maturing June 15, 2022 with monthly payments of approximately $41,000 plus interest secured by substantially all assets.	$	5,000,000		$	—

Term notes payable - Wells Fargo Bank, N.A. Real estate term notes bearing interest at three month LIBOR + 2.75% maturing March 31, 2027, and December 31, 2027 with combined monthly payments of approximately $19,000 plus interest, secured by substantially all assets.	—			2,415,428

Equipment notes bearing interest at three month LIBOR + 2.75% maturing May 2018 with a combined monthly payments of approximately $46,000 plus interest, secured by substantially all assets.	—			2,489,624

Industrial revenue bond payable to the City of Blue Earth, Minnesota which bears a variable interest rate (approx. 0.21% at June 30, 2017), and has a maturity date of June 1, 2021, with principal of $80,000 payable annually on June 1.	120,000			200,000

Devicix Acquistion Note 1 payable to DeLange Holdings bears interest rate of 4.0% per annum, maturing July 1, 2019.	519,956			643,585

Devicix Acquistion Note 2 payable to DeLange Holdings bears interest rate of 4.0% per annum, maturing July 1, 2019.	675,944			836,661

	6,315,900			6,585,298
Discount on Devicix Notes Payable	(82,600		)	(102,424		)
Debt issuance Costs	(264,660		)	(25,896		)

Total long-term debt	5,968,640			6,456,978
Current maturities of long-term debt	(1,064,876		)	(1,565,347		)

Long-term debt - net of current maturities	$	4,903,764		$	4,891,631