LINE OF CREDIT AND LONG-TERM DEBT

6 Months Ended

Jun. 30, 2020

On April 24, 2020, (a) Encina Business Credit, LLC (“EBC”) and the lenders under our Revolving Credit Agreement with EBC (the “EBC Lenders”), and Vertex Operating, entered into a Fourth Amendment and Limited Waiver to Credit Agreement, effective on April 24, 2020, pursuant to which the EBC Lenders agreed to amend the EBC Credit Agreement; and (b) the EBC Lenders and Vertex Operating entered into a Fourth Amendment and Limited Waiver to ABL Credit Agreement, effective on April 24, 2020, pursuant to which the EBC Lenders agreed to amend the Revolving Credit Agreement (collectively, the “Waivers”). The Waivers amended the credit agreements to extend the due date of amounts owed thereunder from February 1, 2021 to February 1, 2022. This was considered a debt extinguishment per ASC 470-50; however, this results in no gain or loss recognition in earnings on the consolidated statements of operations at June 30, 2020.

Loan Agreements

On May 4, 2020, the Company applied for a loan from Texas Citizens Bank in the principal amount of $4.222 million, pursuant to the Paycheck Protection Program (the “PPP”) under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which was enacted on March 27, 2020. On May 5, 2020, the Company received the loan funds. The Note is unsecured, matures on April 28, 2022, and bears interest at a rate of 1.00% per annum, payable monthly commencing on November 15, 2020, following an initial deferral period as specified under the PPP. Under the terms of the PPP, the entire amount may be forgiven to the extent loan proceeds are used for qualifying expenses. As of the date of this report, the Company has used the PPP funds for qualifying expenses.

On May 27, 2020, the Company entered into a loan contract security agreement with John Deere to finance $152,643 to purchase equipment. The Note matures on June 27, 2024, and bears interest at a rate of 2.45% per annum, payable monthly commencing on June 27, 2020. The payment of the note is secured by the equipment purchased.

Insurance Premiums

The Company financed insurance premiums through various financial institutions bearing interest rates from 4.00% to 4.90% per annum. All such premium finance agreements have maturities of less than one year and have a balance of $0 at June 30, 2020 and $1,165,172 at December 31, 2019.

Finance Leases

On April 2, 2020, the Company obtained one finance lease. Payments are $9,322 per month for three years and the amount of the finance lease obligation has been reduced to $313,272 at June 30, 2020.

On May 22, 2020, the Company obtained one finance lease. Payments are $15,078 per month for three years and the amount of the finance lease obligation has been reduced to $520,191 at June 30, 2020.

The Company's outstanding debt facilities as of June 30, 2020 and December 31, 2019 are summarized as follows:



Creditor	Loan Type	Origination Date	Maturity Date	Loan Amount		Balance on June 30, 2020		Balance on December 31, 2019
Encina Business Credit, LLC	Term Loan	February 1, 2017	February 1, 2022	$	20,000,000	$	5,883,000	$	13,333,000
Encina Business Credit SPV, LLC	Revolving Note	February 1, 2017	February 1, 2022	$	10,000,000	—		3,276,230
Wells Fargo Equipment Lease-Ohio	Finance Lease	April-May, 2019	April-May, 2024	$	621,000	494,573		551,260
AVT Equipment Lease-Ohio	Finance Lease	April 2, 2020	April 2, 2023	$	337,155	313,272		—
AVT Equipment Lease-HH	Finance Lease	May 22, 2020	May 22, 2023	$	551,609	520,191		—
John Deere Note	Note	May 27, 2020	June 24, 2024	$	152,643	149,613		—
Tetra Capital Lease	Finance Lease	May, 2018	May, 2022	$	419,690	218,896		264,014
Well Fargo Equipment Lease-VRM LA	Finance Lease	March, 2018	March, 2021	$	30,408	7,135		12,341
Texas Citizens Bank	PPP Loan	May 5, 2020	April 28, 2022	$	4,222,000	4,222,000		—
Various institutions	Insurance premiums financed	Various	< 1 year	$	2,902,428	—		1,165,172
Total						11,808,680		18,602,017
Deferred finance costs, net						—		(47,826		)
Total, net of deferred finance costs						$	11,808,680	$	18,554,191

Future contractual maturities of notes payable as of June 30, 2020 are summarized as follows:



Creditor	Year 1		Year 2		Year 3		Year 4		Year 5		Thereafter
Encina Business Credit, LLC	$	900,000	$	4,983,000	$	—	$	—	$	—	$	—
Encina Business Credit SPV, LLC	—		—		—		—		—		—
John Deere Note	36,845		37,759		38,695		36,313		—		—
Well Fargo Equipment Lease- Ohio	117,834		124,039		130,574		122,127		—		—
AVT Equipment Lease-Ohio	88,689		96,512		128,071		—		—		—
AVT Equipment Lease-HH	142,258		154,805		223,128		—		—		—
Tetra Capital Lease	94,920		123,976		—		—		—		—
Well Fargo Equipment Lease- VRM LA	7,135		—		—		—		—		—
Texas Citizens Bank	1,877,461		2,344,539		—		—		—		—
Various institutions	—		—		—		—		—		—
Totals	$	3,265,142	$	7,864,630	$	520,468	$	158,440	$	—	$	—