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LINE OF CREDIT AND LONG-TERM DEBT
 3 Months Ended
Mar. 31, 2021
Debt Disclosure [Abstract]  
LINE OF CREDIT AND LONG-TERM DEBT LINE OF CREDIT AND LONG-TERM DEBT
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.

On August 7, 2020, the Company and Vertex Operating entered into a Fifth Amendment to Credit Agreement with EBC (the “Fifth Amendment”), which amended the EBC Credit Agreement to provide the Company up to a $2 million term loan to be used for capital expenditures (the “CapEx Loan”), which amounts may be requested from time to time by the Company, provided that not more than four advances of such amount may be requested, with each advance being not less than $500,000 (in multiples of $100,000). The amendment also provided that any prepayments of the EBC Credit Agreement would first be applied to the term loan and then to the CapEx Loan. The CapEx Loan bears interest at the rate of LIBOR (1.15% at March 31, 2021) plus 7%, or to the extent that LIBOR is not available, the highest of the prime rate and the Federal Funds Rate plus 0.50%, in each case, plus 6%. We are required to repay the CapEx Loan in monthly installments of 1/48th of the amount borrowed, each month that the CapEx Loan is outstanding, with a final balloon payment due at maturity. The obligation of EBC to fund the CapEx Loan is subject to customary conditions and requirements set forth in the Fifth Amendment, including the requirement that the Company has maintained daily availability under the ABL Credit Agreement greater than $1 million for the last thirty days, and that such availability would remain over $1 million, on a pro forma basis with such new loan. We are
also required to provide the agent for the EBC Credit Agreement, a first priority security interest in the rolling stock collection assets or other assets acquired with the CapEx Loan.

On November 27, 2020, the Company, Vertex Operating, the Agent and the EBC Lenders, entered into a Fifth Amendment and Limited Waiver to Credit Agreement (the “Amendment and Waiver”), pursuant to which the Lenders agreed to amend the Revolving Credit Agreement, to (1) provide for the Lender’s waiver of an event of default which occurred under the Revolving Credit Agreement, relating solely to the Company exceeding the $3 million capital expenditure limitation for 2020 set forth in the Revolving Credit Agreement; (2) amend the capital expenditure limit set forth in the Revolving Credit Agreement to $4 million for 2020 (compared to $3 million previously) and $3 million thereafter; and (3) amended the minimum required availability under the Revolving Credit Agreement to be $1 million prior to December 31, 2020 (which amount was previously $2 million) and $2 million thereafter. Notwithstanding the technical default under the Revolving Credit Agreement discussed above, the Lenders did not take any action to accelerate amounts due under the Revolving Credit Agreement, such amounts due thereunder were not automatically accelerated in connection with the default, and as discussed above, such technical default was waived by the Lenders according to the Amendment and Waiver.

As of the date of this filing, the Company is in the process of extending the maturity date of the Encina debt to February 1, 2023. The Company presented the Encina debt in the current portion of long-term debt balance on the consolidated balance sheet at March 31,2021.

Loan Agreements

On May 4, 2020, the Company applied for a loan from Texas Citizens Bank in the principal amount of $4.22 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 in February 2021, 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 believes it has used the PPP funds for qualifying expenses and has applied for forgiveness.

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 $473,417 at March 31, 2021 and $1,183,543 at December 31, 2020.

Finance Leases

On April 2, 2020, the Company obtained one finance lease with payments of $9,322 per month for three years and on July 28, 2020, the Company entered into another finance lease with payments of $3,545 per month for three years. The amount of the finance lease obligation has been reduced to $350,086 at March 31, 2021.

On May 22, 2020, the Company entered into one finance lease. Payments are $15,078 per month for three years and the amount of the finance lease obligation has been reduced to $414,632 at March 31, 2021.

The Company's outstanding debt facilities as of March 31, 2021 and December 31, 2020 are summarized as follows:
CreditorLoan TypeOrigination DateMaturity DateLoan AmountBalance on March 31, 2021Balance on December 31, 2020
Encina Business Credit, LLCTerm LoanFebruary 1, 2017February 1, 2022$20,000,000 $5,208,000 $5,433,000 
Encina Business Credit SPV, LLCRevolving NoteFebruary 1, 2017February 1, 2022$10,000,000 — 133,446 
Encina Business Credit, LLCCapex LoanAugust 7, 2020February 1, 2022$2,000,000 1,286,603 1,378,819 
Wells Fargo Equipment Lease-OhioFinance LeaseApril-May, 2019April-May, 2024$621,000 406,765 436,411 
AVT Equipment Lease-OhioFinance LeaseApril 2, 2020April 2, 2023$466,030 350,086 380,829 
AVT Equipment Lease-HHFinance LeaseMay 22, 2020May 22, 2023$551,609 414,632 450,564 
John Deere NoteNoteMay 27, 2020June 24, 2024$152,643 122,063 131,303 
Tetra Capital LeaseFinance LeaseMay, 2018May, 2022$419,690 148,309 172,235 
Well Fargo Equipment Lease-VRM LAFinance LeaseMarch, 2018March, 2021$30,408 — 1,804 
Texas Citizens BankPPP LoanMay 5, 2020April 28, 2022$4,222,000 4,222,000 4,222,000 
Various institutions Insurance premiums financed Various< 1 year $2,902,428 473,417 1,183,543 
Total$12,631,875 $13,923,954 


Future contractual maturities of notes payable as of March 31, 2021 are summarized as follows:
CreditorYear 1Year 2Year 3Year 4Year 5Thereafter
Encina Business Credit, LLC$5,208,000 $— $— $— $— $— 
Encina Business Credit, LLC1,286,603 — — — — — 
John Deere Note37,528 38,459 39,413 6,663 — — 
Well Fargo Equipment Lease- Ohio122,458 128,908 135,698 19,701 — — 
AVT Equipment Lease-Ohio129,676 141,111 79,299 — — — 
AVT Equipment Lease-HH151,568 164,934 98,130 — — — 
Tetra Capital Lease99,832 48,477 — — — — 
Texas Citizens Bank1,877,461 2,344,539 — — — — 
Various institutions 473,417 — — — — — 
Totals$9,386,543 $2,866,428 $352,540 $26,364 $— $—