Note 8 – Line of Credit

On March 21, 2016, the Company entered into a line of credit agreement with Bank of America, which expired March 31, 2017. In March 2017, the Company extended until March 31, 2018. The line provided a revolving credit facility with borrowing capacity of up to $1,000,000. There were no covenants or borrowing base calculations associated with this line of credit. On August 29, 2018, the Company entered a Loan Modification Agreement (the “Agreement”) with the bank. The Company had been working with the bank and had paid $100,000 to the bank to lower the outstanding balance to $900,000 at the signing of the Agreement. The Agreement had the following provisions:

1)	The Company to make an additional principal payment of $50,000 by October 1, 2018. (The Company made this payment.)

2)	Borrowing base calculation tied to accounts receivable and inventories.

3)	The Agreement expired May 31, 2019.

4)	Interest on any outstanding balances was payable monthly at an annual interest rate equal to the LIBOR (London Interbank Offered Rates) Daily Floating plus 3.75 percentage points.

5)	The line was collateralized by substantially all of the assets of the Company.

6)	The Company will make principal payments of $5,000 per month from September 30, 2018 through November 30, 2018 and principal payments of $10,000 per month from December 31, 2018 to May 31, 2019.

7)	Beginning with the fiscal year ended March 31, 2019, the Company must maintain a debt service coverage ratio.

During the six months ended September 30, 2019 the Company repaid $70,000 against this line of credit. As of September 30, 2019 and March 31, 2019, the outstanding balances were $730,000 and $800,000, respectively. As of September 30, 2019 the remaining availability under this line is $-0-.

During June 2019, Bank of America agreed to extend the Company’s line of credit until March 31, 2020. The new Loan Modification Agreement (the “Amended Loan Modification Agreement”) with the bank contains the following provisions:

1)	The Company to make an additional principal payment of $10,000 at closing.
2)	Borrowing base calculation tied to accounts receivable.
3)	The Amended Loan Modification Agreement expires March 31, 2020.
4)	Interest on any outstanding balances is payable monthly at an annual interest rate equal to the LIBOR (London Interbank Offered Rates) Daily Floating plus 3.75 percentage points. The Company’s interest rate was 5.77% at September 30, 2019.
5)	The line is collateralized by substantially all of the assets of the Company.
6)	The Company will make principal payments of $10,000 per month until March 31, 2020.
7)	The covenant for the debt service ratio is deleted.