(

)

Long-term Debt and Note Payable to Bank

The Company has credit facilities consisting of a real estate term loan, as amended

and restated (the “Virginia Real Estate Loan”), a supplemental real estate term loan, as amended and restated (the “North Carolina Real Estate Loan”) and a revolving credit note.

Both the Virginia Real Estate Loan and the North Carolina Real Estate Loan are with Pinnacle

Financial Partners (“Pinnacle”), have a fixed interest rate of

3.95%

and are secured by a

first

priority lien on all of the Company’s personal property and assets, all money, goods, machinery, equipment, fixtures, inventory, accounts, chattel paper, letter of credit rights, deposit accounts, commercial tort claims, documents, instruments, investment property and general intangibles now owned or hereafter acquired by the Company and wherever located, as well as a

first

lien deed of trust on the Company’s real property.

Long-term debt a

s of

January 31, 2018

and

October 31, 2017

consists of the following:

	January 31,		October 31,
	2018		2017
Virginia Real Estate Loan ($6.5 million original principal) payable in monthly installments of $31,812, including interest (at 3.95%), with final payment of $3,644,211 due May 1, 2024	$	4,915,223	$	4,960,738
North Carolina Real Estate Loan ($2.24 million original principal) payable in monthly installments of $10,963, including interest (at 3.95%), with final payment of $1,255,850 due May 1, 2024		1,693,911		1,709,595
Total long-term debt		6,609,134		6,670,333
Less current installments		253,266		250,726
Long-term debt, excluding current installments	$	6,355,868	$	6,419,607

The

Revolving Credit Note (“Revolver”) with Pinnacle provides the Company with a

$7.0

million revolving line of credit (“Revolving Loan”) for the working capital needs of the Company. Under the Revolver, Pinnacle provides the Company with

one

or more revolving loans in a collective maximum principal amount of

$7.0

million. The Company

may

borrow, repay, and reborrow at any time or from time to time while the Revolving Loan is in effect. The maturity date of the Revolver is currently

March 31, 2019.

he applicable margin in the Revolving Credit Note has a floor on the interest rate for the Revolving Credit Note such that the rate will never be less than

2.50%

per annum. The Revolving Loan accrues interest at LIBOR plus

2.50%

(resulting in a

4.07%

rate at

January 31, 2018).

The Revolving Loan is payable in monthly payments of interest only with principal and any outstanding interest due and payable at maturity.

The Revolving Loan

is secured by a perfected

first

lien security interest on all assets, including but

not

limited to, accounts, as-extracted collateral, chattel paper, commodity accounts, commodity contracts, deposit accounts, documents, equipment, fixtures, furniture, general intangibles, goods, instruments, inventory, investment property, letter of credit rights, payment intangibles, promissory notes, software and general tangible and intangible assets owned now or later acquired. The Revolving Loan is also cross-collateralized with the Company’s real property.

As of

January 31, 2018,

the Company had

$5.9

million of outstanding borrowings on its Revolving Loan and

$1.1

million in available credit. As of

October 31, 2017,

the Company had outstanding borrowings of

$5.7

million on its Revolving Loan and

$1.3

million in available credit.