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DEBT

9 Months Ended

Sep. 30, 2020

DEBT

DEBT

5. DEBT

Dominion Loan Agreement

On September 30, 2019, the Company entered into a Loan and Security Agreement with Dominion Bank, a Texas state bank (“Dominion Bank”). On September 30, 2020, the Company entered into a Loan Modification Agreement to the Loan and Security Agreement (as amended by the Loan Modification Agreement, the “Loan Agreement”) for the purpose of amending and extending the maturity of the Company’s line of credit with Dominion Bank by one year. The Loan Agreement provides for a revolving credit facility (the “Revolving Credit Facility”) in an amount up to the lesser of (i) $15,000,000 or (ii) a sum equal to (a) 80% of the Company’s eligible accounts receivable plus 100% of the amount on deposit with Dominion Bank in the Company’s collateral account, consisting of a restricted CDARS account of $5,000,000 (the “Deposit”). As of September 30, 2020, the Company has not borrowed any amounts under the Revolving Credit Facility.

Under the Revolving Credit Facility, interest will accrue at an annual rate equal to the lesser of (i) 6.00% and (ii) the greater of (a) the prime rate as published from time to time in The Wall Street Journal or (b) 3.50%. The Company will pay a commitment fee of 0.10% per annum on the difference of (a) $15,000,000 minus the Deposit minus (b) the daily average usage of the Revolving Credit Facility. The Loan Agreement contains customary covenants for credit facilities of this type, including limitations on disposition of assets. The Company is

also obligated to meet certain financial covenants under the Loan Agreement, including maintaining a tangible net worth of $75,000,000 and specified ratios with respect to current assets and liabilities and debt to tangible net worth. The Company’s obligations under the Loan Agreement are secured by a security interest in the collateral account (including the Deposit) with Dominion Bank and future accounts receivable and related collateral. The maturity date of the Loan Agreement is September 30, 2021.

The Company does not currently have any notes payable under the Revolving Credit Facility.

Veritex Letters of Credit

As of September 30, 2020, Veritex Community Bank (“Veritex”) had issued two letters of credit to the Company, each of which were secured by a certificate of deposit with Veritex. The first letter of credit was in the amount of $1,767,000 to support payment of certain insurance obligations of the Company. The second letter of credit was in the amount of $583,000 to support the Company’s workers compensation insurance. During October of 2020, the letter of credit in the amount of $1,767,000 to support payment of certain insurance obligations of the Company was terminated at the request of the Company because the beneficiary no longer required it to secure such obligations. Also during October of 2020, Veritex, at the Company’s request, terminated the second letter of credit in the amount of $583,000 to support the Company’s workers compensation insurance and the Company simultaneously had a replacement letter of credit issued in the same amount by its principal lender, Dominion Bank. The letter of credit is secured by a certificate of deposit with Dominion Bank.

Other Indebtedness (in thousands)

As of September 30, 2020, the Company has one note payable to a finance company for various insurance premiums totaling $160,000.

In addition, the Company leases certain seismic recording equipment and vehicles under leases classified as finance leases. The Company’s Condensed Consolidated Balance Sheets as of September 30, 2020 include finance leases of $106,000.

Maturities and Interest Rates of Debt

The following tables set forth the aggregate principal amount (in thousands) under the Company’s outstanding notes payable and the interest rates as of September 30, 2020 and December 31, 2019:

​	​	​	​	​	​	​
​	​	​		​	​	​
​		September 30, 2020		​	December 31, 2019
Notes payable to finance company for insurance	​	​	​	​	​	​
Aggregate principal amount outstanding	​	$	160	​	$	1,746
Interest rate	​	​	4.99%	​	​	4.05% - 4.99%

​

The aggregate maturities of notes payable as of September 30, 2020 are as follows (in thousands):

​	​	​	​	​	​	​
October 2020 - September 2021	​	$	160	​	​	​
Total notes payable	​	$	160	​	​	​

​

The aggregate maturities of finance leases as of September 30, 2020 are as follows (in thousands):

​	​	​	​	​	​	​
October 2020 - September 2021	​	$	55	​	​	​
October 2021 - September 2022	​	​	41	​	​	​
October 2022 - September 2023	​	​	10	​	​	​
Obligations under finance leases	​	$	106	​	​	​

​

Interest rates on these leases range from 4.83% to 5.37%.

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- References

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- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-URI http://asc.fasb.org/topic&trid=2208564

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