Note

– Debt

East West Bank

Revolving

Credit Facility

The

2017

Credit Agreement (as defined in Note

) originally allowed us to borrow up to

85%

of our eligible receivables and up to

85%

of the appraised value of our eligible equipment. The Fifth Amendment restructured the loan and provided for a loan forgiveness of

$16.0

million and converts the remaining principal balance to a

$17.0

million equipment term loan and a revolver to provide the Company with a maximum

$1.0

million line of credit. The Sixth Amendment further extended the maturity date and modified the financial covenants effective

January 1, 2021.

There are

required principal payments until maturity on

October 15, 2022,

and interest is fixed at

8.25%.

Interest on the

first

5.25%

is calculated monthly and paid in arrears, while the remaining

3.00%

is accrued to the loan balance through

October 15, 2021,

and due with all remaining outstanding principal on the maturity date. Additionally, the Credit Facility is subject to an unused credit line fee of

0.5%

per annum multiplied by the amount by which total availability exceeds the average monthly balance of the Credit Facility, payable monthly in arrears. The Credit Facility is collateralized by substantially all our assets and subject to financial covenants.

February 11, 2021,

the Company made a

$3.0

million payment of principal on the equipment term loan. As of

March 31, 2021,

we had an outstanding principal loan balance under the Credit Facility of approximately

$15.2

million with a weighted average interest rates of

8.25%

per year. As of

March 31, 2021,

our availability under the amended

2017

Credit Agreement was

$1.0

million. The Credit Facility balance of

$15.2

million at

March 31, 2021

includes

$1.2

million of future interest payable due over the remaining term of the Credit Facility in accordance with ASC

470

60,

Troubled Debt Restructuring by Debtors.

Under the amended

2017

Credit Agreement, we are subject to the following financial covenants, with which we were in compliance as of March

31,

2021:

(

)

December 31, 2020,

we were required to maintain liquidity of

not

less than

$1.5

million; and

(

)

For each trailing

three

-month period, commencing with the

three

-month period ending

March 31, 2021,

we are required to achieve gross revenue of at least

seventy

percent (

70%

) of our projected gross revenue; and

(

) We are limited to a capital expenditures cap of

$1.2

million for any fiscal year that the loan remains outstanding.

In connection with amending the

2017

Credit Agreement on

September 23, 2020,

the Company issued to East West Bank

533,334

shares of Company common stock, and a

five

-year warrant to purchase up to

1,000,000

additional shares of Company common stock at an exercise price of

$3.75

per share. The

533,334

shares of Company common stock were valued at a price of

$2.0775

per share, or a total value of

$1.1

million. The

533,334

common shares issued to East West Bank could

not

be sold or transferred prior to

March 23, 2021.

The warrant for

1,000,000

shares is exercisable beginning

September 23, 2021

until

September 23, 2025.

The fair value of the warrant was determined to be

$1.4

million and were recorded in additional paid-in capital. The Company recorded a total gain on the debt restructuring of

$11.9

million during the

third

quarter of

2020,

which was calculated by subtracting from the

$16.0

million loan forgiveness, a) the future interest payable on the Credit Facility; b) the value of the Company common stock issued; and c) the fair value of the warrant.

Debt Issuance Costs

We capitalized certain debt issuance costs incurred in connection with the Credit Facility discussed above and these costs were amortized to interest expense over the term of the facility

on a straight-line basis. There were

remaining unamortized debt issuance costs as of

March 31, 2021,

and

December 31, 2020.

During the

three

months ended March

31, 2020

, the Company amortized approximately

$35,000

of these costs to Interest Expense.

Notes Payable

Long-term debt consists of the following (in thousands):

	March 31,				December 31,
	2021				2020

Senior Revolving Credit Facility with related party. All future interest through October 15, 2021 accrued to loan pursuant to the Fifth Amendment. Interest at 8.25%, 5.25% is paid monthly while 3% is accrued and paid upon maturity. Matures October 15, 2022.	$	15,168		$		19,078

Paycheck Protection Loan. Interest is at 1% with payments deferred until October 10, 2020. Matures April 10, 2022.		1,940				1,940

Subordinated Promissory Note with related party. Interest is at 10% and is paid quarterly. Matures June 28, 2022. See Note 2 - Summary of Significant Accounting Policies and Recent Developments for discussion of conversion of debt balance.		-				1,250

Real Estate Loan for a facility in North Dakota, interest at 5.75%, and monthly principal and interest payment of $5,255 until October 3, 2023. Collateralized by land and property purchased with the loan.		153				167

Vehicle loans for three pickups, interest at 8.59% monthly principal and interest payments of $3,966, matures in August 2021.		20				31

Note payable to the seller of Heat Waves. The note was garnished by the Internal Revenue Service (“IRS”) in 2009 and is due on demand; paid in annual installments of $36,000 per agreement with the IRS		14				14
Total		17,295				22,480
Less debt discount		-				(70	)
Less current portion		(1,407	)			(1,693	)
Long-term debt, net of debt discount and current portion	$	15,888			$	20,717

Aggregate maturities of debt

are as follows (in thousands):

Twelve Months Ending March 31,
2022		824
2023		16,432
2024		39
Thereafter		-
Total	$	17,295