6	Term Loan, Revolving Line of Credit and Warrants

April 27, 2017,

the Company entered into a

$1.5

million loan agreement with Partners For Growth (“PFG”), which was funded by PFG on

April 28, 2017 (

the

“2017

Loan”). The

2017

Loan, which originally matured on

April 27, 2019,

provides for interest only payments during the term of the loan with principal and any accrued interest and fees due upon maturity. The

2017

Loan bears interest at a fixed aggregate per annum rate equal to

16%

per annum, of which

9.5%

per annum rate is payable monthly in cash and

6.5%

per annum rate is accrued monthly and due upon maturity. In addition, the Company agreed to pay PFG a cash fee of up to

$100,000

payable upon maturity (the “back-end fee”),

$76,000

of which was earned on

April 27, 2017,

and

$24,000

of which is earned at the rate of

$1,000

per month on the

first

day of each month if the loan principal (or any amount thereof) is outstanding during any day of the prior month.

December 2018,

the Company and PFG agreed to modify the

2017

Loan Agreement to extend the maturity date from

April 27, 2019

November 1, 2019,

to require the Company to pay all accrued interest on

May 1, 2019

and to require the Company to make monthly prepayments of principal of

$75,000

and accrued interest from

May 1, 2019

until maturity. The effectiveness of the modification was conditioned on the Company raising

$500,000

in additional equity capital. As of

March 30, 2019,

the Company had satisfied this condition.

March 11, 2019,

the Company and PFG agreed to further modify the

2017

Loan Agreement to extend the maturity date to

March 1, 2020

and to add financial covenants requiring the Company to maintain a minimum tangible net worth and minimum revenues.

June 28, 2019,

the Company and PFG agreed to further modify the

2017

Loan Agreement to adjust the financial covenants requiring the Company to maintain a minimum tangible net worth and minimum revenues. At

December 28, 2019,

the Company did

not

meet a covenant in the amended

2017

Agreement with PFG requiring the Company to achieve minimum cumulative revenues of

$11

million for the

first

three

quarters of its

2020

fiscal year. The Company's failure to comply with this covenant constituted an event of default under the agreement, entitling PFG to declare all outstanding amounts immediately due and payable. PFG waived this default on

January 31, 2020.

January 31, 2020,

the Company and PFG agreed to further modify the

2017

Loan Agreement. The Amendment, among other things, provided for a fee of

$16,500;

extended the maturity date of the loan from

March 1, 2020

March 1, 2021;

required the Company make principal payments of

$75,000

February 1, 2020

and

$57,700

on the

first

day of each month thereafter until maturity; provides for an annual interest rate of

16%,

of which

9.5%

is payable monthly and

6.5%

is deferred until maturity or payoff; and adjusted and extended a modified minimum revenue financial covenant through the maturity date. The Amendment also contained the Lender’s waiver of the Company’s default arising from its failure to comply with the Loan Agreement’s minimum revenue financial covenant for the calendar quarter ended

December 31, 2019,

which entitled the Lender to declare all outstanding amounts immediately due and payable.

As of

March 28, 2020

and

March 30, 2019,

the Company’s total outstanding loan balances were

$792,300

and

$1.8

million, respectively, and are included in Loans payable, net of discounts and issuance costs on the Consolidated Balance Sheet.

The Company anticipates it will need to achieve significant product shipments and resulting cash inflows and or seek additional funds through the issuance of new debt or equity securities to repay the

2017

Loan (including accrued interest and back end fees) in full upon maturity or otherwise enter into a refinancing agreement with PFG.