Note 6 Long-Term Debt

Long-term debt consists of the following as of March 31, 2013 and 2012 as follows:

	2013			2012
	(in thousands)
Term loans	$	5,582		$	634
Less current maturities	(128		)	(234		)
Long-term debt, excluding current maturities	$	5,454		$	400

Term Loans

The Company executed a loan agreement with a lender providing for $5,500,000 in aggregate credit facilities (the “Loan”) secured by substantially all the Company’s assets, pursuant to a Term Loan Agreement dated August 14, 2012 (the “Loan Agreement”). The Loan Agreement is evidenced by promissory notes in the amounts of $2,250,000 and $3,250,000, the repayment of which is partially guaranteed under the provisions of a United States Department of Agriculture (“USDA”) Rural Development Guarantee program (the “Guarantees”). The proceeds of the Loan will be used to acquire new processing equipment and leasehold improvements at its Kona, Hawaii facility.

The provisions of the Loan require the payment of interest only for the first 12 months of the term; thereafter, and until its maturity on August 14, 2032, the obligation fully amortizes over nineteen (19) years. Interest on the Loan accrues on the outstanding principal balance at an annual variable rate equal to the published Wall Street Journal prime rate (3.25% at March 31, 2013) plus 1.0% and is adjustable on the first day of each calendar quarter and fixed for that quarter. At no time shall the annual interest rate be less than 5.50%. The Loan has a prepayment penalty of 5% for any prepayment made prior to the first anniversary of the date of the Loan Agreement, which penalty is reduced by 1% each year thereafter until the fifth anniversary of such date, after which there is no prepayment penalty. The balance under this Loan was $5,500,000 at March 31, 2013. Proceeds from the Loan are classified as restricted cash until drawn upon to acquire new processing equipment and leasehold improvements.

The Loan includes a one-time origination and guaranty fees totaling $214,500 and an annual renewal fee payable in the amount of 0.25% of the USDA guaranteed portion of the outstanding principal balance as of December 31 of each year, beginning December 31, 2012. The USDA has guaranteed 80% of all amounts owing under the Loan. The Company is subject to financial covenants and customary affirmative and negative covenants. The Company was in compliance with these financial covenants at March 31, 2013.

The Company has three equipment loans with John Deere credit providing for $103,000 in equipment financing; these loans are payable in 48 equal monthly principal payments. At March 31, 2013 the total outstanding combined balance was approximately $66,000. The equipment loans have maturity dates of May 2015 as to $23,000, November 2015 as to $19,000 and June 2016 as to $24,000. The loans are at a 0% rate of interest and are net of unamortized discount of $2,000 at March 31, 2013 and 2012.

In September 2011, the Company executed a Term Loan Agreement with Nissan Motor Acceptance Corporation providing for $23,000 in equipment financing, secured by the equipment. The Term Loan has a maturity date of September 13, 2016 and is payable in 60 equal monthly principal payments. The interest rate under this Term Loan is 0%. Imputed interest at a rate of 2% (cash discount offered by seller) has been recorded and is being amortized as interest over the term of the loan. The balance outstanding under the Term Loan was $15,000 and $20,000 at March 31, 2013 and 2012, respectively, less the unamortized discount of $600 and $900 at March 31, 2013 and 2012, respectively.

Capital Lease

In March 2010, the Company executed a capital lease agreement with Thermo Fisher Financial providing for $97,000 in equipment, secured by the equipment financed. The capital lease matured in March 2013 and was payable in 36 equal monthly payments. The interest rate under this capital lease is 6.6%. The balance under this lease was $0 and $34,000 at March 31, 2013 and 2012, respectively.

Future principal payments under the loan agreements as of March 31, 2013 are as follows:

Year ending March 31	(in thousands)
2014	$	128
2015	204
2016	203
2017	199
2018	206
Thereafter	4,642
Total principal payments	$	5,582