6.	LINE OF CREDIT AND LONG-TERM DEBT

Total debt consists of the following at

December 31, 2019

and

March 31, 2019:

	Dec ember 3 1 , 2019			March 31, 2019
	(in thousands)
Line of credit	$	2,000		$	2,000
Long-term debt		5,549			6,035
Long-term debt - related party		1,500			—
Less current maturities		(2,700	)		(2,663	)
Long-term debt, excluding current maturities		6,349			5,372
Less unamortized debt issuance costs		(177	)		(200	)
Total long-term debt, net of current maturities and unamortized debt issuance costs	$	6,172		$	5,172

Line of Credit and Term Loans

August 30, 2016,

the Revolving Credit Agreement (the “Credit Agreement”), which the Company and First Foundation Bank (“the Bank”) entered into on

June 3, 2016,

became effective after the Company and the Bank received the necessary approvals from the State of Hawaii to secure the lien on the Company’s leasehold property in Kona, Hawaii. The Credit Agreement allows the Company to borrow up to

$2,000,000

on a revolving basis. Borrowings under the Credit Agreement bear interest at the Wall Street Journal prime rate (

4.75%

and

5.5%

December 31, 2019

and

March 31, 2019,

respectively) plus

2%,

floating.

At both

December 31, 2019

and

March 31, 2019,

the outstanding balance under the Credit Agreement was

$2,000,000

The line of credit, which is subject to annual renewal, was renewed on

August 30, 2019

and will be subject to renewal upon expiration on

August 30, 2020.

Pursuant to the

August 30, 2019

renewal, the current ratio covenant was

1.50:1

and is applicable to both the line of credit and term loans with the Bank.

The Credit Agreement grants the Bank the following security interests in the Company’s property: (a) a lien on the Company’s leasehold interest in its Kona facility; (b) an assignment of the Company’s interest in leases and rents on its Kona facility; and (c) a security interest in all fixtures, furnishings and equipment related to or used by the Company at the Kona facility. Each security interest is further subject to the terms of the Credit Agreement.

2015,

the Company executed a loan agreement with a lender providing for

$2,500,000

in aggregate credit facilities (the

“2015

Loan”) secured by substantially all the Company’s assets, pursuant to a Term Loan Agreement dated

July 30, 2015 (

the

“2015

Loan Agreement”). The

2015

Loan is evidenced by a promissory note in the amount of

$2,500,000,

the repayment of which is partially guaranteed under the provisions of the United States Department of Agriculture (“USDA”) Rural Development Guarantee program. The proceeds of the

2015

Loan were used to pay off a

$500,000

short term note payable that matured on

September 18, 2015,

and to acquire new processing equipment and leasehold improvements at the Company’s Kona, Hawaii facility.

The provisions of the

2015

Loan require the payment of principal and interest until its maturity on

September

2022;

the obligation fully amortizes over

seven

(

) years. Interest on the

2015

Loan accrues on the outstanding principal balance at an annual variable rate equal to the published Wall Street Journal prime rate (

5.0%

and

5.5%

December 31, 2019

and

March

31,

2019,

respectively) plus

2.0%

and is adjustable on the

first

day of each calendar quarter and fixed for that quarter. At

time shall the annual interest rate be less than

6.0%.

The

2015

Loan has a prepayment penalty of

5.0%

for any prepayment made prior to the

first

anniversary of the date of the

2015

Loan Agreement, which penalty is reduced by

1.0%

each year thereafter until the

fifth

anniversary of such date, after which there is

prepayment penalty. The balance under the

2015

Loan was

$1,131,000

and

$1,389,000

December 31, 2019

and

March

31,

2019,

respectively, and was included in long-term debt in the debt table above.

2012,

the Company executed a loan agreement with a lender providing for

$5,500,000

in aggregate credit facilities (the

“2012

Loan”) secured by substantially all the Company’s assets, including a mortgage on the Company's interest in its lease at the National Energy Laboratory of Hawaii Authority, pursuant to a Term Loan Agreement dated

August

14,

2012

(the

“2012

Loan Agreement”). The

2012

Loan 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 USDA Rural Development Guarantee. The proceeds of the

2012

Loan were used to acquire processing equipment and leasehold improvements at its Kona, Hawaii facility.

The provisions of the

2012

Loan required the payment of interest only for the

first

months of the term; thereafter, and until its maturity on

August

14,

2032,

the obligation fully amortizes over

nineteen

(

) years. Interest on the

2012

Loan accrues on the outstanding principal balance at an annual variable rate equal to the published Wall Street Journal prime rate (

5.0%

and

5.5%

December 31, 2019

and

March

31,

2019,

respectively) plus

1.0%

and is adjustable on the

first

day of each calendar quarter and fixed for that quarter. At

time shall the annual interest rate be less than

5.5%.

The balance under the

2012

Loan was

$4,279,000

and

$4,439,000

December 31, 2019

and

March

31,

2019,

respectively, and was included in long-term debt in the debt table above.

The

2015

Loan includes a

one

-time origination and guaranty fee totaling

$113,900

and an annual renewal fee payable in the amount of

0.5%

of the USDA guaranteed portion of the outstanding principal balance as of

December

of each year, beginning

December

31,

2015.

The USDA has guaranteed

80%

of all amounts owing under the

2015

Loan. The

2012

Loan included 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

of each year, beginning

December

31,

2012.

The USDA has guaranteed

80%

of all amounts owing under the

2012

Loan. The balance in unamortized debt issuance costs was

$177,000

and

$200,000

December 31, 2019

and

March 31, 2019,

respectively.

Loan Covenant Violations and Waiver

The Company’s Credit Agreement,

2015

Loan and

2012

Loan are subject to annual debt service and other financial covenants, including covenants which require the Company to meet key financial ratios and customary affirmative and negative covenants. As of

March 31, 2019,

the Company was

not

in compliance with the required debt service coverage ratio or the current ratio and due to these violations, the Bank would be contractually entitled to require immediate repayment of the outstanding term loan amounts of

$5,828,000

and the outstanding line of credit balance of

$2,000,000.

However, on

June 17, 2019,

the bank issued the Company a letter waiving the covenant violations as of

March 31, 2019.

The outstanding balance of the terms loans is presented as a non-current liability at

December 31, 2019

and

March 31, 2019.

Long-term Debt – Related Party

April 2019,

the Company obtained an unsecured subordinated loan in the amount of

$1,500,000.

Interest accrues at a rate of

6.5%

and is payable quarterly. The principal amount and any accrued and unpaid interest are due in

April 2021 (

see Note

). The balance under this loan was

$1,500,000

December 31, 2019.

Equipment Finance Agreement

October 6, 2017,

the Company entered into an Equipment Finance Agreement (the “Equipment Agreement”) with a lender, which provides up to

$175,000

of financing for equipment. The interest rate on this loan is

4.75%.

The provisions of the Equipment Agreement require the payment of principal and interest until its maturity on

October

31,

2022.

The balance under this loan was

$102,000

and

$126,000

December 31, 2019

and

March 31, 2019,

respectively, and was included in long-term debt in the debt table above.

Finance Lease Obligations

August 2016,

the Company executed a finance lease agreement with Thermo Fisher Financial providing for

$52,000

in equipment, secured by the equipment financed. The finance lease matured in

May

2019

and was payable in

equal monthly payments. The interest rate under this capital lease was

12.90%.

The balance under this lease was

and

$7,800

December 31, 2019

and

March

31,

2019,

respectively, and was included in long-term debt in the debt table above.

February

2016,

the Company executed a finance lease agreement with Bank of the West providing for

$51,000

in equipment, secured by the equipment financed. The finance lease matures in

March

2021

and is payable in

equal monthly payments. The interest rate under this finance lease is

4.18%.

The balance under this lease was

$14,000

and

$22,000

December 31, 2019

and

March

31,

2019,

respectively, and was included in long-term debt in the debt table above.

July

2015,

the Company executed a finance lease agreement with Huntington Technology Finance providing for

$174,000

in equipment, secured by the equipment financed. The finance lease matures in

July

2020

and is payable in

equal monthly payments. The interest rate under this lease is

6.57%.

The balance under this lease was

$23,000

and

$52,000

December 31, 2019

and

March

31,

2019,

respectively, and was included in long-term debt in the debt table above.

Future principal payments under the loans and finance lease obligations at

December

31,

2019

are as follows:

Payments Due	(in thousands)
Remainder of 2020	$	177
2021		702
2022		2,227
2023		491
2024		301
Thereafter		3,151
Total principal payments	$	7,049