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Note 4 - Term Loan, Revolving Line of Credit and Warrants

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Note 4 - Term Loan, Revolving Line of Credit and Warrants
9 Months Ended
Dec. 28, 2019
Notes to Financial Statements  
Long-term Debt [Text Block]
(
4
)
       Term Loan, Revolving Line of Credit and Warrants
 
 
On
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.
 
In
December 2018,
the Company and PFG agreed to modify the
2017
Loan Agreement to extend the maturity date from
April 27, 2019
to
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.
 
On
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.
 
On
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. As of
December 28, 2019,
the outstanding balance on this loan was
$1.0
million. PFG waived this default on
January 31, 2020.
 
As of
December 28, 2019
and
March 30, 2019,
the Company’s total outstanding loan balances were
$1.0
million and
$1.8
million, respectively, and are included in Loans payable, net of discounts and issuance costs on the Condensed 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.