K. SUBSEQUENT EVENT
|3 Months Ended|
Mar. 31, 2021
|Subsequent Events [Abstract]|
NOTE K – SUBSEQUENT EVENT
On April 27, 2021, the Company entered into an unsecured promissory note, dated as of April 26, 2021, for the Second PPP Loan, with Heritage Bank under a second draw of the PPP administered by the SBA and authorized by the Keeping American Workers Employed and Paid Act, which is part of the Coronavirus Aid, Relief, and Economic Security Act, enacted on March 27, 2020.
The principal amount of the Second PPP Loan is $913,062.50, and it bears interest of 1.0% per annum and has a maturity date of five years from the date the proceeds are disbursed. The proceeds of the Second PPP Loan were disbursed on April 27, 2021. No payments of principal or interest are required until after the Payment Deferral Period (as defined in the Note), but interest accrues during this period. After this period, monthly payments of principal and interest are required and continue until maturity with respect to any portion of the Second PPP Loan not forgiven, as discussed below. The Second PPP Loan may be prepaid, in full or in part, at any time prior to maturity with no prepayment penalties. The Note contains events of default and other provisions customary for a loan of this type.
Under the terms of the PPP, the Company can apply for, and be granted, forgiveness for all or a portion of the Second PPP Loan. Such forgiveness will be determined, subject to limitations and ongoing rulemaking by the SBA, based on the use of loan proceeds for eligible purposes, including payroll costs, mortgage interest, rent, utility costs and the maintenance of employee and compensation levels. At least 60% of such loan proceeds must be used for eligible payroll costs. The amount of loan forgiveness will be reduced if the Company terminates employees or reduces salaries during the Covered Period (as defined in the Note). No assurance is provided that the Company will obtain forgiveness of the Second PPP Loan in whole or in part.
The entire disclosure for significant events or transactions that occurred after the balance sheet date through the date the financial statements were issued or the date the financial statements were available to be issued. Examples include: the sale of a capital stock issue, purchase of a business, settlement of litigation, catastrophic loss, significant foreign exchange rate changes, loans to insiders or affiliates, and transactions not in the ordinary course of business.
Reference 1: http://www.xbrl.org/2003/role/disclosureRef