ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On
Subject to the terms of the Notes, the PPP Loan bears interest at a fixed rate
of one percent (1%) per annum, with the first six months of interest and
principal deferred. Commencing seven months after the effective date of the PPP
Loan, the Company is required to pay the Lender equal monthly payments of
principal and interest as required to fully amortize the PPP Loan by
The Company may apply to the Lender for forgiveness of the PPP Loan, with the amount which may be forgiven equal to the sum of the payroll costs, covered mortgage obligations, covered rent obligations and covered utility payments incurred by the Company during the eight-week period beginning on the date of first disbursement to the Company under the PPP Loan, calculated in accordance with the terms of the CARES Act. The PPP Loan may be forgiven so long as employee and compensation levels of the Company are maintained and 75% of the PPP Loan proceeds are used for payroll expenses, with the remaining 25% of the PPP Loan proceeds used for other qualifying expenses. No assurance is provided that the Company will obtain forgiveness of the PPP Loan in whole or in part, but the Company intends to use the proceeds from the PPP Loan in accordance with the PPP Loan program. The Notes contain customary events of default relating to, among other things, payment defaults, breach of representations and warranties, or provisions of the Notes. The occurrence of an event of default may result in the repayment of all amounts outstanding, collection of all amounts owing from the Company, and/or Lender's exercise of any of the rights and remedies available under the PPP Loan documents or under applicable law.
The Company believes that the PPP Loan proceeds are critical to the continuing operations of the company due to the factors discussed in Item 8.01 Other Material Events.
ITEM 8.01. OTHER MATERIAL EVENTS.
As a contractor providing electrical, mechanical, HVAC and underground piping
services to customers in the petroleum, natural gas, public utilities and power
industries, the Company and its subsidiaries are considered an "Essential
Business" in the various states in which it operates. The Company has seen a
decline in business as certain customers have decided to cancel or delay
construction projects as a result of the COVID-19 pandemic. As early as
mid-to-late
On
On
Certain statements contained in the release, including without limitation statements including the words "believes," "anticipates," "intends," "expects" or words of similar import, constitute "forward-looking statements" within the meaning of section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements of the Company expressed or implied by such forward-looking statements. Such factors include, among others, general economic and business conditions, changes in business strategy or development plans, the effect of the COVID-19 pandemic and other factors referenced in this release. Given these uncertainties, prospective investors are cautioned not to place undue reliance on such forward-looking statements. The Company disclaims any obligation to update any such factors or to publicly announce the results of any revisions to any of the forward-looking statements contained herein to reflect future events or developments.
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
ENERGY SERVICES OF AMERICA CORPORATION
DATE:
Charles Crimmel Chief Financial Officer
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