Item 1.01 Entry into a Material Definitive Agreement.
On April 14, 2020, Mikros Systems Corporation (the "Company") entered into a
Paycheck Protection Program Term Note (the "PNC Note") with PNC Bank, National
Association ("PNC") pursuant to the Paycheck Protection Program (the "Program")
of the recently enacted Coronavirus Aid, Relief, and Economic Security Act
("CARES Act") administered by the U.S. Small Business Administration. The
Company received total proceeds of $753,300 from the PNC Note. In accordance
with the requirements of the CARES Act, the Company will use proceeds from the
PNC Note primarily for payroll costs and lease payments. Interest accrues on the
PNC Note at the rate of 1.00% per annum. The Company may apply to PNC for
forgiveness of the amount due on the PNC Note which shall be an amount equal to
the sum of eligible payroll costs, rent obligations, and covered utility
payments incurred during the eight weeks following disbursement under the PNC
Note.
During the period from April 14, 2020 through the six-month anniversary of the
date of the PNC Note (the "Deferral Expiration Date"), neither principal nor
interest shall be due and payable. On the Deferral Expiration Date, the
outstanding principal of the PNC Note that is not forgiven under the Program
(the "Conversion Balance") shall convert to an amortizing term loan. On November
15, 2020, all accrued interest that is not forgiven under the Program shall be
due and payable. Additionally, on November 15, 2020 and continuing on the 15th
day of each month thereafter until April 14, 2022 equal installments of
principal shall be due and payable, each in an amount determined by dividing the
Conversion Balance by 18 (the "Monthly Principal Amount"). Interest shall be
payable at the same times as the Monthly Principal Amount. Any outstanding
principal and accrued interest shall be due and payable in full on April 14,
2022.
The Company has the right to prepay any amounts outstanding under the PNC Note
at any time and from time to time, in whole or in part, without penalty.
The foregoing description of the PNC Note is qualified in its entirety by
reference to Exhibit 10.1 attached to this Current Report on Form 8-K, which is
incorporated herein by reference.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation
under an Off-Balance Sheet Arrangement of a Registrant.
The information provided in Item 1.01 is hereby incorporated by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit
Number Exhibit Description
10.1 Term Note, between PNC Bank, National Association and Mikros Systems
Corporation, dated April 14, 2020.
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