Business Context and Reporting Period
This Form 8-K was filed by TSS, Inc. on April 17, 2020. The report discloses the entry into a material definitive agreement and the creation of a direct financial obligation by VTC, L.L.C., a wholly-owned subsidiary of TSS, Inc.
Key Financial Metrics
- Loan Amount: $889,858
- Lender: Texas Capital Bank, N.A.
- Program: Small Business Administration Paycheck Protection Program (PPP) under the CARES Act
- Interest Rate: 1.00% per annum
- Term: Two years, maturing on April 12, 2022
- Payment Schedule: Monthly principal and interest payments commence on October 12, 2020
- Collateral: None provided
- Facility Charge: None paid
Material Changes and Loan Terms
The Company secured funding intended for covered payroll costs, rent, and utilities. The Promissory Note includes customary events of default, such as failure to make payments, cross-defaults, bankruptcy, insolvency, change of control, or material adverse changes in financial condition. Upon default, the Lender may accelerate indebtedness.
Outlook, Risks, and Contingencies
Loan Forgiveness: The Borrower may apply for forgiveness of some or all of the Loan. The eligible amount is based on payroll costs, mortgage interest, covered rent, and utility payments incurred during the eight-week period following the Effective Date. Forgiveness amounts may be reduced by certain decreases in payroll costs during this period.
Uncertainty: There is no guarantee that the Borrower will receive forgiveness for any fixed amount of the Loan proceeds. The filing does not provide specific revenue, profit, cash flow, or margin data for the reporting period.
Investor Verification Checklist
- Verify the full text of the Promissory Note filed as Exhibit 99.1.
- Monitor the Company's ability to maintain payroll levels during the eight-week forgiveness period to maximize potential loan forgiveness.
- Assess the impact of the new debt obligation on the Company's liquidity and future cash flow requirements starting October 2020.
- Review subsequent filings for updates on the loan forgiveness application status.