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| EX-10.1 - U.S. SMALL BUSINESS ADMINISTRATION PAYCHECK PROTECTION PROGRAM NOTE ENTERED INTO - IOTA COMMUNICATIONS, INC. | iotc_ex101.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 4,
2020
IOTA COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
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Delaware
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000-27587
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22-3586087
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(State or other jurisdiction
of incorporation)
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(Commission
File Number)
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(IRS Employer
Identification No.)
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600 Hamilton Street, Suite 1010
Allentown, PA 18101
(Address of principal executive offices)
Registrant’s telephone number, including area code: (855)
743-6478
N/A
(Former name or former address, if changed since last
report)
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant
under any of the following provisions (see General Instruction A.2.
below):
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☐
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Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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Securities
registered pursuant to Section 12(b) of the Act: None
Indicate
by check mark whether the registrant is an emerging growth company
as defined in Rule 405 of the Securities Act of 1933 (§230.405
of this chapter) or Rule 12b-2 of the Securities Exchange Act of
1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by
check mark if the registrant has elected not to use the extended
transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the
Exchange Act. ☐
On May
4, 2020, Iota Networks, LLC (the “Borrower”), a wholly
owned subsidiary of Iota Communications, Inc. (the
“Company”), was granted a loan (the “Loan”)
from Western Alliance Bank (the “Lender”) in the
aggregate amount of $763,600, pursuant to the Paycheck Protection
Program (the “PPP”) under Division A, Title I of the
CARES Act, which was enacted on March 27, 2020.
The
Loan, which was in the form of a Note dated May 4, 2020 issued by
the Borrower, matures on May 4, 2022 and bears interest at a rate
of 1.00% per annum, payable monthly commencing on December 4, 2020,
unless forgiven in whole or in part in accordance with the PPP
regulations. The Note may be prepaid by the Borrower at any time
prior to maturity with no prepayment penalties.
All or
a portion of the Loan may be forgiven by the SBA upon application
by the Borrower beginning 60 days, but not later than 120 days,
after Loan approval and upon documentation of expenditures in
accordance with the SBA requirements. Under the CARES Act, loan
forgiveness is available if the funds received are used for
documented payroll costs, interest on covered mortgages, covered
rent payments, and covered utilities during the eight-week period
beginning on the date the lender makes the first disbursement of
the loan to the borrower, provided that at least 75% of the
forgiven amount has been used for payroll costs. Forgiveness is
based on the borrower’s maintaining or quickly rehiring
employees and maintaining applicable salary levels. Forgiveness is
reduced if full-time headcount declines or if salaries and wages
for employees with salaries of $100,000 or less annually are
reduced by more than 25%. In the event the Loan, or any portion
thereof, is forgiven pursuant to the PPP, the amount forgiven will
be applied to outstanding principal. The Borrower intends to use
the Loan proceeds for purposes consistent with the PPP. While the
Borrower currently believes that its use of the Loan proceeds will
meet the conditions for forgiveness of the Loan, we cannot assure
you that we will not take actions that could cause the Borrower to
be ineligible for forgiveness of the Loan, in whole or in
part.
The
Borrower did not provide any collateral or personal guarantees for
the Loan, nor did the Borrower pay any facility charge to the
government or to the Lender.
The
Note also provides for customary events of default, including,
among others, events of default relating to failure to make payment
or comply with the covenants contained in the Note and related Loan
documents, defaults on any other loan with the Lender, defaults on
any loan or agreement with another creditor if the Lender believes
the default may materially affect the Borrower’s ability to
pay the Note, failure to pay any taxes when due, becoming the
subject of a civil or criminal action that the Lender believes may
materially affect the Borrower's ability to pay the Note,
bankruptcy, breaches of representations, judgment, reorganization,
merger, consolidation or other changes in ownership or business
structure without the Lender’s prior written consent, and
material adverse changes in financial condition or business
operation that the Lender believes may materially affect the
Borrower’s ability to pay the Note. Upon an event of default,
the Lender may require immediate payment of all amounts owing under
the Note, collect all amounts owing from the Borrower, or file suit
and obtain judgment against the Borrower.
The
foregoing summary of the Note does not purport to be complete and
is qualified in its entirety by reference to the Note, which is
filed as Exhibit 10.1 to this Current Report on Form 8-K and
incorporated herein by reference.
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ITEM 2.03
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Creation of a Direct Financial Obligation or an Obligation Under an
Off-Balance Sheet Arrangement of a Registrant
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See the
discussion set forth in Item 1.01, “Entry into a Material
Definitive Agreement” of this Current Report on Form 8-K,
which discussion is incorporated herein by this
reference.
Forward-Looking Statements
Certain
statements included in this Form 8-K are “forward-looking
statements” within the meaning of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements may
involve known and unknown risks, uncertainties, and other factors
that may cause actual results, performance, or achievements of the
Company to be materially different from historical results or from
any future results or projections expressed or implied by such
forward-looking statements. Accordingly, readers should not place
undue reliance on any forward-looking statements. In addition to
statements that explicitly describe such risks and uncertainties,
readers are urged to consider statements in the conditional or
future tenses or that include terms such as “believes,”
“belief,” “expects,”
“estimates,” “intends,”
“anticipates,” or “plans” to be uncertain
and forward-looking. Among the factors that could cause actual
results to differ materially from those described or projected
herein are the following: financial market conditions; actions by
the Loan parties; changes by the SBA or other governmental
authorities regarding the CARES Act, the Paycheck Protection
Program or related administrative matters; the availability of
forgiveness of the Loan; and the Borrower’s ability to comply
with the terms of the Loan and the CARES Act, including to use the
proceeds of the Loan as described herein. Additional factors
include those listed under Part I, Item 1A. “Risk
Factors” in the Company’s Annual Report on Form 10-K
for the fiscal year ended May 31, 2019 and the Company’s
other filings with the SEC. Except as required by law, the Company
assumes no obligation to update or revise these forward-looking
statements for any reason, even if new information becomes
available in the future.
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ITEM 9.01
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Financial Statements and Exhibits.
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(d) Exhibits:
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Exhibit Number
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Description
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U.S. Small
Business Administration Paycheck Protection Program Note Entered
into on May 4, 2020 by the Borrower
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SIGNATURE
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.
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IOTA COMMUNICATIONS, INC. |
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Date: May 8,
2020
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By:
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/s/ Terrence
DeFranco
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Name: Terrence
DeFranco
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Title:
Chief
Executive Officer
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