B2Digital, Incorporated (OTCMKTS:BTDG) Files An 8-K Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
Item 2.03.
Economic Injury Disaster Loan
On May 26, 2020, B2Digital, Incorporated, a Delaware corporation (the “Company”), executed the standard loan documents required for securing loans (the “EIDL Loans”) offered by the U.S. Small Business Administration (the “SBA”) under its Economic Injury Disaster Loan (“EIDL”) assistance program in light of the impact of the COVID-19 pandemic on the Company’s business. The principal amount of each EIDL Loan is $97,300 and $10,000, respectively, with proceeds to be used for working capital purposes. Interest accrues at the rate of 3.75% per annum and will accrue from the date of the EIDL Loans. Installment payments, including principal and interest, are due monthly beginning May 26, 2021 (twelve months from the date of the EIDL Loans) in the amount of $475 (for the larger loan). The balance of principal and interest is payable 30 years from the date of the EIDL Loans.
The EIDL Loans are secured by a security interest on all of the Company’s assets.
Paycheck Protection Program Loan
On April 16, 2020, the Company issued a Promissory Note (the “PPP Note”) to which the lender agreed to make a loan to the Company under the Paycheck Protection Program (the “PPP Loan”) offered by the SBA to qualified small businesses in a principal amount of $15,600.
The interest rate on the PPP Note is a fixed rate of 1% per annum based on a 365-day year. The Company is required to make one payment of all outstanding principal plus all accrued unpaid interest on April 16, 2022 (the “Maturity Date”). Commencing on the seventh month anniversary of date of the PPP Note and continuing on the same day of each month thereafter, the Company is required to make a monthly principal payment on the outstanding principal balance (after application of any loan forgiveness) in an amount that shall fully amortize the outstanding principal balance of the PPP Note by the Maturity Date. Accrued interest shall be due and payable with each monthly principal payment.
The PPP Loan proceeds are to be used to pay for payroll costs, continuation of group health care benefits during periods of paid sick, medical, or family leave, or insurance premiums; salaries or commissions or similar compensation; rent; utilities; and interest on certain other outstanding debt; however, 75% of the PPP Loan proceeds must be used for payroll purposes.
According to the terms of the Paycheck Protection Program (the “PPP”), all or a portion of loans under the PPP may be forgiven if all employees are kept on the payroll for eight weeks after the date of such loan and the proceeds of such loan are used for payroll, rent, mortgage interest, or utilities. Forgiveness is also based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease.
At the Company’s option, the Company may prepay all or a portion of the PPP Loan without penalty.
The PPP Note includes events of default, the occurrence and continuation of which would provide the lender with the right to exercise remedies against the Company including the right to declare the entire unpaid principal balance under the PPP Note and all accrued unpaid interest immediately due.
About B2Digital, Incorporated (OTCMKTS:BTDG)
B2 Digital, Incorporated is a provider of in-room, on-demand video entertainment and satellite services to the domestic lodging industry. The Company’s services include the delivery of Hollywood movies, sports and live events, as well as various types of pay-per-view content. Its in-room entertainment and information services include pay-per-view motion pictures, archived television content, games, music, Internet connectivity and guest programming of select pay cable channels. Its on-demand interactive services include guest folio review, automatic checkout, survey completion, guest messaging, video games and Internet service. The Company provides its services under long-term contracts to hotels, hotel management companies and individually owned and franchised hotel properties. The Company, through Hotel Movie Network, Inc. provides platforms for in room viewing of various cable channels, and other interactive and information services and high-speed wireless Internet access.