SharpSpring, Inc. (NASDAQ:SHSP) Files An 8-K Entry into a Material Definitive Agreement

On April 22, 2020, SharpSpring, Inc. (the “Company”) received $165,500 in loan funding from the Paycheck Protection Program (the “PPP”), established to the recently enacted Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) and administered by the U.S. Small Business Administration (“SBA”). The unsecured loan (“PPP Loan #1”) is evidenced by a promissory note made by SharpSpring Reach, Inc., a wholly owned subsidiary of the Company, dated April 20, 2020 (“Note #1”) in the principal amount of $165,500, to Western Alliance Bank (the “Bank”), the lender.

On April 23, 2020, SharpSpring, Inc. (the “Company”) received $3,234,000 in loan funding from the PPP, established to the CARES Act and administered by the SBA. The unsecured loan (“PPP Loan #2”) is evidenced by a promissory note made by SharpSpring Technologies, Inc., a wholly owned subsidiary of the Company, dated April 21, 2020 (“Note #2”) in the principal amount of $3,234,000, to the Bank, the lender.

PPP Loan #1 and PPP Loan #2 are collectively referred to herein as the “PPP Loans” and Note #1 and Note #2 are collectively referred to herein as the “Notes” and each a “Note.”

Under the terms of the Notes and the PPP Loans, interest accrues on the outstanding principal at the rate of 1.0% per annum. The term of each Note is two years, though it may be payable sooner in connection with an event of default under the Note. To the extent the PPP Loan amounts are not forgiven under the PPP, the Company is obligated to make equal monthly payments of principal and interest, beginning seven months from the date of each Note, until the maturity date.

The CARES Act and the PPP provide a mechanism for forgiveness of up to the full amount borrowed. Under the PPP, the Company may apply for and be granted forgiveness for all or part of each PPP Loan. The amount of loan proceeds eligible for forgiveness is based on a formula that takes into account a number of factors, including the amount of loan proceeds used by the Company during the eight-week period after the loan origination for certain purposes including payroll costs, rent payments on certain leases, and certain qualified utility payments, provided that at least 75% of the loan amount is used for eligible payroll costs; the employer maintaining or rehiring employees and maintaining salaries at certain levels; and other factors. Subject to the other requirements and limitations on loan forgiveness, only loan proceeds spent on payroll and other eligible costs during the covered eight-week period will qualify for forgiveness.The Company intends to use the entire PPP Loan amounts for qualifying expenses, though no assurance is provided that the Company will obtain forgiveness of the PPP Loans in whole or in part.

The Notes may be prepaid in part or in full, at any time, without penalty. The Notes contains customary events of default relating to, among other things, payment defaults, making materially false and misleading representations to the SBA or the Bank, or breaching the terms of the Notes. Upon the occurrence of an event of default on a Note, the Bank has customary remedies and may, among other things, require immediate payment of all amounts owed under the Note, collect all amounts owing from the Company, file suit and obtain judgment against the Company.

The foregoing description of the Notes is qualified in its entirety by reference to the full text of the Notes, copies of which are filed as Exhibits 10.1 and 10.2 to this Current Report on Form 8-K and incorporated by reference herein.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant.

The information disclosed in Item 1.01 above is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits

SharpSpring, Inc. Exhibit
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About SharpSpring, Inc. (NASDAQ:SHSP)

SharpSpring, Inc., formerly SMTP, Inc., is a cloud-based marketing technology company. The Company’s SharpSpring marketing automation platform uses features, such as Web tracking, lead scoring and automated workflow to enable businesses deliver messages to the customers. The SharpSpring marketing automation solution offers digital marketing tools to small and medium-sized businesses and is primarily sold to marketing agencies using the platform on behalf of their clients. The Company offers a SMTP relay product, which is designed to send high volumes of e-mail messages. The Company offers the GraphicMail e-mail campaign management solution to customers globally. The GraphicMail platform is focused on e-mail, social and mobile marketing and is used by companies wishing to communicate with a list of subscribers or customers. The Company’s platform is used by agencies, agency clients and direct end users.