The information set forth below under Item 2.03 is hereby incorporated by reference into this Item 1.01.
On May 12, 2020, Track Group, Inc. (the "Company") received net proceeds of approximately $933,200 from a potentially forgivable loan from the U.S. Small Business Administration ("SBA") pursuant to the Paycheck Protection Program ("PPP") enacted by Congress under the of the Coronavirus Aid, Relief, and Economic Security Act (15 U.S.C. 636(a)(36)) (the "CARES Act") administered by the SBA (the "PPP Loan"). To facilitate the PPP Loan, the Company entered into a Note Payable Agreement with BMO Harris Bank National Association as lender (the "Lender") (the "PPP Loan Agreement").
The PPP Loan provides for working capital to the Company and will mature on May 12, 2022. However, under the CARES Act and the PPP Loan Agreement, all payments of both principal and interest will be deferred until at least December 12, 2020. The PPP Loan will accrue interest at a rate of 1.00% per annum, and interest will continue to accrue throughout the period the PPP Loan is outstanding, or until it is forgiven. The CARES Act (including the guidance issued by SBA and U.S. Department of the Treasury related thereto) provides that all or a portion of the PPP Loan may be forgiven upon request from the Company to Lender, subject to requirements in the PPP Loan Agreement and the CARES Act. Upon expiration of the eight-week period following the issuance of the PPP Loan, the Company intends to complete and file the application for forgiveness with the SBA.
The foregoing summary of the PPP Loan is qualified in its entirety by reference to the PPP Loan Agreement, which is attached as Exhibit 10.1 hereto.
The Chilean government recently elected to impose an unexpected 2-week quarantine period with an additional 1-week extension in the Nation's capital of Santiago which ends on June 5, 2020 (the "Chilean Order"). The Chilean Order has delayed the full reopening of the country's court system which has reduced the size of the Company's program for the Chilean prison service thereby adversely impacting the Company's total revenue.
(d) Exhibits.
Exhibit No.
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Description
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Note Payable Agreement by and between Track Group, Inc. and BMO Harris Bank National Association, dated May 12, 2020.
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Track Group, Inc. |
By: | /s/ Peter K. Poli |
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Name: Peter K. Poli | |
Title: Chief Financial Officer |
SBA
Loan #
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49453874-03
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SBA
Loan Name
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Track
Group, Inc.
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Date
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May 12,
2020
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Loan
Amount
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$933,200.00
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Interest
Rate
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1.00%
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Borrower
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Track
Group, Inc.
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Operating
Company
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N/A
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Lender
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BMO
Harris Bank National Association
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Borrower must make
all payments at the place Lender designates. The payment terms for
this Note are:
Maturity: This Note will mature in 2
years and 0 months from date of Note.
Repayment
terms:
The
interest rate is 1% per year. The interest rate may only be changed
in accordance with
SOP 50
10.
Borrower must pay
principal and interest payments of $52,517.20 every month,
beginning 7 months from the date of the Note; payments must be made
on the same day as the date of the Note in the months they are
due.
Lender
will apply each installment first to pay interest accrued to the
day Lender receives the payment, then to bring principal current,
then to pay any late fees, and will apply any remaining balance to
reduce principal.
Loan
Prepayment:
Notwithstanding any
provision in this Note to the contrary:
Borrower may prepay this Note. Borrower
may prepay 20 percent or less of the unpaid principal balance at
any time without notice. If Borrower prepays more than 20 percent
and the Loan has been sold on the secondary market, Borrower
must:
a.
Give Lender written
notice;
b.
Pay all accrued
interest; and
c.
If this prepayment
is received less than 21 days from the date Lender receives the
notice, pay an amount equal to 21 days' interest from the date
lender receives the notice, less any interest accrued during the 21
days and paid under subparagraph b., above.
If
Borrower does not prepay within 30 days from the date Lender
receives the notice, Borrower must give Lender a new
notice.
All
remaining principal and accrued interest is due and payable 2 years
and 0 months from
date of
Note.
Late Charge: If payment on this Note is
more than 10 days late, Lender may charge Borrower a late fee of up
to 5.00 % of the unpaid portion of the regularly scheduled
payment.
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The
following provision applies when a borrower is a resident of
WISCONSIN:
Each
Borrower who is married represents that this obligation is incurred
in the interest of his or her marriage or family.
The
following Confession of Judgment provision applies when a borrower
is a resident of DELAWARE:
WARRANT
OF ATTORNEY/CONFESSION OF JUDGMENT. In addition to any other
remedies Lender may possess, Borrower knowingly, voluntarily and
intentionally authorizes any attorney to appear on behalf of
Borrower, from time to time, in any court of record possessing
jurisdiction over this Note and to waive issuance and service of
process and to confess judgment in favor of Lender against
Borrower, for the unpaid principal, accrued interest, accrued
charges, reasonable attorney fees and court costs and such other
amount due under this Note.
The
following Confession of Judgment provision applies when a borrower
is a resident of MARYLAND: WARRANT
OF ATTORNEY/CONFESSION OF JUDGMENT. Borrower authorizes an attorney
to appear in a court of record and confess judgment, without
process, against Borrower in favor of Lender for all indebtedness
owed in connection with the loan, including but not limited to
service charges, other charges and reasonable attorney's
fees.
The
following Confession of Judgment provision applies when a borrower
is a resident of OHIO:
WARRANT
OF ATTORNEY/CONFESSION OF JUDGMENT. In addition to any other
remedies Lender may possess, Borrower knowingly, voluntarily and
intentionally authorizes any attorney to appear on behalf of
Borrower, from time to time, in any court of record possessing
jurisdiction over this Note and to waive issuance and service of
process and to confess judgment in favor of Lender against
Borrower, for the unpaid principal, accrued interest, accrued
charges, reasonable attorney fees and court costs and such other
amount due under this Note. WARNING: BY SIGNING THIS PAPER YOU GIVE
UP YOUR RIGHT TO NOTICE AND COURT TRIAL. IF YOU DO NOT PAY ON TIME,
A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR
KNOWLEDGE AND THE POWERS OF THE COURT CAN BE USED TO COLLECT FROM
YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR
WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO
COMPLY WITH THE AGREEMENT OR ANY OTHER CAUSE.
The
following Confession of Judgment provision applies when a borrower
is a resident of PENNSYLVANIA: WARRANT OF ATTORNEY/CONFESSION OF JUDGMENT.
Borrower irrevocably authorizes and empowers the prothonotary, any
attorney or any clerk of any court of record, upon default, to
appear for and confess judgment against Borrower for such sums as
are due and/or may become due under this Note including costs of
suit, without stay of execution, and for attorney's fees and costs
as set forth in this Note and knowingly, voluntarily and
intentionally waives any and all rights Borrower may have to notice
and hearing under the state and federal laws prior to entry of a
judgment. To the extent permitted by law, Borrower releases all
errors in such proceedings. If a copy of this Note, verified by or
on behalf of the holder shall have been filed in such action, it
shall not be necessary to file the original Note as a warrant of
attorney. The authority and power to appear for and confess
judgment against Borrower shall not be exhausted by the initial
exercise thereof and may be exercised as often as the holder shall
find it necessary and desirable and this Note shall be a sufficient
warrant for such authority and power.
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The following Confession of Judgment provision
applies when a borrower is a resident of VIRGINIA:
IMPORTANT NOTICE: THIS INSTRUMENT
CONTAINS A CONFESSION OF JUDGMENT PROVISION WHICH CONSTITUTES A
WAIVER OF IMPORTANT RIGHTS YOU MAY HAVE AS A DEBTOR AND ALLOWS THE
CREDITOR TO OBTAIN A JUDGMENT AGAINST YOU WITHOUT ANY FURTHER
NOTICE. WARRANT OF ATTORNEY/CONFESSION OF JUDGMENT. In addition
to
any other
remedies Lender may possess, Borrower knowingly, voluntarily and
intentionally authorizes to appear on behalf of Borrower, from time
to time, in the District Court of Alexandria, Virginia and to waive
issuance and service of process and to confess judgment in favor of
Lender against Borrower, for the unpaid principal, accrued
interest, accrued charges, reasonable attorney fees and court costs
and such other amount due under this Note. The following Oral
Agreements Disclaimer provision applies when the borrower is a
resident of MISSOURI: Oral or unexecuted
agreements or commitments to loan money, extend credit or to
forbear from enforcing repayment of a debt including promises to
extend or renew such debt are not enforceable, regardless of the
legal theory upon which it is based that is in any way related to
the credit agreement. To protect you (Borrowers(s)) and us
(Creditor) from misunderstanding or disappointment, any agreements
we reach covering such matters are contained in this writing, which
is the complete and exclusive statement of the agreement between
us, except as we may later agree in writing to modify
it.
The following Oral
Agreements Disclaimer provision applies when the borrower is a
resident of MISSOURI: Oral or unexecuted
agreements or commitments to loan money, extend credit or to
forbear from enforcing repayment of a debt including promises to
extend or renew such debt are not enforceable, regardless of the
legal theory upon which it is based that is in any way related to
the credit agreement. To protect you (Borrowers(s)) and us
(Creditor) from misunderstanding or disappointment, any agreements
we reach covering such matters are contained in this writing, which
is the complete and exclusive statement of the agreement between
us, except as we may later agree in writing to modify
it.
The following Oral Agreements Disclaimer
provision applies when the borrower is a resident of OREGON:
UNDER OREGON LAW, MOST AGREEMENTS,
PROMISES AND COMMITMENTS MADE BY [BENEFICIARY]/ US CONCERNING LOANS
AND OTHER CREDIT EXTENSIONS WHICH ARE NOT FOR PERSONAL, FAMILY, OR
HOUSEHOLD PURPOSES OR SECURED SOLELY BY GRANTOR'S/BORROWER'S
RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE SIGNED
BY [AN AUTHORIZED REPRESENTATIVE OF BENEFICIARY]/US TO BE
ENFORCEABLE.
The
following Oral Agreements Disclaimer provision applies when the
borrower is a resident of WASHINGTON:
Oral
agreements or oral commitments to loan money, extend credit, or to
forbear from enforcing repayment of a debt are not enforceable
under Washington law.
The
following provision applies when the borrower is a resident of
ALASKA:
The
Mortgagor or Trustor (Borrower) is personally obligated and fully
liable for the amount due under the Note. The Mortgagee or
Beneficiary (Lender) has the right to sue on the Note and obtain a
personal judgment against the Mortgagor or Trustor for the
satisfaction of the amount due under the Note either before or
after a judicial foreclosure of the Mortgage or Deed of Trust as
under AS 09.45.170-09.45.220.
The following Oral Agreements Disclaimer
provision applies when the borrower is a resident of IOWA:
IMPORTANT: READ BEFORE SIGNING. The
terms of this agreement should be read carefully because only those
terms in writing are enforceable. No other terms or oral promises
not contained in this written contract may be legally enforced. You
may change the terms of this agreement only by another written
agreement.
The following Oral Agreements Disclaimer
provision applies when the borrower is a resident of UTAH:
This is a final expression of the
agreement between the creditor and debtor and the written agreement
may not be contradicted by evidence of any alleged oral
agreement.
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