Quarterly report pursuant to Section 13 or 15(d)

Note 7 - Paycheck Protection Program Loan

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Note 7 - Paycheck Protection Program Loan
6 Months Ended
Jun. 30, 2021
Notes to Financial Statements  
Long-term Debt [Text Block]

7.

Paycheck Protection Program Loan

 

The Paycheck Protection Program (“PPP”) was established under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) and is administered by the U.S. Small Business Administration (“SBA”). On April 24, 2020, Viveve, Inc. (“Viveve”), a wholly-owned subsidiary of the Company, entered into a promissory note evidencing an unsecured loan in the aggregate amount of approximately $1,343,000 made to Viveve under the PPP (the “PPP Loan”). The PPP Loan to Viveve is being made through Western Alliance Bank (“WAB”). The interest rate on the PPP Loan is 1.00% and the term is two years. In accordance with the updated Small Business guidance, the PPP Loan was modified so that, beginning ten months from the date of the PPP Loan, Viveve is required to make monthly payments of principal and interest. The promissory note evidencing the PPP Loan contains customary events of default relating to, among other things, payment defaults or breaching the terms of the PPP Loan documents. The occurrence of an event of default may result in the repayment of all amounts outstanding, collection of all amounts owing from Viveve, or filing suit and obtaining judgment against Viveve. Under the terms of the CARES Act, PPP Loan recipients can apply for and be granted forgiveness for all or a portion of the loan granted under the PPP. Such forgiveness will be determined, subject to limitations, based on the use of loan proceeds for payment of payroll costs and any payments of mortgage interest, rent, and utilities. No assurance is provided that Viveve will obtain forgiveness of the PPP Loan in whole or in part.

 

In October 2020, the Company was notified that the terms of its PPP Loan with WAB were modified. The amount of time that the Company had to spend the proceeds of the PPP Loan (the “covered period”) was extended from 8 weeks to 24 weeks. The date to begin repaying unforgiven portions of the PPP Loan was also extended from six months after the funding date to up to 10 months after the end of the covered period (approximately 16 months from the funding date) depending on when the Company applies for forgiveness. The SBA will also cover interest on the forgiveness portion of the loan during this period. There was no change to the maturity date of the loan. All PPP Loans must be repaid or forgiven within two years after the funding date. The Company submitted its PPP Loan forgiveness application to the SBA in October 2020.

 

In April 2021, the Company received notification that the SBA requested a review of the loan application, forgiveness application, and supporting material for the PPP Loan.

 

In May 2021, the Company was notified by WAB that its request for forgiveness of the PPP Loan had been approved in full. The total principal amount and the accrued interest through the forgiveness payment date was forgiven. The Company has recognized a gain on the extinguishment of debt in the condensed consolidated statements of operations during the three and six months ended June 30, 2021 in the amount of $1,358,000.