Video Display Corporation and Subsidiaries
Note 5. – Paycheck Protection Promissory (“PPP”) Related Loans
On April 13, 2020, our Lexel Imaging subsidiary entered into a PPP loan for $216,200 and on January 27, 2021, entered into a second round PPP loan for $304,442. On April 23, 2020, Video Display Corporation entered into a $772,000 first round PPP loan and on February 11, 2021, entered into a second round PPP loan for $780,112. The PPP loans were made under, and were subject to the terms and conditions of the PPP which was established under the CARES Act and is administered by the U.S. Small Business Administration. Under the terms of the CARES Act, recipients can apply for and receive forgiveness for all, or a portion of the loans granted under the PPP. Such forgiveness was granted, based on the use of loan proceeds for certain permissible purposes as set forth in the PPP, including, but not limited to, payroll costs, mortgage interest, rent or utility costs (collectively, “Qualifying Expenses”), and on the maintenance of employee and compensation levels during a certain time period following the funding of the PPP loans.
The Company has used the proceeds of the PPP loans for Qualifying Expenses. In fiscal 2021, the Company received forgiveness on the first round $216,200 Lexel Imaging PPP loan in November 2020 and on the first round $772,000 Video Display PPP loan in December 2020. The Company received forgiveness on the second round of PPP loans ($1,084,554 in aggregate) in August 2021 (fiscal 2022). The forgiveness qualified as a gain on extinguishment of debt on the consolidated statements of operations and the related liability was removed from the consolidated balance sheets based on the forgiveness date of the related PPP loan.
Note 6. – Note Payable to Officers and Directors (Related Party Transactions)
The Company increased borrowings from the CEO by $
826
thousand to fund working capital needs and owes the CEO an additional $
218
thousand in Company rent for the nine months ending November 30, 2022. The $
1,284
thousand note contains
no
repayment terms and is expected to be repaid in
fiscal 2023
along with the $
531
thousand in rent owed. The note payable and rent owed are included in the Company’s consolidated balance sheets as of November 30, 2022 as a note payable to officers and directors and within accounts payable, respectively.
The Company leases its office space and manufacturing facilities under operating lease agreements. The base lease terms expire at various dates from 2022 to 2025. While each of the leases include renewal options, the Company has only included the base lease term in its calculation of lease assets and liabilities.
Balance sheet information related to operating leases is as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
599 |
|
|
|
|
|
|
|
|
|
|
|
Current portion of operating lease liabilities |
|
$ |
388 |
|
Noncurrent portion of operating lease liabilities |
|
|
211 |
|
|
|
|
|
|
Total operating lease liabilities |
|
$ |
599 |
|
|
|
|
|
|
Operating lease costs are included in Cost of goods sold in the Company’s condensed consolidated statements of operations and totaled approximately $125 thousand for the three months ended November 30, 2022, and $329 thousand for the nine months ended November 30, 2022. Operating lease costs were $104 thousand for the three months ended November 30, 2021 and $405 thousand for the nine months ended November 30, 2021.
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