Reimagine Network

“The organization is a nonprofit public benefit corporation organized under the laws of california and, as such, are exempt from federal and state income taxes under internal revenue code (irc) section 501(c)(3) and corresponding state provisions. The organization recognizes the financial statement benefit of tax positions, such as filing status of tax-exempt, only after determining that the relevant tax authority would more likely than not sustain the position following an audit. The organization is subject to potential income tax audits on open tax years by any taxing jurisdiction in which it operates. The statute of limitations for federal and california state purposes is generally three and four years, respectively.”

“In june 2020, the organization entered into an agreement with a bank to finance the purchase and construction of its santa ana facility. The note provides for a borrowing limit of $10,000,000. As of june 30, 2020, the organization had borrowings outstanding of $7,755,892 comprised of construction related advances of $6,555,892, and an interest holdback of $1,200,000, which was funded by the note (see note 2, funded interest holdback). The note balance is shown net of debt issuance costs totaling $153,085, which will be accreted to interest expense over the life of the note. No accretion expense was recognized for the year ended june 30, 2020. Borrowings are secured by substantially all of the organization's assets, bear interest at 5.75%, and mature on june 1, 2040. As stipulated by the agreement, a one-time $5,000,000 principal payment is due upon sale of its orange facility, interest-only payments are due monthly through december 1, 2023 after which payments of $58,893 are monthly through may 1, 2040, with a final balloon payment due on june 1, 2040. The amount of the scheduled interest-only payments and the final balloon payment amounts are dependent on the amounts drawn by the organization.”

“In march 2020, congress passed the paycheck protection program (ppp) under division a, title i of the coronavirus aid, relief, and economic security act, authorizing loans to small businesses for use in paying employees that they continue to employ throughout the covid-19 pandemic and for rent, utilities and interest on mortgages. Loans obtained through the program are eligible to be forgiven if the proceeds are used for qualifying purposes and certain other conditions are met. On april 22, 2020, the company received a small business association (sba) loan in the amount of $1,700,000 through the ppp. Management believes that the proceeds were used only for qualifying purposes; therefore, management anticipates that the loan will be substantially forgiven. However, any loan forgiveness is subject to final review and approval by the sba. To the extent any amount is not forgiven by the sba, the company would be required to repay that portion at an interest rate of 1%, with entire principal and unpaid interest due april 2022.”