TECHNICAL COMMUNICATIONS CORP

On March 15, 2021, the Company ended its furlough plan instituted in December 2020 and all employees returned to work on a full time basis. During the furlough, the Company had reduced the workweek for the majority of salaried employees to 24 hours and reduced salaries commensurately.

On May 7, 2021, the Company obtained a Line of Credit in favor of Carl H. Guild, Jr. on a demand basis and with no expiration date, for up to $1 million. Mr. Guild, the Company’s Chief Executive Officer, President and Chairman of the Board, loaned the money to the Company to provide working capital. This note will bear interest at a rate of 6%.

On April 17, 2020, the Company was granted an initial PPP loan from bankHometown in the principal amount of $474,400 under the Coronavirus Aid, Relief and Economic Security Act (the “ CARES Act”). The loan, which was evidenced by a Note dated April 17, 2020, was payable over 18 months at an annual interest rate of 1% commencing on October 17, 2020 to the extent not forgiven. The Company used the entire loan amount for qualifying expenses and the loan was forgiven in its entirety on January 11, 2021. The AICPA and the SEC Office of the Chief Accountant have indicated that a borrower may elect to account for a PPP loan as a government grant in substance by applying the guidance in IAS 20, Accounting for Government Grants and Disclosure of Government Assistance by analogy if it is probable that it will meet both (a) the eligibility criteria for a PPP loan, and (b) the loan forgiveness criteria for all or substantially all of the PPP loan. The Company has elected to adopt this method of accounting for this PPP loan under IAS 20, and has recognized the loan forgiveness as grant income for the full amount of the loan.

During the three months ended March 27, 2021, the Company had four customers that represented 84% (40%, 16%, 16% and 12%, respectively) of net revenue as compared to the three months ended March 28, 2020, during which two customers represented 87% (63% and 24%, respectively) of net revenue. During the six month period ended March 27, 2021, the Company had four customers that represented 75% (31%, 19%, 13% and 12%, respectively) of net revenue as compared to the six month period ended March 28, 2020, during which two customers represented 75% (63% and 12%, respectively) of net revenue.

On February 1, 2021, the Company also was granted a second PPP loan from bankHometown in the principal amount of $474,405 under theEconomic Aid Act. Any amounts not forgiven will be paid back over five years at an interest rate of 1% per year. Program rules provide that loan payments will be deferred for borrowers who apply for loan forgiveness until the SBA remits the borrower's loan forgiveness amount to the lender. If a borrower does not apply for loan forgiveness, payments are deferred for 10 months following the end of the covered period for the borrower’s loan forgiveness (between 8 and 24 weeks). The Company expects to use the entire loan amount for qualifying expenses and that the SBA will forgive the loan in its entirety.