SOCKET MOBILE, INC. 8-K 2009
Washington, DC 20549
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
On December 31, 2008, Socket Mobile, Inc. (the "Company") entered
into new domestic and international working capital credit facility agreements
(the "Loan Agreements") with Silicon Valley Bank (the "Lender"),
replacing the prior credit facility agreements with the Lender. Pursuant to
the Loan Agreements, the Company may borrow up to $2.5 million, of which up
to $1.0 million is based on qualified receivables from domestic (U.S. based)
customers and up to $1.5 million is based on qualified receivables from international
Advances against the domestic line are calculated at 80% of receivables except for receivables from distributors which are calculated at 60%. Advances against the international line are calculated at 80% against hedged receivables and 70% against non-hedged receivables, except for receivables from distributors which are calculated at 60%.
Borrowings under the lines bear an annual interest rate equal to the greater
of (i) the Lender's prime rate plus 2%, or (ii) 6%. There is also a collateral
handling fee of 0.7% per month. The applicable interest and fees are calculated
based on the full amount of the account receivable provided as collateral for
the actual amounts borrowed. The lines expire on February 15, 2009 and the Company
expects to renew the lines at that time.
The Loan Agreements, as in the prior agreements, contain customary representations,
warranties and covenants, including covenants limiting the Company's ability
to incur additional liens or indebtedness, make distributions to its stockholders
and make investments. In addition, the Company must maintain a minimum liquidity
(cash plus availability under the lines) of at least $250,000.
As in the prior agreements, the Loan Agreements contain customary events of
default that entitle the Lender to accelerate the Company's obligations and
require repayment of the Company's outstanding indebtedness thereunder. These
events of default include, among others, the Company's breach of its payment
obligations or covenants, a material impairment of the Company's financial condition
or ability to repay any indebtedness to the Lender and the commencement of dissolution
or insolvency proceedings.
To secure the Company's borrowings under the Loan Agreements, the Company continues to provide the Lender a first priority security interest in all assets of the Company, including its intellectual property.
The foregoing description of the Loan Agreements does not purport to be complete
and is qualified in its entirety by reference to the full text of the Loan Agreements,
copies of which are attached hereto as Exhibit 10.11 and Exhibit 10.12 and are
incorporated herein by reference.
This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended that involve risks and uncertainties, specifically statements relating to the renewal of credit lines. We assume no obligation to update such forward-looking statements.
Item 9.01 Financial Statements
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.