- Current report filing (8-K)
July 28 2010 - 4:01PM
Edgar (US Regulatory)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported):
July 28, 2010 (July 22, 2010)
InfoSonics Corporation
(Exact
name of registrant as specified in its charter)
Maryland
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001-32217
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33-0599368
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(State
or other jurisdiction
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(Commission
File Number)
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(IRS
Employer Identification
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of
incorporation)
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No.)
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4350 Executive Drive, Suite #100,
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San Diego, CA
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92121
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(Address
of principal executive offices)
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(Zip
Code)
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Registrants
telephone number, including area code:
(858)
373-1600
Not Applicable
(Former
name or former address, if changed since last report)
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):
o
Written communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant
to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
o
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
Item 1.02.
Termination
of a Material Definitive Agreement.
On April 30, 2008, InfoSonics
Corporation (the Company) entered into a Loan, Security and Bulk Purchase
Agreement and a Letter of Credit and Security Agreement (collectively, the Agreement)
with Wells Fargo Trade Capital, LLC (successor in interest to Wells Fargo
Century, Inc.)(Lender). The
Agreement had a two-year term ending in April 2010, but was renewed under
its current terms and conditions for another year ending in April 2011. Pursuant to the Agreement, the Company can
obtain advances up to $45 million based on the expected collections of eligible
receivables as well as value of the Companys eligible inventory. The outstanding advances could not exceed the
lesser of (i) $45 million or (ii) the sum of the value of the
eligible receivables and eligible inventory multiplied by their respective
advance rates as set forth in the Agreement.
The credit facility is secured by all of the assets of the Company. The interest rate for each borrowing under
the Agreement is, at the option of the Company, either the Wells Fargo Bank
N.A. prime rate minus 0.50% or the LIBOR rate plus 2.00%.
There are currently no
advances outstanding under the Agreement.
Outstanding letters of credit supported by the Agreement amount to $2.6
million.
Section 6.2 of the
Agreement provides that the Agreement may be terminated for convenience by
either party with 60 days written notice.
Although the Company is currently in compliance with all of its
covenants under the Agreement, on July 22, 2010, it received a notice from
the Lender of its election to terminate the Agreement on September 22,
2010, the end of the 60-day notice period.
It is the Companys belief that the principal reasons for the Lenders
actions are the decreased utilization of the facility by the Company, the high
level of capital reserves required by the Lender to support the facility and
the Companys lack of profitability. There
will be no early termination penalties incurred by the Company as a result of
this termination.
The Company believes that
its current cash resources and working capital are sufficient to fund its
operations for the foreseeable future.
In addition, the Company is considering other alternatives, including
replacing the facility with another lender.
2
SIGNATURES
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.
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InfoSonics Corporation
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/s/ Vernon A. LoForti
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Vernon A. LoForti
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Date:
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July 28, 2010
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Chief Financial Officer
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3
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