Item 1.01. Entry into a Material Definitive Agreement.
Effective
Under the terms of the Factoring Agreement, the Company may use the Buyer's
on-line software platform to offer for sale, and the Buyer may purchase at 80%
of face value, certain accounts receivable of the Company. The Company will
receive a rebate back to the Company in a maximum amount of 18.4% of the
verified receivable amount if the receivable is collected within 30 days and a
lesser rebate amount based on the receivable collection period. The Factoring
Agreement provides for a minimum volume commitment of
In connection with the sale of any accounts receivable, the Company may be required to pay to the Buyer certain additional fees, including application and early termination fees. The Company may also be required to repurchase accounts receivable in the event that the Company did not have the legal authority to assign the accounts receivable to the Buyer. The Company's obligations under the Factoring Agreement are secured by the accounts receivable that have been acquired by Buyer.
The Factoring Agreement has an initial term of one year and automatically renews for successive one-year renewal periods unless terminated pursuant to the terms of the Factoring Agreement. The Company may terminate the Factoring Agreement at any time, subject to an early termination fee.
The foregoing summary of the Factoring Agreement is qualified in its entirety by
reference to the Factoring Agreement, a copy of which will be filed as an
exhibit to the Company's Quarterly Report on Form 10-Q for the period ended
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth under Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.
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