AMERICAN BIO MEDICA CORPORATION (OTCMKTS:ABMC) Files An 8-K Entry into a Material Definitive Agreement
ITEM 1.01 Entry into a Material Definitive Agreement
On February 25, 2019 (the “Closing Date”), American Bio Medica Corporation (the “Company”) completed a transaction related to a one-year Extension Agreement dated February 13, 2019 (the “Agreement”) with Cherokee Financial, LLC (“Cherokee”) under which Cherokee will provide the Company with a loan in the amount of $200,000. The Agreement extends the Company’s current Loan Agreement and Promissory Note with Cherokee in the amount of $150,000 and provides the Company with an additional $50,000 in gross proceeds; $48,000 in net proceeds after Cherokee’s legal fees in connection with the financing. The Company utilized the net proceeds to pay a portion of the $75,000 principal reduction payment under the Company’s Mortgage Loan with Cherokee (with the remaining $27,000 being paid with cash on hand).
The annual interest rate under the Agreement (and accompanying promissory note) is 18% paid quarterly in arrears with the first interest payment being due on May 15, 2019. The loan is required to be paid in full on February 15, 2020 unless paid off earlier (with no penalty) at the Company’s sole discretion. In connection with the Loan Agreement, the Company is required to issue 200,000 restricted shares of common stock to Cherokee within sixty (60) days of the Closing Date.
In the event of default, this includes, but is not limited to, the Company’s inability to make any payments due under the Agreement, Cherokee has the right to increase the interest rate on the financing to 20% and Cherokee would automatically add a delinquent payment penalty of $20,000 to the outstanding principal.
About AMERICAN BIO MEDICA CORPORATION (OTCMKTS:ABMC)
American Bio Medica Corporation develops, manufactures and sells immunoassay tests, primarily for the immediate, point of collection testing (POCT) for drugs of abuse (DOA) in urine and oral fluids. The Company’s DOA POCT products offer employers, law enforcement, government, healthcare and education professionals to identify illicit drug use. In addition to the manufacture and sale of DOA POCT products, the Company provides bulk test strip manufacturing services to unaffiliated third parties on a contract basis. Its Rapid Drug Screen (RDS) is a POCT product that detects the presence or absence of 2 to 10 DOA simultaneously in a single urine specimen. The Rapid ONE product line consists of single drug tests, each of which tests for the presence or absence of a single drug of abuse in a urine specimen. The RDS InCup is a POCT product that detects the presence or absence of 1 to 12 DOA in a single urine specimen. The POCT products for oral fluid-based DOA testing include OralStat.