Giga-tronics Incorporated (NASDAQ:GIGA) Files An 8-K Entry into a Material Definitive AgreementItem 1.01 Entry into a Material Definitive Agreement.
On April 27, 2017, Giga-tronics Incorporated (the “Company”) entered into a loan agreement with Partners For Growth V, L.P. (“PFG”). Under the terms of the agreement, PFG made a term loan to Giga-tronics in the principal amount of $1,500,000, with funding occurring on April 28, 2017.
The loan has a two-year term, with interest only payments for the term of the loan. The principal amount of the loan plus any accrued interest will be due upon maturity. The loan shall bear interest at an aggregate per annum rate equal to 16% per annum, fixed, which is comprised of cash interest reflecting a 9.5% per annum rate and deferred interest reflecting a 6.5% per annum rate. The Company will pay the cash interest monthly and will accrue deferred interest on the unpaid principal balance. The deferred interest will be due and payable upon maturity. In addition, the Company shall pay PFG a charge of up to $100,000 due and payable upon maturity, $76,000 of which was earned on April 27, 2017 and $24,000 of which is earned at the rate of $1,000 per month on the first day of each month if the loan principal (of any amount) is outstanding during any day of the prior month. If the Company meets or exceeds certain revenue and net income minimums in fiscal 2018, the amount could be reduced by 25 percent. To stay in compliance with the loan terms, the Company must meet certain financial covenants associated with minimum quarterly revenues and monthly minimum shareholders’ equity. The lender can accelerate the maturity of the loan in case of a default. The Company can prepay the loan before maturity at any time without fee or penalty.
In connection with its loan to the Company, PFG will receive up to 250,000 shares of common stock, 190,000 of which was earned on April 27, 2017 and 60,000 of which is earned at the rate of 2,500 per month on the first day of each month if the loan principal (of any amount) is outstanding during any day of the prior month.
The Company has pledged all its assets as collateral for the loan made by PFG, including all its accounts, inventory, equipment, deposit accounts, intellectual property and all other personal property.
2.03 Creation of a Direct Financial Obligation or an Obligation under an off-balance Sheet Arrangement of a Registrant.
See discussion under Item 1.01 above.
3.02 Unregistered Sale of Equity Securities
See discussion of the issuance of common shares to PFG under item 1.01 above.
About Giga-tronics Incorporated (NASDAQ:GIGA)
Giga-tronics Incorporated (Giga-tronics) includes the operations of the Giga-tronics Division and Microsource Inc. (Microsource). The Company operates through two segments: Giga-tronics Division and Microsource. Giga-tronics segment designs, manufactures and markets the Advanced Signal Generator (ASG) for the electronic warfare market and switching systems that are used in automatic testing systems primarily in aerospace, defense and telecommunications. The Company’s Giga-tronics segment produces modular signal sources, up-converters, receivers and down-converters in the AXIe format covering a radio frequency (RF) range of 100 megahertz to 18 gigahertz. The end user markets for these products are divided into three segments: RADAR Target Generation, Threat simulation and Surveillance. Microsource primarily develops and manufactures Yttrium, Iron, Garnet (YIG) radio detection and ranging (RADAR) filters used in fighter jet aircraft for two prime contractors. Giga-tronics Incorporated (NASDAQ:GIGA) Recent Trading Information
Giga-tronics Incorporated (NASDAQ:GIGA) closed its last trading session down -0.028 at 0.820 with 64,037 shares trading hands.