Unassociated Document
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
March
27, 2009 (May 15, 2008)
Date of
Report (Date of earliest event reported)
AFTERSOFT
GROUP, INC.
(Exact
name of registrant as specified in its charter)
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Delaware
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000-27083
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84-1108035
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(State
or other jurisdiction of incorporation)
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(Commission
File No.)
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(IRS
Employer Identification No.)
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Regus
House, Herons Way, Chester Business Park
Chester,
UK CH4 9QR
(Address
of principal executive offices, including zip code)
Registrant's
telephone number, including area code: 011 44 124 489
3138
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligations 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)
Soliciting material
pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Aftersoft Group, Inc. (“we,” “us,”
“our,” and the “Company”) is filing this Current Report on Form 8-K to report
our receipt of certain waivers from ComVest Capital LLC (“ComVest”), in respect
of our $5,000,000 term loan dated December 21, 2007, and the related amendments
to our loan agreement documents. We had not previously described these matters
under cover of this form as we did not initially consider the waivers to
constitute material amendments to the loan agreement documents requiring
disclosure under this item, although they have been discussed in our recent Form
10-K and Form 10-Qs. However, we have since re-evaluated the materiality
of the waivers following our receipt of certain comments from the Securities and
Exchange Commission in connection with our recent filing of a registration
statement, and accordingly are filing this Form 8-K to discuss these
matters. Each of the waivers and amendments are described
below.
Item
1.01. Entry Into A Material Definitive Agreement.
As
previously disclosed, on December 21, 2007, we entered into a Revolving Credit
and Term Loan Agreement (the “Loan Agreement”) with ComVest as lender, pursuant
to which ComVest agreed to extend to us a $1,000,000 secured revolving credit
facility and a $5,000,000 term loan. The Loan Agreement contains customary
affirmative and negative covenants, including a covenant requiring that, at the
end of any quarter of any fiscal year, the ratio of our (a) Earnings Before
Interest, Depreciation, and Amortization (“EBIDA”) minus capital expenditures
incurred to maintain or replace capital assets, to (b) debt service (all
interest and principal payments), for the four (4) consecutive quarters then
ended, is to be not less than 1.25 to 1.00 (the “EBIDA Ratio
Covenant”).
May 15, 2008 Waiver and
Amendment. Subsequent to March 31, 2008, we notified ComVest that we
had incurred a loss of $1,897,000 for the three-month period ending March 31,
2008, and as a result, we had a ratio of EBIDA to debt service of (4.41):1.00,
therefore violating the EBIDA Ratio Covenant. ComVest agreed to grant us a
waiver for this violation. On May 15, 2008, we entered into a Waiver and
Amendment (the “May 15, 2008 Waiver and Amendment”) pursuant to which ComVest
granted us the waiver, and in consideration therefor, we reduced the exercise
price for 1,000,000 of the warrants issued to ComVest in connection with the
Loan Agreement from $0.3125 per share to $0.11 per share. As a result of ComVest
granting us this waiver, we were not in violation of any loan covenants at March
31, 2008.
A copy of
the May 15, 2008 Waiver and Amendment is attached hereto as Exhibit
10.1.
September 23, 2008 Waiver
and Amendment. Subsequent to June 30, 2008, we advised ComVest that
we had incurred a loss of $11,664,000 for the six-month period ending June 30,
2008, and that as a result had again violated the EBIDA Ratio Covenant with an
EBIDA to debt service ratio of (2.26):1.00. ComVest agreed to provide us with
another waiver. In connection therewith, we entered into a letter agreement
amending the Loan Agreement (the “September 23, 2008 Waiver and Amendment”) and
modifying the EBITDA Ratio Covenants. Pursuant to the September 23, 2008 Waiver
and Amendment, the EBIDA Ratio Covenant was waived for the quarter ending
September 30, 2008 and was reduced to 0.62:1.00 from 1.25:1.00 for the quarter
ended December 31, 2008. Additionally, the EBIDA Ratio Covenant was reset for
future quarters to 0.71:1.00 for the four quarters ended March 31, 2009;
0.50:1.00 for the four quarters ended June 30, 2009; and 1.25:1.00 for the four
quarters ended on or after September 30, 2009. Additionally, ComVest agreed to
delay the commencement of the loan amortization related to the Term Note for one
year, from January 1, 2009 to January 1, 2010. In consideration for these
modifications, we reduced the exercise price related to 2,000,000 of the
warrants issued to ComVest in connection with the Loan Agreement from $0.39 to
$0.11. As a result of these amendments, we were not in violation of any loan
covenants at June 30, 2008.
A copy of
the September 23, 2008 Waiver and Amendment is attached hereto as Exhibit
10.2.
February 10, 2009 Waiver and
Amendment. Subsequent to the end of the quarter ended December 31,
2008, we advised ComVest that we had incurred a net loss of $5,349,000 for the
six month period ended December 31, 2008, and that as a result, our ratio of
EBIDA to debt service was (1.41):1.00 in violation of the amended EBIDA Ratio
Covenant. ComVest agreed to extend an additional waiver of this covenant, which
was granted on February 10, 2009, under a Waiver and Amendment #2 letter
agreement (the “February 10, 2009 Waiver and Amendment”). In
consideration for the waiver, we agreed to increase the interest rate on the
$1,000,000 Credit Facility from 9.5% to 11%. As a result of ComVest granting us
this waiver, we were not in violation of any loan covenants at December 31,
2008. If we restore compliance with the EBIDA Ratio Covenant as of the close of
any quarter ending on or after March 31, 2009, then the annual interest rate
will be restored to 9.5%, effective as of the first day of the calendar month
next succeeding our demonstrated quarter-end compliance with such
covenant.
A copy of
the February 10, 2009 Waiver and Amendment is attached hereto as Exhibit
10.3.
Item
9.01 Financial Statements and Exhibits.
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| (a) |
Not
applicable. |
| (b) |
Not
applicable. |
| (c) |
Not
applicable. |
| (d) |
Exhibits |
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Exhibit
No.
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Description
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10.1
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May
15, 2008 Waiver and Amendment
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10.2
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September
23, 2008 Waiver and Amendment
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10.3
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February
10, 2009 Waiver and Amendment
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Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, the
registrant has duly caused this Current Report on Form 8-K to be signed on its
behalf by the undersigned thereunto duly authorized.
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| Dated:
March 27, 2009 |
AFTERSOFT
GROUP, INC.
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By:
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/s/ Ian
Warwick |
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Name:
Ian Warwick
Title:
Chief Executive Officer
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Exhibit
No.
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Description
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10.1
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May
15, 2008 Waiver and Amendment
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10.2
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September
23, 2008 Waiver and Amendment
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10.3
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February
10, 2009 Waiver and Amendment
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