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:
December 15, 2015
ZYNEX, INC.
(Exact name of registrant as specified in its charter)
Nevada | 33-26787-D | 90-0275169 | ||
State of Incorporation |
Commission File Number |
IRS Employer Identification No. |
9990 Park Meadows Drive
Lone Tree, CO 80124
Address of principal executive offices
303-703-4906
Telephone number, including
Area code
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:
¨ | Written communications pursuant to Rule 425 under the Securities Act |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act |
Item 7.01 Regulation FD Disclosures
Zynex, Inc (Company) signed Amendment No 4 to the Forbearance Agreement with TBK Bank, SSB (aka Triumph Healthcare Finance) on December 15 2015, by which the Bank agreed to continue to forbear declaring default and accelerating payment of the loan.
The Company has an asset-backed revolving credit facility under a Loan and Security Agreement as amended, (the Triumph Agreement) with Triumph Healthcare Finance, a division of Triumph Community Bank (the Lender). The Triumph Agreement contains certain customary restrictive and financial covenants for asset-backed credit facilities. As of September 30, 2015 and subsequently, the Company was not in compliance with the financial covenants under the Triumph Agreement. On July 14, 2014, the Company received notice from the Lender of an event of default under the Triumph Agreement. The notice relates to the Companys default under the minimum debt service coverage ratio requirement for the quarter ended March 31, 2014 and certain other alleged defaults. The Lender notified the Company that it was exercising its default remedies under the Triumph Agreement, including, among others, accelerating the repayment of all outstanding obligations under the Triumph Agreement (outstanding principal and accrued interest) and collecting the Companys bank deposits to apply towards the outstanding obligations.
As of September 30, 2015, $4,322,000 ($4,442,000 as of December 31, 2014) was outstanding under the Triumph Agreement and zero was available for borrowing based on the default status. The Triumph Agreement matured on December 19, 2014.
The Lender has agreed to continue to forbear from the exercise of its rights and remedies under the terms of the Credit Agreement through March 31, 2016, pursuant to the terms of a Forbearance Agreement, as amended, dated effective December 15, 2015. During the Forbearance Period, the Company has agreed to reduce the principal amount of the Line by no less than $85,000 per month. The Lender has made no commitment to continue its forbearance beyond March 31, 2016. Furthermore, the Company may make no payments to vendors or other creditors with proceeds of any advances that the Lender may authorize unless the proposed use of proceeds has been communicated to and approved by the Lender in advance.
The Company is currently facing liquidity challenges due to lower revenues and limited availability of borrowings under its existing revolving credit facility. The lender has continued to make advances to the Company based on cash collections and the Company has been able to utilize its key bank accounts. The Company is exploring ways to improve its liquidity and is actively seeking a new lender or investor to replace the existing lender.
The Company was not in compliance with the financial covenants under the Triumph Agreement, as of September 30, 2015 or subsequently, and no assurance can be given that the Lender will continue to make such additional loans or that the parties will agree on a repayment plan acceptable to the Company.
Item 9.01 Financial Statements and Exhibits
(d) | Exhibits |
10.4 | Amendment No. 4 to Forbearance Agreement December 15, 2015. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on the 31 st day of December, 2015.
Zynex, Inc. | ||
By: | /s/ Thomas Sandgaard | |
Thomas Sandgaard, President, Chief Executive Officer, Treasurer and Principal Financial Officer |
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Exhibit 10.4
AMENDMENT NO. 4 TO FORBEARANCE AGREEMENT
This Amendment No. 4 to Forbearance Agreement ( Amendment ) dated effective December 15, 2015 is by and between ZYNEX, INC., a Nevada corporation, ZYNEX MEDICAL, INC., a Colorado corporation, ZYNEX NEURODIAGNOSTICS, INC., a Colorado corporation, ZYNEX MONITORING SOLUTIONS, INC., a Colorado corporation, ZYNEX BILLING AND CONSULTING, LLC, a Colorado limited liability company, and PHARMAZY, INC., a Colorado corporation (collectively, and jointly and severally, Borrower ), and TBK BANK, SSB ( Lender ).
RECITALS
A. | The parties entered into a Forbearance Agreement dated December 17, 2014, as amended by Amendment No. 1 to Forbearance Agreement dated March 27, 2015, Amendment No. 2 to Forbearance Agreement dated June 30, 2015, and Amendment No. 4 to Forbearance Agreement dated September 30, 2015 (the Forbearance Agreement ). |
B. | Additional Events of Default have occurred, including Borrowers failure to meet the Debt Service Coverage Ratio and Minimum Current Ratio financial covenants for the quarterly period ending September 30, 2015. |
C. | The parties desire to amend the Forbearance Agreement to extend the Forbearance Period, and to evidence certain additional continuing covenants related to such extension. |
AGREEMENT
1. | Amendment . Section 4.1(i) of the Forbearance Agreement is amended to read as follows: 11:59 pm Portland, Oregon time on March 31, 2016. |
2. | Condition Precedent . The effectiveness of the Amendment set forth in Section 1 above is conditional upon Borrowers delivery to Lender of a stock certificate representing 100% of the outstanding shares of Pharmazy, Inc. ( Pharmazy ), along with a duly executed stock power covering such shares as required by that certain Pledge Agreement between Zynex Medical, Inc. and Lender pursuant to which Zynex Medical, Inc. pledged 100% of the stock of Pharmazy to Lender to secure the obligations under the Loan and Security Agreement. |
3. | Continuing Conditions . The continued effectiveness of the extension of the Forbearance Period is conditional upon Borrowers compliance with the following continuing covenants: |
(a) during the Forbearance Period, Borrower must reduce the principal amount of the Obligations in an amount no less than $85,000 per month, plus such interest and Expenses and Fees incurred in such monthly periods; and
(b) Borrower shall not make any payments to vendors or other creditors with the proceeds of Advances unless such proposed use of proceeds has been communicated to and approved by Lender in advance.
4. | Other Provisions . Except as specifically provided herein, all terms and conditions of the Forbearance Agreement shall remain in full force and effect, without waiver or modification. All terms defined in the Forbearance Agreement shall have the same meaning when used in this Amendment. This Amendment and the Forbearance Agreement shall be read together, as one document. |
5. | Signatures . This Amendment may be executed in any number of counterparts, each of which when executed and delivered shall be deemed to be an original, and all of which when taken together shall constitute one and the same Amendment. |
UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY A LENDER CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE BORROWERS RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE SIGNED BY THE LENDER TO BE ENFORCEABLE.
[signature page follows]
Dated effective as of the date first written above.
BORROWER:
ZYNEX, INC., a Nevada corporation |
LENDER:
TBK BANK, SSB |
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By: | /s/ T HOMAS S ANDGAARD | By: | /s/ J ONATHAN N. K NOX | |||||
Name: | Thomas Sandgaard | Name: | Jonathan N. Knox | |||||
Title: | CEO | Title: | SVP |
ZYNEX MEDICAL, INC., a Colorado corporation | ||
By: |
/s/ T HOMAS S ANDGAARD |
|
Name: |
Thomas Sandgaard |
|
Title: | CEO |
ZYNEX NEURODIAGNOSTICS, INC., a Colorado corporation | ||
By: |
/s/ T HOMAS S ANDGAARD |
|
Name: |
Thomas Sandgaard |
|
Title: | CEO |
ZYNEX MONITORING SOLUTIONS, INC., a Colorado corporation | ||
By: |
/s/ T HOMAS S ANDGAARD |
|
Name: |
Thomas Sandgaard |
|
Title: | CEO |
ZYNEX BILLING AND CONSULTING, LLC, a Colorado limited liability company | ||
By: |
/s/ T HOMAS S ANDGAARD |
|
Name: |
Thomas Sandgaard |
|
Title: | CEO |
PHARMAZY, INC., a Colorado corporation | ||
By: |
/s/ T HOMAS S ANDGAARD |
|
Name: |
Thomas Sandgaard |
|
Title: | CEO |