UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) October 3, 2002
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TeraForce Technology Corporation
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(Exact name of registrant as specified in its charter)
Delaware 0-11630 76-0471342
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1240 East Campbell Road, Richardson, Texas 75081
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (469) 330-4960
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ITEM 5. OTHER EVENTS.
On January 11, 2003, the Company completed a further step in its previously
announced financial restructuring when it completed certain definitive
documentation related to the previously reported restructuring of certain debt
obligations.
The Company has exchanged $600,000 in notes payable by the Company in favor of a
private investor note, plus accrued interest on that note, for a new note. The
new note has a principal balance of $647,463 and a maturity of September 15,
2003. The Company also has amended its $1,500,000 Loan Agreement with Bank One,
N.A., dated October 12, 2001, that is also guaranteed by this private investor
and expects to further amend that facility. The private investor has agreed to
continue to provide an unconditional guarantee of the facility and the Company
expects that the maturity of the facility will be extended to September 12,
2003. This same private investor has previously provided a $3,000,000 letter of
credit to secure the Company's $2,700,000 credit agreement with Bank One, N.A.
The Company and the private investor have entered into a Reimbursement Agreement
related to the credit support provided by the private investor. Pursuant to this
agreement the Company has agreed to reimburse the private investor for all costs
the investor may incur as a result of the guarantee and letter of credit
provided. These costs include amounts that the investor would pay Bank One,
N.A., as well as any amounts drawn under the letter of credit. Any such
reimbursement obligations are due upon demand and bear interest at prime plus
2%. In the event of the occurrence of a reimbursement obligation under the
agreement, the Company has agreed to grant the investor a security interest in
certain accounts receivable and inventories. This Reimbursement Agreement
supersedes reimbursement agreements previously entered into with this investor
dated June 1, 2001 and October 19, 2001.
As consideration for the previous and on-going credit support the Company has
issued to the private investor certain warrants for the purchase of the
Company's common stock and has amended certain warrants previously issued to the
investor as follows:
Number of shares Previous Exercise
Description subject to warrant Expiration Date Exercise Price Price
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Warrant 960,000 October 31, 2004 $0.12 --
Amended and Restated
Warrant 600,000 October 31, 2004 $0.12 $0.80
Amended and Restated
Warrant 360,000 October 31, 2004 $0.12 $0.20
Amended and Restated
Warrant 720,000 May 31, 2004 $0.12 $0.75
Amended and Restated
Warrant 150,000 December 31, 2003 $0.12 $0.75
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On October 31, 2002 and December 20, 2002 the Company entered into Securities
Purchase Agreements with two private investors for the purchase of 3,916,667
shares of the Company's common stock for $470,000 cash. The sale of 1,000,000
shares of common stock was completed on November 29, 2002 and the sale of
1,250,000 shares of common stock was completed on December 27, 2002. The
Company expects to complete the sale of the balance of the common stock
completed on or before January 20, 2003.
The Company has entered into registration rights agreements with each of these
investors, and has agreed to file a registration statement registering the
3,916,667 shares of common stock and the 2,790,000 shares of common stock to be
issued upon exercise of the warrants.
The Company's sales of common stock were exempt from registration pursuant to
Section 4(2) of the Securities Act of 1933, as amended (the Securities Act), and
pursuant to Rule 506 of Regulation D of the Securities Act. A Rule 506 exemption
was available for these sales because the Company sold only to accredited
investors; the Company did not solicit or advertise the sales; a restrictive
legend was placed on each certificate issued describing the restrictions against
resale; and a Form D was filed with the Securities and Exchange Commission and
in each state where the individual investors reside.
The Company is currently pursuing discussions to raise additional equity
capital, but there can be no assurance that the Company will be successful in
its efforts.
These statements in "Other Events" regarding our future financial performance
and results, and other statements that are not historical facts, are
forward-looking statements as defined in Section 27A of the Securities Act of
1933. We use the words "may," "will," "expect," "anticipate," "estimate,"
"believe," "continue," "intend," "plan," "budget," or other similar words to
identify forward-looking statements. You should read statements that contain
these words carefully because they discuss future expectations, contain
projections of our financial condition, and/or state other "forward-looking"
information. Events may occur in the future that we are unable to accurately
predict, or over which we have no control. If one or more of these uncertainties
materialize, or if underlying assumptions prove incorrect, actual outcomes may
vary materially from those forward-looking statements included in this Form 8-K.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business to Be Acquired: N/A
(b) Pro Forma Financial Information: N/A
(c) Exhibits:
Exhibit Description of Exhibit
4.1 Form of Securities Purchase Agreement
4.2 Form of Registration Rights Agreement
4.3 Reimbursement Agreement
4.4 Form of Promissory Note Dated October 1, 2002
4.5 Warrant for purchase of 960,000 shares of Common Stock
4.6 Amended and Restated Warrant for purchase of 600,000 shares of
Common Stock
4.7 Amended and Restated Warrant for purchase of 360,000 shares of
Common Stock
4.8 Amended and Restated Warrant for purchase of 720,000 shares of
Common Stock
4.9 Amended and Restated Warrant for purchase of 150,000 shares of
Common Stock
10.1 Schedule of Investors
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TeraForce Technology Corporation
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(Registrant)
Date: January 15, 2003 By: /s/ Herman M. Frietsch
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(Signature)
Herman M. Frietsch
Chairman of the Board and CEO
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EXHIBIT INDEX
Exhibit Description of Exhibit
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4.1 Form of Securities Purchase Agreement
4.2 Form of Registration Rights Agreement
4.3 Reimbursement Agreement
4.4 Form of Promissory Note Dated October 1, 2002
4.5 Warrant for purchase of 960,000 shares of Common Stock
4.6 Amended and Restated Warrant for purchase of 600,000 shares of
Common Stock
4.7 Amended and Restated Warrant for purchase of 360,000 shares of
Common Stock
4.8 Amended and Restated Warrant for purchase of 720,000 shares of
Common Stock
4.9 Amended and Restated Warrant for purchase of 150,000 shares of
Common Stock
10.1 Schedule of Investors