Business Context and Reporting Period
This Form 8-K was filed by Snap Interactive, Inc. on July 18, 2016. The filing reports the entry into a material definitive agreement involving a new debt facility.
Key Financial Metrics
- New Debt Facility: Entered into a subordinated multiple advance term note with A.V.M. Software, Inc. for a maximum principal amount of $250,000.
- Interest Rate: 8.0% per annum.
- Maturity Date: July 18, 2017.
- Drawdown Status: As of July 22, 2016, the company had borrowed $200,000 under this facility.
- Collateral: A Security Agreement was executed to secure the note, granting the lender a first priority security interest in all company assets, including 65% of the equity of subsidiary SNAP Mobile Limited. This agreement is contingent upon the full repayment of a prior $3,000,000 Senior Secured Convertible Note due February 13, 2017.
Material Changes
The primary material change is the establishment of a new $250,000 credit line and the execution of a security agreement. The filing does not provide comparative financial data (revenue, profit, or cash flow) for the current period versus prior periods.
Guidance, Risks, and Contingencies
- Prepayment Terms: The company may prepay amounts without penalty but cannot reborrow repaid principal.
- Events of Default: The note includes standard default provisions (payment defaults, covenant breaches, cross-defaults, bankruptcy). Upon default, the lender may declare all obligations immediately due.
- Contingency: The security interest in company assets will not become effective until the existing $3,000,000 Senior Secured Convertible Note is paid in full.
Investor Verification Checklist
- Verify the current status of the $3,000,000 Senior Secured Convertible Note due February 13, 2017, to determine if the new Security Agreement has become effective.
- Confirm the total outstanding debt load including the $200,000 drawn from the new Term Note.
- Review the company's liquidity position to assess its ability to service the new 8.0% interest obligation and the existing senior debt.
- Check for any subsequent filings regarding the repayment or acceleration of the Term Note.