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
Date
of
report (Date of earliest event reported): May 22, 2008
AMERICAN
BIO
MEDICA CORPORATION
(Exact
Name of Registrant as Specified in its Charter)
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New
York
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0-28666
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14-1702188
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|
(State
or Other Jurisdiction of Incorporation)
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(Commission
File Number)
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(IRS
Employer Identification Number)
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122
Smith Road, Kinderhook, NY
12106
(Address
of Principal Executive Offices)
(Zip
Code)
Registrant’s
telephone number, including area code: 518-758-8158
Not
applicable
(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 (see General Instruction A.2. below):
o Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting
material pursuant to
Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement
communications
pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement
communications
pursuant to Rule 13c-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
ITEM
1.01 Entry
into a Material Definitive Agreement
On
May
22, 2008, the Company entered into a Forbearance Agreement (the “Agreement”)
with First Niagara Bank (“First Niagara”). The Agreement addresses the Company’s
noncompliance, as of December 31, 2007, of the minimum debt service coverage
ratio covenant (“Existing Default”), and the Company’s likely default as of
March 31, 2008 and June 20, 2008 of the minimum net worth and minimum net
working capital covenants (“Likely Defaults”) set forth in loan documents
related to the Company’s lines of credit and mortgage with First Niagara (the
“Loan Documents”). Under the terms of the Agreement, First Niagara will forbear
from exercising its rights and remedies arising under the Loan Documents from
the Existing Default and the Likely Defaults.
Under
the
Agreement, First Niagara’s forbearance is subject to the condition that the
Company fall short of the minimum net worth covenant of $5,000,000 by no more
than $500,000, and falls short of the minimum net working capital covenant
of
$4,000,000 by no more than $400,000 (“Likely Default Limits”), and the further
condition that the Company show a net loss no greater than $225,000 at April
30,
2008, $200,000 at May 31, 2008 and $175,000 at June 30, 2008. As of April 30,
2008, the Company was in compliance with this condition. Furthermore, the
Agreement amends the Loan Documents to reduce FNFG’s total lending commitment on
the Company’s lines of credit from $875,000 to $750,000. The aggregate
outstanding balance on these lines of credit was $723,000 as of April 30,
2008.
The
date
of the forbearance period is from May 22, 2008 until the earliest of (i) July
31, 2008; or (ii) the date on which First Niagara elects to terminate the
forbearance period on the occurrence of the Company’s breach of any of the terms
or conditions of the Agreement or the occurrence of an event or condition that
constitutes an event of default under the Loan Documents other than the Existing
Default or the Likely Defaults only to the extent of the Likely Default Limits;
or (iii) the date on which any subsequent amendments to the Agreement become
effective. If the forbearance period is terminated as a result of a breach
or
default on the part of the Company as noted in (ii) above, the Company must
pay
all obligations in full to First Niagara and First Niagara may exercise its
rights and remedies under the Loan Documents. As of April 30, 2008, the
Company’s obligations to First Niagara are (i) $752,000 under a commercial real
estate mortgage for its Kinderhook, NY facility; (ii) $723,000 under its Lines
of Credit; and (iii) $422,000 under a term loan, totaling
$1,897,000.
During
the forbearance period, interest will accrue on the Lines of Credit and term
loan at the rate of prime plus 2% per annum, an increase from the original
prime
plus .25% under the Loan Documents. Interest accruing on the real estate
mortgage during the forbearance period shall remain unchanged at the fixed
rate
of 7.5%.
In
attempts to ensure its compliance with the requirements under the Agreement,
the
Company has implemented a number of cost reductions.
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.
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AMERICAN
BIO
MEDICA CORPORATION (Registrant) |
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| Dated:
May 28, 2008 |
By: |
/s/
Melissa A. Waterhouse |
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Melissa
A. Waterhouse |
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Vice
President & Chief Compliance Officer Corporate
Secretary |