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): April 12, 2000
ELCOTEL, INC.
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(Exact name of registrant as specified in its charter).
Delaware 000-15205 592518405
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
6428 Parkland Drive, Sarasota, Florida 34243
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code: (941) 758-0389
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Item 5. Other Events
As previously disclosed in its Form 10-Q for the quarter ended December
31, 1999, Elcotel, Inc. (the "Company") reached an agreement in principle to
enter into a forbearance agreement with its bank that would modify the terms of
the loan agreements with its bank (the "Loan Agreements").
On April 12, 2000, the Company entered into a Forbearance and Modification
Agreement (the "Forbearance Agreement") that modified the terms of its Loan
Agreements. Under the terms of the Forbearance Agreement, the maturity date of
indebtedness outstanding under the Loan Agreements was changed to July 31, 2000,
the annual interest rate under the Loan Agreements was increased to two and
one-half percentage points above the prime interest rate, and the Company's
ability to borrow additional funds under a $2.0 million export revolving credit
line (none of which was borrowed as of such date) and a $1.5 million equipment
credit line ($281,000 of which was borrowed as of such date) was cancelled. In
addition, the Forbearance Agreement permits a $2.8 million overadvance through
June 30, 2000 of indebtedness outstanding under a $10.0 million working capital
revolving credit line and a $4.0 million installment note, and a $1.5 million
overadvance thereafter based on the value of collateral consisting of eligible
accounts receivable and inventories. The Forbearance Agreement only permits the
Company to borrow additional funds under the $10.0 million revolving credit line
to the extent that it repays debt outstanding on the date of the Forbearance
Agreement and the Company is in compliance with the terms of the Forbearance
Agreement. As of April 12, 2000 and the date hereof, the Company was not able to
borrow any additional funds under the terms of the Forbearance Agreement.
Overadvances, as defined in the Forbearance Agreement, approximated $2.3 million
at March 31, 2000 and April 12, 2000. There is no assurance that the Company
will be able to satisfy the overadvance provision in the Forbearance Agreement.
Also, as previously disclosed, the Company is attempting to secure an
asset based financing line and additional equity capital or other sources of
funding to refinance the outstanding indebtedness under the Loan Agreements. The
Company has received proposals with respect thereto and believes that its
efforts will be successful. However, there is no assurance that the Company's
efforts will be successful, or if successful, that such financing would be
available on favorable terms. In addition, there is no assurance that any such
financing would provide the funding required to refinance outstanding
indebtedness and fund continued net operating losses and other liquidity
requirements. If the Company's efforts to secure additional capital and/or other
sources of financing are not successful, the Company may be forced to reduce its
product development efforts, slow down the launch of its public access Internet
appliance products and take other actions that may adversely affect the
Company's growth potential and future prospects. Further, if the Company's
efforts to raise additional capital and/or other sources of financing are not
successful, the Company could experience difficulties meeting its obligations as
they become due. Accordingly, there is no assurance that the Company's cash
resources will be sufficient to meet its anticipated cash needs for operations,
working capital and capital expenditures for the next twelve months unless the
Company is able to successfully raise additional capital and/or financing on
satisfactory terms. Furthermore, there is no assurance that the Company will be
able to complete any transaction in which it raises such additional capital
prior to the expiration date or any default in the overadvance provision of the
Forbearance Agreement.
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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.
ELCOTEL, INC.
Date: May 1, 2000 By: /s/ William H. Thompson
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William H. Thompson
Senior Vice President,
Administration and Finance
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