# EDGAR Filing Document

**Accession Number:** 0000944075
**File Stem:** 0000944075-23-000003
**Filing Date:** 2023-1
**Character Count:** 22396
**Document Hash:** 9d9d828ebd6370e9545297d98cab6e2b
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0000944075-23-000003.hdr.sgml**: 20230127

**ACCESSION NUMBER**: 0000944075-23-000003

**CONFORMED SUBMISSION TYPE**: 8-K

**PUBLIC DOCUMENT COUNT**: 13

**CONFORMED PERIOD OF REPORT**: 20230125

**ITEM INFORMATION**: Entry into a Material Definitive Agreement

**ITEM INFORMATION**: Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant

**ITEM INFORMATION**: Financial Statements and Exhibits

**FILED AS OF DATE**: 20230127

**DATE AS OF CHANGE**: 20230126

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** SOCKET MOBILE, INC.
- **CENTRAL INDEX KEY:** 0000944075
- **STANDARD INDUSTRIAL CLASSIFICATION:** ELECTRONIC COMPUTERS [3571]
- **IRS NUMBER:** 943155066
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 8-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-13810
- **FILM NUMBER:** 23559182

**BUSINESS ADDRESS:**
- **STREET 1:** 40675 ENCYCLOPEDIA CIRCLE
- **CITY:** FREMONT
- **STATE:** CA
- **ZIP:** 94538-2475
- **BUSINESS PHONE:** 5109333000

**MAIL ADDRESS:**
- **STREET 1:** 40675 ENCYCLOPEDIA CIRCLE
- **CITY:** FREMONT
- **STATE:** CA
- **ZIP:** 94538-2475

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** SOCKET COMMUNICATIONS INC
- **DATE OF NAME CHANGE:** 19950418

?xml version="1.0" encoding="utf-8"?

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, DC 20549**

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**FORM 8-K**

**CURRENT REPORT**

**Pursuant to Section 13 or 15(d) of**

**The Securities Exchange Act of 1934**

**January 25, 2023**

Date of Report

(Date of earliest event reported)

------

**SOCKET MOBILE, INC.**

(Exact name of registrant as specified in its charter)

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| | | |
|:---|:---|:---|
| **Delaware** | **001-13810** | **94-3155066** |
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer<br> Identification No.) |

---

**40675 Encyclopedia Circle**

**Fremont, CA 94538**

(Address of principal executive offices, including zip code)

**(510) 933-3000**

(Registrant's telephone number, including area code)

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):

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

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| | | |
|:---|:---|:---|
| &nbsp;&nbsp;Title of each class | &nbsp;&nbsp;Trading Symbol(s) | &nbsp;&nbsp;Name of each exchange on which registered |
| &nbsp;&nbsp;Common stock, $0.001 Par Value per Share | &nbsp;&nbsp;SCKT | &nbsp;&nbsp;NASDAQ |

---

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company [ ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

**Item 1.01 Entry Into a Material Definitive Agreement**

On January 25, 2023, Socket Mobile ("we" or the "Company") entered into the Second Business Financing Modification Agreement and Waiver of Defaults (the "Financing Agreement") with Western Alliance Bank, an Arizona corporation ("Lender"), which among other things, extends the maturity date of the Company's $2.0 million domestic and $0.5 million EXIM revolving credit facilities to January 31, 2025. The Financing Agreement also waives the events of default as a result of noncompliance of the required financial performance in Q3 2022. The original Financing Agreement was dated February 27, 2014 with subsequent modifications dated February 26, 2016, March 20, 2017, January 31, 2018, June 4, 2018, July 30, 2018, June 14, 2019, January 29, 2021, and February 9, 2022.

The Financing Agreement contains customary affirmative and negative covenants, including covenants that limit or restrict our ability to, among other things, grant liens, make investments, incur indebtedness, merge or consolidate, dispose of assets, make acquisitions, pay dividends or make distributions, repurchase stock, enter into transactions with affiliates and enter into restrictive agreements, in each case subject to customary exceptions for a credit facility of this size and type. We are also required to maintain adjusted EBITDA of at least $100,000 with respect to any fiscal quarter commencing with the fiscal quarter ending December 31, 2022.

The Financing Agreement also contains customary events of default including, among others, payment defaults, breaches of covenants, bankruptcy and insolvency events, cross defaults with certain material indebtedness, judgment defaults, and breaches of representations and warranties. Upon an event of default, Lender may declare all or a portion of our outstanding obligations payable to be immediately due and payable and exercise other rights and remedies provided for under the Financing Agreement.

The foregoing description of the Financing Agreement is qualified in its entirety by reference to the full text of the Amended and Restated Business Financing Agreement, a copy of which is attached hereto as Exhibit 10.1 and incorporated herein by reference.

**Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.**

The information set forth in Item 1.01 hereof is incorporated by reference into this Item 2.03.

**Item 9.01 Financial Statements and Exhibits**

**(d) Exhibits.**

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| | |
|:---|:---|
| **Exhibit No.** | **Description** |
| **10.1** | Second Business Financing Modification Agreement and Waiver of Defaults dated as of January 25, 2023 |

---

**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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| | |
|:---|:---|
|  | **SOCKET MOBILE, INC.** |
| By: | /s/ Lynn Zhao |
|  | Name: Lynn Zhao<br> Vice President, Finance and Administration <br> and Chief Financial Officer |

---

Date: January 26, 2023

## Ex-10

**Exhibit 10.1**

**SECOND BUSINESS FINANCING MODIFICATION AGREEMENT AND WAIVER OF DEFAULTS**

This Second Business Financing Modification Agreement and Waiver of Defaults (this "<u>BFMA</u>") is entered into as of January 25, 2023, by and between Socket Mobile, Inc., a Delaware corporation ("<u>Borrower</u>"), and Western Alliance Bank, an Arizona corporation ("<u>Lender</u>").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.** **<u>DESCRIPTION OF EXISTING INDEBTEDNESS</u>:** Among other indebtedness which may be owing by Borrower to Lender, Borrower is indebted to Lender pursuant to, among other documents, an Amended and Restated Business Financing Agreement, dated as of January 29, 2021, as amended by that certain First Business Financing Modification Agreement, dated as of February 9, 2022 (the "<u>Agreement</u>"). Capitalized terms used without definition herein shall have the meanings assigned to them in the Agreement.

Hereinafter, all indebtedness owing by Borrower to Lender shall be referred to as the "Obligations" and the Agreement and any and all other documents executed by Borrower in favor of Lender shall be referred to as the "Existing Documents."

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.** **<u>WAIVER OF DEFAULTS</u>**. Events of Default have occurred and are continuing as listed on **Schedule 1** attached hereto (the "<u>Existing Defaults</u>"). In reliance upon the representations and warranties of Borrower set forth in this BFMA, and upon the terms and subject to the conditions set forth in this BFMA, Bank hereby waives the Existing Defaults. This waiver shall be effective only in this specific instance and for the specific purpose for which it is given, and this waiver shall not entitle Borrower to any other or further waiver in any similar or other circumstances. Bank's waiver shall not be deemed a course of conduct or course of dealing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. <u>DESCRIPTION OF CHANGE IN TERMS</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. <u>Modifications to Agreement</u>:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Sections
 4.12(a) and (b) of the Agreement are hereby amended in their entirety

as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Reserved.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Adjusted EBITDA of at least $100,000 with respect to any fiscal quarter, commencing with the fiscal quarter ending December 31, 2022.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) The following definition set forth in Section 12.1 of the Agreement is hereby amended in its entirety as follows:

"**<u>Maturity Date</u>**" means (i) for Advances under the Domestic Line of Credit, January 31, 2025, (ii) for Advances under the EXIM Line of Credit, January 31, 2025, or, in each case, such earlier date as Lender shall have declared the Obligations immediately due and payable pursuant to Section 7.2.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. <u>Replacement Exhibit A.</u> Exhibit A to the Agreement is hereby replaced with Exhibit A attached to this BFMA.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.** **<u>CONSISTENT CHANGES</u>.** The Existing Documents are each hereby amended wherever necessary to reflect the changes described above.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.** **<u>CONDITIONS TO EFFECTIVENESS</u>**. The effectiveness of this BFMA shall be subject to the satisfaction of the following conditions precedent:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. <u>Execution of this BFMA</u>. Lender shall have received a fully executed copy of this BFMA, duly executed by Borrower.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. <u>Representations and Warranties</u>. After giving effect to this BFMA, the representations and warranties set forth in the Existing Documents shall be true and correct (and Borrower so certifies, by its signature below) as of the date hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C. <u>No Default or Event of Default</u>. After giving effect to this BFMA, no Default or Event of Default shall exist or be continuing as of the date hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D. <u>Payment of Lender's Legal Fees and Expenses</u>. Borrower shall have reimbursed Lender for all sums due in payment of Lender's legal fees and expenses in connection with the preparation, negotiation and execution of this BFMA.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**6.** **<u>NO DEFENSES OF BORROWER/GENERAL RELEASE</u>**. Borrower agrees that, as of this date, it has no defenses against the obligations to pay any amounts under the Obligations. Borrower acknowledges that Lender would not enter into this BFMA without Borrower's assurance that it has no claims against Lender or any of Lender's officers, directors, employees or agents. Except for the obligations arising hereafter under this BFMA, each Borrower releases Lender, and each of Lender's and entity's officers, directors and employees from any known or unknown claims that Borrower now has against Lender of any nature, including any claims that Borrower, its successors, counsel, and advisors may in the future discover they would have now had if they had known facts not now known to them, whether founded in contract, in tort or pursuant to any other theory of liability, including but not limited to any claims arising out of or related to the Agreement or the transactions contemplated thereby. Borrower waives the provisions of California Civil Code section 1542, which states:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY.

The provisions, waivers and releases set forth in this section are binding upon Borrower and its shareholders, agents, employees, assigns and successors in interest. The provisions, waivers and releases of this section shall inure to the benefit of Lender and its agents, employees, officers, directors, assigns and successors in interest. The provisions of this section shall survive payment in full of the Obligations, full performance of all the terms of this BFMA and the Agreement, and/or Lender's actions to exercise any remedy available under the Agreement or otherwise.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.** **<u>CONTINUING VALIDITY</u>.** Borrower understands and agrees that in modifying the existing Obligations, Lender is relying upon Borrower's representations, warranties, and agreements, as set forth in the Existing Documents. Except as expressly modified pursuant to this BFMA, the terms of the Existing Documents remain unchanged and in full force and effect. Lender's agreement to modifications to the existing Obligations pursuant to this BFMA in no way shall obligate Lender to make any future modifications to the Obligations. Nothing in this BFMA shall constitute a satisfaction of the Obligations. It is the intention of Lender and Borrower to retain as liable parties all makers and endorsers of Existing Documents, unless the party is expressly released by Lender in writing. No maker, endorser, or guarantor will be released by virtue of this BFMA. The terms of this paragraph apply not only to this BFMA, but also to any subsequent Business Financing Modification Agreements.

*[remainder of this page intentionally left blank]*

 

 

 

 

 

 

BN 73999619v2

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**8.** **<u>NOTICE OF FINAL AGREEMENT</u>.** BY SIGNING THIS DOCUMENT EACH PARTY REPRESENTS AND AGREES THAT: (A) THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES, (B) THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES, AND (C) THIS WRITTEN AGREEMENT MAY NOT BE CONTRADICTED BY EVIDENCE OF ANY PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR UNDERSTANDINGS OF THE PARTIES.

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| | |
|:---|:---|
| &nbsp;&nbsp;**BORROWER:** <br>SOCKET MOBILE, INC.<br>By:: <u>/s/ Lynn Zhao</u><br> Name: Lynn Zhao<br> Title: CFO<br>| &nbsp;&nbsp;**LENDER:**<br>WESTERN ALLIANCE BANK<br> an Arizona corporation<br>By: <u>/s/ Michael Hengl</u><br> Name: Michael Hengl<br> Title: Senior Director<br>|

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Second Business Financing Modification Agreement and Waiver of Defaults

SCHEDULE 1

TO

SECOND BUSINESS FINANCING MODIFICATION AGREEMENT AND WAIVER OF DEFAULTS

EXISTING DEFAULTS

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| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**<u>Section of Agreement</u>** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**<u>Required Performance</u>** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**<u>Actual Performance1</u>** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section 4.12(a) – Minimum Revenue | &nbsp;&nbsp;$5,396,000 for the fiscal quarter ended September 30, 2022 (75% of the projections approved by Borrower's board of directors) | &nbsp;&nbsp;&nbsp;$3,727,871 for the fiscal quarter ended September 30, 2022 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section 4.12(b) – Minimum Quarterly Adjusted EBITDA | &nbsp;&nbsp;$897,000 for the fiscal quarter ended September 30, 2022 (75% of the projections approved by Borrower's board of directors) | &nbsp;&nbsp;<$505,988> for the fiscal quarter ended September 30, 2022 |

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________________________________

1 Numbers between "<>" are negative.

Second Business Financing Modification Agreement and Waiver of Defaults

EXHIBIT A TO SECOND BUSINESS FINANCING MODIFICATION AGREEMENT AND WAIVER OF DEFAULTS

REPLACEMENT FORM OF COMPLIANCE CERTIFICATE

Second Business Financing Modification Agreement and Waiver of Defaults

**COMPLIANCE CERTIFICATE**

TO: WESTERN ALLIANCE BANK, an Arizona corporation (the "Lender")

FROM: SOCKET MOBILE, INC., a Delaware corporation (the "Borrower")

The undersigned authorized officer of Borrower hereby certifies that in accordance with the terms and conditions of the Business Financing Agreement between Borrower and Lender (the "Agreement"), (i) Borrower is in complete compliance for the period ending <u>___________</u> with all required covenants except as noted below and (ii) all representations and warranties of Borrower stated in the Agreement are true and correct as of the date hereof. Attached herewith are the required documents supporting the above certification. The Officer further certifies that these are prepared in accordance with Generally Accepted Accounting Principles (GAAP) and are consistently applied from one period to the next except as explained in an accompanying letter or footnotes.

**Please indicate compliance status by circling Yes/No under "Complies" column.**

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| | | | |
|:---|:---|:---|:---|
| **Reporting Covenant** | **Required** | **Complies** | **Complies** |
| Audited annual financial statements | 120 days after FYE | Yes | No |
| Monthly financial statements | 30 days after month end | Yes | No |
| Copies of management letters to or from Borrower's auditors | Promptly upon sending or receipt | Yes | No |
| Form 10-K Annual Report, Form 10-Q Quarterly Report and Form<br> 8-K | concurrent with the date of filing with the Securities and Exchange Commission | Yes | No |
| Annual financial projections and budget | 30 days of FYE | Yes | No |
| Compliance Certificate | 30 days after month end | Yes | No |
| Domestic and EXIM Borrowing Base Certificates | 10 days after the last day of the month | Yes | No |
| Domestic A/R and A/P agings by<br> invoice date, sales journal, and cash receipts journal | 10 days after the last day of the month | Yes | No |
| EXIM A/R by due date and A/P agings | 10 days after the last day of the month | Yes | No |
| Sell through reports | 10 days after the last day of the month | Yes | No |
| CPA prepared business tax returns | Within 5 days of filing | Yes | No |

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| | | | |
|:---|:---|:---|:---|
| **Financial Covenant** | **Required** | **Complies** | **Complies** |
| Performance to Plan (EBITDA) | Adjusted EBITDA of at least $100,000<br> with respect to any fiscal quarter | $Yes | No |
| **<u>Deposits</u>** | **<u>Deposits</u>** |  |  |
| Deposits held at Western Alliance Bank:<br> $ | Deposits held at Western Alliance Bank:<br> $ |  |  |
| Deposits held outside of Western Alliance Bank:<br> $ | Deposits held outside of Western Alliance Bank:<br> $ |  |  |

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| | | | |
|:---|:---|:---|:---|
| **Comments Regarding Exceptions:** See Attached. | **BANK USE ONLY** | **BANK USE ONLY** | **BANK USE ONLY** |
| | Received by: | Received by: | Received by: |
| Sincerely, | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;AUTHORIZED SIGNER | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;AUTHORIZED SIGNER | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;AUTHORIZED SIGNER |
| | Date: | Date: | Date: |
| | Verified: | Verified: | Verified: |
| | Verified: | Verified: | Verified: |
| SIGNATURE | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;AUTHORIZED SIGNER | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;AUTHORIZED SIGNER | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;AUTHORIZED SIGNER |
| | Date: | Date: | Date: |
| | Date: | Date: | Date: |
| TITLE | | | |
| | Compliance Status | Yes | No |
| DATE | | | |

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