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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 (EARLIEST EVENT REPORTED): AUGUST 13, 2007
EMRISE CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 1-10346 77-0226211
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) file number) Identification No.)
9485 HAVEN AVENUE, SUITE 100
RANCHO CUCAMONGA, CALIFORNIA 91730
(Address of principal executive offices) (Zip code)
(909) 987-9220
(Registrant's telephone number, including area code)
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:
[ ] 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))
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On August 13, 2007, EMRISE Corporation, Emrise Electronics Corporation, RO
Associates Incorporated, and CXR Larus Corporation entered into a First
Amendment to Credit and Security Agreement and Waiver of Defaults (the
"Amendment") with Wells Fargo Bank, National Association, acting through its
Wells Fargo Business Credit operating division. The Amendment resets certain
financial covenants contained in the existing Credit and Security Agreement
dated December 1, 2006 ("Existing Agreement"), which covenants apply to EMRISE
Corporation and its subsidiaries on a consolidated basis, as described below.
The minimum debt service coverage ratio must be greater than 1.20:1:00 on a
trailing quarterly basis. "Debt service coverage ratio" is defined as net income
after taxes, plus depreciation, plus amortization, plus or minus changes in
deferred taxes, minus capital expenditures and minus dividends or distributions,
divided by the current maturities of long-term debt paid or scheduled to be paid
plus any payments on subordinated debt. The amended covenants also require that
we maintain a minimum book net worth, determined at the end of each calendar
month, in an amount not less than the sum of (i) $23 million and (ii) 90% of
consolidated net income for each calendar quarter ending on or after September
30, 2007, but only to the extent such net income for each such quarter is
positive. The amended covenants also specify minimum year-to-date net income
(loss) thresholds that are measured monthly. We were not permitted to incur a
net loss of greater than $1.5 million for the six months ended June 30, 2007.
For the year-to-date period ending September 30, 2007, we are not permitted to
incur a net loss of greater than $1.2 million and for the year-to-date period
ending December 31, 2007 our net income must not be less than $100,000.
The Amendment also provides a formal waiver of defaults for the periods ended
April 30, 2007 and May 31, 2007 that occurred under the financial covenants
relating to Minimum Book Net Worth that existed under the Existing Agreement
prior to the Amendment.
A copy of the Amendment is attached hereto and incorporated by reference as
Exhibit 10.1.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
d. Exhibits:
EXHIBIT NO. DESCRIPTION
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10.1 FIRST AMENDMENT TO CREDIT AND SECURITY AGREEMENT AND
WAIVER OF DEFAULTS dated August 13, 2007, by and
among Emrise Corporation, a Delaware corporation,
Emrise Electronics Corporation, a New Jersey
corporation, RO Associates Incorporated, a California
corporation, CXR Larus Corporation, a Delaware
corporation, and WELLS FARGO BANK, NATIONAL
ASSOCIATION, acting through its Wells Fargo Business
Credit operating division.
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 thereunto duly authorized.
EMRISE CORPORATION
Dated: August 15, 2007 By: /S/ D. JOHN DONOVAN
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D. John Donovan, Vice President
of Finance and Administration
(principal financial officer)
INDEX TO EXHIBITS ATTACHED TO THIS REPORT
EXHIBIT NO. DESCRIPTION
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10.1 FIRST AMENDMENT TO CREDIT AND SECURITY AGREEMENT AND WAIVER OF DEFAULTS
dated August 13, 2007, by and among Emrise Corporation, a Delaware
corporation, Emrise Electronics Corporation, a New Jersey corporation,
RO Associates Incorporated, a California corporation, CXR Larus
Corporation, a Delaware corporation, and WELLS FARGO BANK, NATIONAL
ASSOCIATION, acting through its Wells Fargo Business Credit operating
division.