Item 2.03 Creation of a Direct
Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
As described above,
on June 14, 2018, we entered into the Term Loan Documents with Lenders with respect to the issuance to us by Lenders of a $20,000,000
Term Loan. The Term Loan is a secured obligation, second only to the Credit Line we have with Wells Fargo (as defined below), except
with respect to certain of our inventory in which GACP has a priority secured position. Borrowings under the Term Loan accrue interest
at LIBOR plus 9.00% per annum. The Term Loan is accelerated and becomes immediately due and payable (and the Term Loan terminates)
in the event of a default under the Term Loan Documents which include, among other things, the following events: breach of certain
covenants or representations contained in the Term Loan Documents, defaults under other loans or obligations, involvement in bankruptcy
proceedings, an occurrence of a change of control or an event constituting a material adverse effect on us (as such terms are defined
in the Term Loan Documents). The Term Loan Documents also contain negative covenants which, during the life of the Term Loan, prohibit
and/or limit us from, among other things, the following: incurring certain types of other debt, acquiring other companies, making
certain expenditures or investments, changing the character of our business, and certain changes to our executive officers. The
foregoing description of the Term Loan is qualified in its entirety by reference to the Term Loan Documents, copies of which are
filed as exhibits to this Form 8-K and are incorporated by reference in this Item 2.03.
Additional information
is provided in Item 1.01 above and is incorporated herein by reference to this Item 2.03.
As previously disclosed,
on March 27, 2014, we entered into a Credit Agreement, Revolving Loan Note, Guaranty and Security Agreement and other ancillary
documents and agreements (the “Credit Line Documents”) with General Electric Capital Corporation (since assigned to
Wells Fargo Bank, National Association (“Wells Fargo”)) as a lender with respect to the issuance to us of a revolving
line of credit of up to a maximum of $75,000,000 (the “Credit Line”) of which the actual amount of our borrowings are
calculated based upon a formula involving our Receivables (as defined in the Credit Line Documents) and the Receivables of our
subsidiaries party to the Credit Line Documents.
On June 14, 2018, we
revised certain of the Credit Line Documents (and entered into new ones) so that certain of our Hong Kong based subsidiaries became
additional parties to the Credit Line Documents. As a result, the receivables of these subsidiaries can now be included in the
borrowing base thereby effectively increasing the amount of funds we can borrow under the Credit Line.
Any additional borrowings
under the Credit Line will be used for general working capital.
The foregoing description
of the revised Credit Line Documents is qualified in its entirety by reference to the Eleventh Amendment to Credit Agreement and
Amendment to Guaranty and Security Agreement, a copy of which is filed as an exhibit to this Form 8-K and is incorporated by reference
in this Item 2.03.