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) JULY 21, 2005
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I/OMAGIC CORPORATION
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(Exact name of registrant as specified in its charter)
NEVADA 000-27267 33-0773180
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
4 MARCONI, IRVINE, CALIFORNIA 92618
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (949) 707-4800
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NOT APPLICABLE
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(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):
[ ] 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 June 6, 2005, the Company entered into an agreement for a trade credit
facility with Lung Hwa Electronics, Co. Ltd. ("LHE"). LHE is a stockholder and
subcontract manufacturer and supplier of the Company. Under the terms of the
facility, LHE has agreed to purchase and manufacture inventory on the Company's
behalf. The Company can purchase up to $15.0 million of inventory either (i)
through LHE as an international purchasing office, or (ii) manufactured by LHE.
For inventory purchased through LHE the payment terms are 120 days following the
date of invoice by LHE and LHE charges the Company a 5% handling fee on a
supplier's unit price. For inventory manufactured by LHE, the payment terms are
90 days following the date of the invoice by LHE. Upon effectiveness of the
Agreement, the Company is required to pay LHE $1.5 million as an early payment
for all invoices coming due for payment. Any early payment funds remaining three
months after the date of the Agreement shall be refunded to the Company
immediately. Once the $1.5 million has been exhausted, or three months from the
date of the Agreement has expired, whichever is sooner, the Company shall pay
LHE 10% of the purchase price on any purchase orders issued to LHE, as a
down-payment for the order, within one week of the purchase order.
On July 21, 2005, the Company entered into an Amended and Restated
Agreement (the "Amendment") with LHE that amended certain terms of the
Agreement. The Amendment resulted in material amendments to the Agreement to (i)
apply the terms of the Agreement retroactively so that the Agreement is
effective as of April 29, 2005; (ii) change the payment terms of the 10% down
payment for products ordered from payment within one week of the Company's
purchase order to payment within ten days of LHE's invoice date; (iii) define
LHE's invoice date as no earlier than the shipment date of products to the
Company; and (iv) designate all purchase orders as F.O.B. the Company's
warehouse in Irvine, California, unless otherwise agreed upon in writing by both
parties.
The above descriptions of the Agreement and the Amendment are qualified in
their entirety by the terms of the Agreement and the Amendment attached as
Exhibit 10.1 and 10.2, respectively, of this Report.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Businesses Acquired.
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Not applicable.
(b) Pro Forma Financial Information.
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Not applicable.
(c) Exhibits.
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Number Description
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10.1 Agreement between Lung Hwa Electronics Co., Ltd. and
I/OMagic Corporation dated June 6, 2005 (1)
10.2 Amended and Restated Agreement between Lung Hwa
Electronics Co. Ltd., and I/OMagic Corporation, dated
July 21, 2005 (*)
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* Filed herewith.
(1) Filed with the Securities and Exchange Commission on June
13, 2005 as an exhibit to I/OMagic Corporation's Report on
Form 8-K and incorporated herein by reference.
SIGNATURE
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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.
Date: July 27, 2005 I/OMAGIC CORPORATION
By: /s/ Steve Gillings
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Steve Gillings, Chief
Financial Officer