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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
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FORM 8-K
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CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 23, 2006
GALAXY NUTRITIONAL FOODS, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 1-15345 25-1391475
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(State or other (Commission File Number) (IRS Employer
juristidiction of incorporation) Identification No.)
2441 Viscount Row
Orlando, Florida 32809
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(Address of Principal Executive Offices) (Zip Code)
(407) 855-5500
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(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))
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This Report includes forward-looking statements related to Galaxy
Nutritional Foods, Inc. that involve risks and uncertainties, including, but not
limited to, risks and uncertainties relating to the outcome of pending
litigation, and other risks. These forward-looking statements are made in
reliance on the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995. For further information about these and other factors that
could affect Galaxy's future results and business plans, please see our filings
with the Securities and Exchange Commission, including in particular our Annual
Report on Form 10-K for the year ended March 31, 2005 and our Quarterly Report
on Form 10-Q for the quarter ended December 31, 2005. Copies of these filings
are available online at http://www.sec.gov. Prospective investors are cautioned
that forward-looking statements are not guarantees of performance. Actual
results may differ materially and adversely from management expectations.
Item 1.01 Entry into a Material Definitive Agreement.
The information set forth under Item 2.03 of this Report on Form 8-K is
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.
On June 23, 2006, Galaxy Nutritional Foods, Inc. (the "Company") entered
into a Receivables Purchase Agreement with Systran Financial Services
Corporation, an affiliate of Textron Financial Corporation ("Systran"), whereby
Systran will provide a line of credit to the Company through advances against
certain trade receivable invoices due to the Company (the "Systran Line").
The Systran Line is secured by the Company's accounts receivable and all
other assets. Generally, subject to a maximum principal amount of $3,500,000
which can be borrowed under the Systran Line, the amount available for borrowing
is equal to 85% of the Company's eligible accounts receivable invoices less a
dilution reserve and any required fixed dollar reserves. The dilution and fixed
dollar reserve have been initially set at 7% and $100,000, respectively.
Advances under the Systran Line bear interest at a variable rate equal to the
prime rate plus 1.5% per annum (9.5% on June 23, 2006). The Company paid a
one-time closing fee of $35,000 and is also obligated to pay a $1,500 monthly
service fee.
The initial term of the Systran Line ends on June 23, 2009 and may renew
automatically for consecutive twelve-month terms unless terminated sooner. The
Systran Line may be accelerated in the event of certain defaults by the Company.
In such an event, interest on the Company's borrowings would accrue at the
greater of twelve percent per annum or the variable rate of prime plus 1.5% and
the Company would be liable for an early termination premium ranging from 1% to
3% of the maximum principal amount available under the Systran Line.
On June 23, 2006, Systran advanced $2,379,262 under the Systran Line of
which $1,839,086 was used to pay in full and terminate the Company's obligations
under its line of credit with Textron Financial Corporation which was to
terminate on June 27, 2006.
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Item 9.01 Financial Statements and Exhibits
10.30 Receivables Purchase Agreement, together with Addendum, dated June
23, 2006 between Galaxy Nutritional Foods, Inc. and Systran
Financial Services Corporation (filed herewith).
99.1 Press Release regarding Systran issued by the Company on June 29,
2006 (filed herewith).
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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.
Dated: June 29, 2006 Galaxy Nutritional Foods, Inc.
By: /s/ Salvatore J. Furnari
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Salvatore J. Furnari
Chief Financial Officer
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