U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) July 5, 2005
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THERMODYNETICS, INC.
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(Exact name of registrant as specified in its charter)
0-10707
Delaware 0-10707 06-1042505
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[State or other jurisdiction (Commission File No.) (I.R.S. Employer
of incorporation) Identification No.)
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651 Day Hill Road, Windsor, Connecticut 06095
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(Address of principal executive offices) (Zip Code)
860-683-2005
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(Registrant's telephone number)
N/A
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(Former name or former address, if changed since last report.)
Check the appropriate box 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):
o Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240, 14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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Section 2. Financial Information
Item 2.04. Triggering Events That Accelerate or Increase a Direct Financial
Obligation or an Obligation under an Off-Balance Sheet Arrangement.
On August 4, 2003, Thermodynetics, Inc. (the "Company") acquired all
of the issued and outstanding capital stock of Vulcan Industries, Inc.
("Vulcan"). The Company financed the acquisition through, among other credit
facilities, a $700,000 term note from its primary bank ("Bank"), and is secured
by substantially all of the assets of Vulcan and the Company and is guaranteed
by the Company and its other operating subsidiary. Further, a term loan was
obtained from an equipment finance company ("Equipment Lender") to finance a
portion of new equipment (the "Equipment Term Loan"). The Equipment Term Loan
consists of a $1,847,580 term note due March 31, 2009, and has a first secured
position specific equipment of Vulcan. The Company is a co-borrower for
additional credit and security to such finance company.
Further, a community block development term loan (the "City Term Loan")
was obtained September 12, 2003 from the City of Sturgis, Michigan ("City"). The
City Term Loan is a $400,000 term note amortized over the same period as the
Equipment Term Loan, is secured by a subordinated position in the assets of
Vulcan and the new equipment purchased by Vulcan. The Company is a guarantor of
such loan.
On July 5, 2005, the Company and Vulcan received a notice of default
dated July 1, 2005 from Equipment Lender. Equipment Lender stated its intention
to accelerate the entire unpaid balance of the Equipment Term Loan unless it
received a payment of $79,453.90 by July 10, 2005; such lender extended the cure
date through July 15, 2005. The Company is unable to pay such amount to the
Equipment Lender without selling the equipment financed by such loan.
On July 6, 2005, the Company, Vulcan and the Company's subsidiary
Turbotec Products, Inc. received a notice dated July 6, 2005 from the Bank
stating that Events of Default have occurred and are continuing in respect of
the Bank's Term Loan as a result of, among other reasons, the acceleration of
the Equipment Term Loan. The Company has not yet received a notice of default
from the City; however, if the alleged Equipment Term Loan default is not cured,
the Company anticipates receiving a default notice from the City.
In anticipation of the alleged loan defaults, the Company has been
seeking to sell certain of the equipment owned by Vulcan. The Company has
entered into a nonbinding letter agreement with the Bank, the Equipment Lender,
the City, and one customer of Vulcan to sell the equipment securing the
Equipment Term Loan and some additional equipment to such customer of Vulcan;
such customer accounts for approximately 80% of Vulcan's sales, and 28% of the
Company's sales. The anticipated sale will be sufficient to pay off the
Equipment Term Loan in full and approximately one-half of the City Term Loan.
The Bank has indicated in such nonbinding letter that it would permit the sale
of such equipment to proceed. Separately, the Bank has verbally indicated its
intention to forbear accelerating its credit facilities and to provide
additional term debt to pay the remaining approximate one-half outstanding
balance of the City Term Loan if the other parties agree to the terms set forth
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in the nonbinding letter agreement. Such transactions, if consummated, would
severely reduce Vulcan's manufacturing capacity and revenues, but also remove a
significant amount of debt from the Company's balance sheet, which debt has been
accelerated. Further, the nonbinding letter agreement provides that the customer
may agree to fund certain operations of Vulcan through August 15, 2005; if it
does not do so, it may cause Vulcan to cease operations. Therefore, the
long-term viability of Vulcan is highly uncertain.
The Company is currently unable to state the effect on its financial
condition of such events, although they are likely to be material.
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Section 9. Financial Statements and Exhibits
Item 9.01. Financial Statements and Exhibits.
(c) Exhibits.
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Exhibit No. Description
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10.1 $700,000 Term Note dated as of July 31, 2003 to Citizens
Bank of Massachusetts. (Incorporated by reference from
Exhibit 10-a to Form 8-K filed August 14, 2003, Commission
File No. 0-10707).
10.2. $1,750,000 Term Note dated as of July 25, 2003 to Wells
Fargo Equipment Finance, Inc. (Incorporated by reference
from Exhibit 10-d to Form 8-K filed August 14, 2003,
Commission File No. 0-10707).
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 hereto duly authorized.
(Registrant)
THERMODYNETICS, INC.
By: /s/ Robert A. Lerman
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Robert A. Lerman, President
Date: July 11, 2005
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