Item 1.01 Entry Into a Material Definitive Agreement

On January 25, 2023, Socket Mobile ("we" or the "Company") entered into the Second Business Financing Modification Agreement and Waiver of Defaults (the "Financing Agreement") with Western Alliance Bank, an Arizona corporation ("Lender"), which among other things, extends the maturity date of the Company's $2.0 million domestic and $0.5 million EXIM revolving credit facilities to January 31, 2025. The Financing Agreement also waives the events of default as a result of noncompliance of the required financial performance in Q3 2022. The original Financing Agreement was dated February 27, 2014 with subsequent modifications dated February 26, 2016, March 20, 2017, January 31, 2018, June 4, 2018, July 30, 2018, June 14, 2019, January 29, 2021, and February 9, 2022.

The Financing Agreement contains customary affirmative and negative covenants, including covenants that limit or restrict our ability to, among other things, grant liens, make investments, incur indebtedness, merge or consolidate, dispose of assets, make acquisitions, pay dividends or make distributions, repurchase stock, enter into transactions with affiliates and enter into restrictive agreements, in each case subject to customary exceptions for a credit facility of this size and type. We are also required to maintain adjusted EBITDA of at least $100,000 with respect to any fiscal quarter commencing with the fiscal quarter ending December 31, 2022.

The Financing Agreement also contains customary events of default including, among others, payment defaults, breaches of covenants, bankruptcy and insolvency events, cross defaults with certain material indebtedness, judgment defaults, and breaches of representations and warranties. Upon an event of default, Lender may declare all or a portion of our outstanding obligations payable to be immediately due and payable and exercise other rights and remedies provided for under the Financing Agreement.

The foregoing description of the Financing Agreement is qualified in its entirety by reference to the full text of the Amended and Restated Business Financing Agreement, a copy of which is attached hereto as Exhibit 10.1 and 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.

The information set forth in Item 1.01 hereof is incorporated by reference into this Item 2.03.

Item 9.01 Financial Statements and Exhibits





(d) Exhibits.



Exhibit No.    Description

10.1           Second Business Financing Modification Agreement and Waiver of
               Defaults dated as of January 25, 2023

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