Item
1.02
|
Termination
of a Material Definitive Agreement.
|
As
previously disclosed, on February 8, 2018, Eco-Stim Energy Solutions, Inc. (the “Company”) and its wholly owned subsidiary
EcoStim, Inc. (each referred to herein as a “Seller” and collectively as the “Sellers”) entered into a
Recourse Receivables Purchase & Security Agreement (the “Agreement”) with Porter Capital Corporation (“Porter
Capital” or the “Buyer”). Under the terms of the Agreement, the Sellers have been able, from time to time, to
sell accounts receivable (“Accounts”) to the Buyer in exchange for funds in an amount equal to 80% of the face amount
of the applicable Account at the time of sale of the Account, with the remaining 20% of the face amount of the applicable Account
to be held back as a required reserve amount to be paid to the Sellers following Buyer’s receipt of payment on the Account
by the account debtor, less applicable fees and interest charges. All of the Sellers’ obligations under the Agreement have
been secured by liens on certain of the assets of the Sellers, including the Sellers’ accounts receivable, chattel paper,
inventory and substantially all of the Sellers’ equipment for its U.S. operations (excluding equipment subject to vendor
financing) (collectively, the “Collateral”).
The
Agreement had an initial one-year term, with the Sellers permitted to terminate the Agreement prior to the expiration of the initial
term upon written notice to Porter Capital and payment of Sellers’ outstanding obligations under the Agreement, including
amounts owed as a minimum term fee calculated in accordance with the terms of the Agreement (the “Minimum Term Fee”).
On
October 19, 2018, the Sellers delivered a notice to Porter Capital of the Sellers’ election to terminate the Agreement following
the payment of the Sellers’ remaining obligations thereunder, including a Minimum Term Fee of approximately $182,000. As
a result, the Sellers will no longer be able to obtain funds under the Receivables Agreement and the Company expects that the
Collateral will be released from the liens that had secured the Sellers’ obligations under the Agreement.
Cautionary
Statement Regarding Forward-Looking Statements
The
foregoing contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The
words “believe,” “expect,” “anticipate,” “plan,” “intend,” “foresee,”
“should,” “would,” “will,” “could” or other similar expressions are intended to
identify forward-looking statements, which are generally not historical in nature. All statements, other than statements of historical
facts, that address activities, events or developments that the Company expects, believes or anticipates will or may occur in
the future are forward-looking statements. These statements are based on certain assumptions made by the Company based on management’s
experience, expectations and perception of historical trends, current conditions, anticipated future developments and other factors
believed to be appropriate.
Forward-looking
statements are not guarantees of performance. Although the Company believes the expectations reflected in its forward-looking
statements are reasonable and are based on reasonable assumptions at the time the statements are made, no assurance can be given
that these assumptions are accurate or that any of these expectations will be achieved (in full or at all) or will prove to have
been correct. For additional information regarding known material factors that could cause the Company’s actual results
to differ from its projected results, please see the Company’s filings with the SEC, including its Annual Report on Form
10-K for the fiscal year ended December 31, 2017 and Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 2018
and June 30, 2018.