UNITED STATES
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): MARCH 31, 2005
TRINITY LEARNING CORPORATION
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(Exact name of registrant as specified in its charter)
Utah 000-08924 73-0981865
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
4101 International Parkway, Carrollton, Texas 75007
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(Address of principal executive offices and Zip Code)
Registrant's telephone number, including area code (972) 309-4000
Copies to:
Darrin Ocasio, Esq.
Sichenzia Ross Friedman Ference LLP
1065 Avenue of the Americas
New York, New York 10018
Phone: (212) 930-9700
Fax: (212) 930-9725
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 March 31, 2006, Trinity Learning Corporation (the "Company") entered
into a Securities Purchase Agreement with certain accredited investors for the
issuance of up to an aggregate of $8,500,000 in face amount of 15% Senior
Secured Convertible Debentures (the "Debentures") maturing March 31, 2010, and
four year warrants (the "Warrants") to purchase an aggregate of 13,600,000
shares of common stock of the Company. The Debentures accrue interest at a rate
of 15% per annum and the Company issued a face amount of $4,500,000 in
Debentures and issued warrants to purchase an aggregate of 7,200,000 shares of
common stock pursuant to the first closing which occurred on March 31, 2006.
The Debentures are convertible into shares of the Company's common stock at
a price equal to $0.25 per share. The Company is obligated to pay 1/24th of the
face amount of the Debenture on the first of every month, starting March 31,
2008, which payment can be made in cash or in common stock of the Company. The
Company may pay this amortization payment in cash or in stock at the lower of
$0.25 per share (the "Set Price") or 80% of the volume weighted average price of
the Company's stock for the twenty trading days prior to the repayment date. The
Company's obligation to repay Debentures is secured by all of its assets, and
the assets of its wholly owned subsidiary, Trinity Workplace Learning
Corporation (the "Subsidiary"), pursuant to a certain Security Agreement which
the Company and the Subsidiary entered into with the investors on March 31,
2006. In addition, the Company's Subsidiary entered into a Subsidiary Guarantee
with the investors on March 31, 2006 pursuant to which the Subsidiary agreed to
guarantee the Company's repayment of the Debentures to the investors.
In the event of default, the investors may require payment, which shall be
the greater of: (A) 130% of the principal amount of the Debenture to be prepaid,
plus all accrued and unpaid interest thereon, or (B) the principal amount of the
Debenture to be prepaid, divided by the conversion price on (x) the date the
default amount is demanded or otherwise due or (y) the date the default amount
is paid in full, whichever is less, multiplied by the volume weighted average
price on (x) the date the default amount is demanded or otherwise due or (y) the
date the default amount is paid in full, whichever is greater.
The Warrants are exercisable into shares of the Company's common stock at a
price equal 120% of closing bid price of the Company's common stock on the day
that is one day prior to the initial closing date. If at any time after one year
from the date of issuance of the Warrant, there is no effective registration
statement registering the resale of the shares underlying the Warrant, then the
Warrant may be exercised at such time by means of a cashless basis. The number
of shares underlying the warrants equals 40% of the shares of common stock
issuable on full conversion of the Debentures at the Set Price (as if the
Debentures were so converted on March 31, 2006).
The conversion price of the debentures and the exercise price of the
warrants may be adjusted in certain circumstances such as if we pay a stock
dividend, subdivide or combine outstanding shares of common stock into a greater
or lesser number of shares, or take such other actions as would otherwise result
in dilution of the investors' position.
The investors have agreed to restrict their ability to convert their
debentures or exercise their warrants and receive shares of our common stock
such that the number of shares of common stock held by them in the aggregate and
their affiliates after such conversion of the Debentures does not exceed 4.99%
or exercise of the Warrants does not exceed 9.99% of the then issued and
outstanding shares of common stock.
Further, we paid commissions of $405,000, a due diligence fee of $25,000,
and issued 225,000 Warrants to the placement agent, a registered broker dealer
firm, each as consideration for services performed in connection with the
issuance of the Debentures and Warrants to the investors in the first closing
pursuant to the Securities Purchase Agreement. The placement agent has no
obligation to buy any Debentures or Warrants from us. In addition, we have
agreed to indemnify the placement agent and other persons against specific
liabilities under the Securities Act of 1933, as amended.
The Company used a portion of the proceeds from the first closing to repay
a portion of its outstanding Credit Facility with Instream Investment Partners,
LLC ("Instream") dated as of July 13, 2005 in the aggregate amount of
$2,089,583.24. Instream shall retain an aggregate amount of $2,551,169 currently
being held by Instream as satisfaction of the remaining portion of the Credit
Facility.
The Company has agreed to file a registration statement with the Securities
and Exchange Commission (the "Commission") within 45 days of the initial closing
date to cover 130% of the shares issuable upon conversion of the Debentures and
exercise of the Warrants. If the registration statement is not filed within such
45-day period or if the registration statement is not declared effective within
90 days from the initial closing date (120 days if the Commission reviews the
registration statement), we are required to pay liquidated damages in cash to
the investors in an amount equal to 1.5% of the face value of the Debentures per
month, which liquidated damages shall not exceed 20% of the face value of the
Debentures. The registration statement also will cover the future sale by
placement agent of the shares issuable on exercise of the Warrants issued to the
placement agent in connection with the transaction.
The Company claims an exemption from the registration requirements of the
Act for the private placement of these securities pursuant to Section 4(2) of
the Act and/or Regulation D promulgated thereunder since, among other things,
the transaction did not involve a public offering, the investors were accredited
investors and/or qualified institutional buyers, the investors had access to
information about the Company and their investment, the investors took the
securities for investment and not resale, and the Company took appropriate
measures to restrict the transfer of the securities.
ITEM 1.02 TERMINATION OF A MATERIAL DEFINITIVE AGREEMENT.
See Item 1.01 above.
ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION.
See Item 1.01 above.
ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES.
See Item 1.01 above.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(A) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
Not applicable.
(B) PRO FORMA FINANCIAL INFORMATION.
Not applicable.
(C) EXHIBITS.
EXHIBIT
NUMBER DESCRIPTION
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10.1 Securities Purchase Agreement dated as of March 31, 2006 by and among
Trinity Learning Corporation and the investors.
10.2 Form of 15% Senior Secured Convertible Debenture of Trinity Learning
Corporation.
10.3 Form of Warrant of Trinity Learning Corporation.
10.4 Registration Rights Agreement dated as of March 31, 2006 by and among
Trinity Learning Corporation and the investors.
10.5 Security Agreement dated as of March 31, 2006 by and among Trinity Learning
Corporation, Trinity Workplace Learning Corporation and the investors.
10.6 Subsidiary Guarantee dated as of March 31, 2006 by Trinity Workplace
Learning Corporation.
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.
TRINITY LEARNING CORPORATION
Date: April 3, 2006 /s/ Patrick Quinn
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Patrick Quinn
Chief Financial Officer