UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
(Amendment No. 2)
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): April 1, 2005
Trinity Learning Corporation
__________________________________________
(Exact name of registrant as specified in its charter)
Utah 0-8924 73-0981865
_____________________ ___________ ___________
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
3685 Mt. Diablo Blvd. Suite 161
Lafayette, California 94549
_________________________________ ________
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (925) 284-8025
Not Applicable
______________________________________________
Former name or former address, if changed since last report
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:
[ ] 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))
This Amendment No. 2 to Current Report on Form 8-K amends and restates
the information previously reported in the Current Report on Form 8-K filed
with the Securities and Exchange Commission on April 7, 2005 and Amendment
No. 1 thereto filed with the SEC on May 12, 2005. This Amendment No. 2
also includes certain historical and pro formal financial information not
previously included.
FORWARD LOOKING STATEMENTS DISCLAIMER RISKS
Statements herein which are not statements of historical fact are
forward-looking statements within the meaning of the Safe Harbor Provision
of the Private Securities Litigation Reform Act of 1995. Such statements
are based on the current expectations and beliefs of the management of
Trinity Learning Corporation, and are subject to a number of factors and
uncertainties that could cause actual results to differ materially from
those described in the forward-looking statements including, without
limitation, the ability of the company to sustain customer interest in its
core products. For a more detailed discussion of risk factors that affect
our operating results, please refer to our SEC reports including our most
recent reports on Form 10-QSB.
ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
Effective April 1, 2005, Trinity Learning Corporation (the "Company")
entered into and closed an asset purchase agreement (the "Asset Purchase
Agreement") with PRIMEDIA Inc. and two PRIMEDIA affiliates
(collectively,"PRIMEDIA"), whereby PRIMEDIA sold to the Company certain
assets related to its PRIMEDIA's Workplace Learning division ("PWPL"). The
assets comprised those relating to PWPL's Healthcare Group, Government
Services Group, Industrial Services Group, Shared Services Group, and all
other assets of PWPL, including all of the assets of PRIMEDIA Digital Video
Holdings LLC, excluding only those assets primarily related to the
operations of PWPL's Financial Services Group and/or PWPL's Interactive
Medical Network business (such acquired assets referred to collectively
hereinafter as the "Business"). These assets are comprised of content
libraries, trademarks, brands, intellectual property, databases, and
physical assets. Included in the sale are certain video production and
distribution capabilities used to deliver integrated learning solutions to
professionals in the homeland security, healthcare, industrial, fire &
emergency, government, law enforcement and private security markets
currently served by PWPL.
In consideration for the Business, the Company assumed certain liabilities
of PRIMEDIA relating to the Business (the "Assumed Liabilities") in an
aggregate amount estimated at the time of closing to be between $28 and $30
million. Based upon management's review of historical financial data with
respect to the Business, the Company estimates that revenues generated by
the Business during the Company's final fiscal quarter in fiscal 2005 will
be approximately $7.0 million. Additional financial information
pertaining to the Business, including pro forma financial statements
incorporating historical financial results of the Business, is included
under Item 9.01 of this Current Report on Form 8-K.
The purchase price for the Business is subject to a working capital
adjustment whereby the purchase price for the assets will be either reduced
or increased on a dollar-for-dollar basis to the extent that certain
elements of the working capital deficit of the Business as of April 1, 2005
is determined within 90 days of such date to be either, respectively, less
than or greater than $4,000,000. Any such working capital adjustment shall
be satisfied by a cash payment by the responsible party, all pursuant to
the terms of the Asset Purchase Agreement. A copy of the Asset Purchase
Agreement is attached hereto as Exhibit 10.1 and is incorporated herein by
this reference. The summary of the transactions contemplated by the Asset
Purchase Agreement set forth above is qualified in its entirety by
reference to such exhibit.
In connection with the transactions contemplated by the Purchase Agreement,
SBI USA LCC, a California limited liability company ("SBI"), agreed to
guarantee the performance by the Company of certain leases comprising part
of the Assumed Liabilities. In consideration for such guarantee (the
"Guarantee"), the Company entered into an agreement with SBI dated April 1,
2005 (the "SBI Agreement") pursuant to which the Company agreed, among
other things, to issue to SBI an aggregate of 4,000,000 shares of the
Company's common stock (which stock will carry piggyback registration
rights) (the "SBI Shares"), to reimburse SBI for any expenses incurred by
it in connection with the granting of the Guarantee, to grant SBI the right
to appoint an observer to the Company's Board of Directors, to compensate
such observer at the rate of $15,000 per month, plus expenses, and to
indemnify SBI for any liabilities that might accrue to it pursuant to the
Guarantee. A copy of the SBI Agreement, along with Annex A thereto, is
attached hereto as Exhibit 10.2. The foregoing summary of the transactions
contemplated by the SBI Agreement is qualified in its entirety by reference
to such exhibit.
ITEM 2.01. COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS.
Effective April 1, 2005, the Company completed the acquisition of assets
from PRIMEDIA as described above under Item 1.01.
ITEM 3.02. UNREGISTERED SALES OF EQUITY SECURITIES.
As disclosed under Item 1.01 above, on April 1, 2005, the Company entered
into the SBI Agreement pursuant to which the Company agreed to issue the
SBI Shares. The issuance of this stock by the Company will be made in
reliance on Section 4(2) of the Securities Act of 1933 as a transaction not
involving any public offering. No advertising or general solicitation was
or will be employed in offering the securities, the offerings and sales
will be made to one entity, and the Company will restrict the transfer of
the securities in accordance with the requirements of the Securities Act of
1933. SBI will represent its intention to acquire the securities for
investment only and not with a view to or for sale in connection with any
distribution thereof, and appropriate legends will be affixed to the stock
certificates representing the SBI Shares.
ITEM 8.01. OTHER EVENTS.
The Company operates the Business as a wholly-owned subsidiary under the
name Trinity Workplace Learning ("TWL"). TWL now represents substantially
all of the Company's assets and operations. Trinity Learning continues to
operate its other subsidiaries in the United States and in international
markets, with the intent of integrating operations, sales and marketing
into TWL. In cases where integration is not feasible or cost effective,
the Company anticipates that it will either (a) continue to operate certain
subsidiaries as it has done in the past, (b) seek partnerships and
alliances and other strategic relationships, or (c) divest or reduce its
ownership in selective non-core assets and operations.
Management believes that the acquisition of the Business from Primedia is
an important milestone in its business development and provides the Company
with an operating foundation in the United States (including content
libraries, advanced communication capabilities, industry-recognized
workplace certifications, and over 200 workplace learning professionals)
upon which the Company can continue to implement its vision to become a
leading company and brand in the global learning market.
The Company's growth strategy consists of acquisitions, internal growth and
alliances that will enable it to leverage and grow the acquired assets.
Management believes that opportunities exist to increase revenue and EBITDA
without the need for significant new capital expenditures over the next two
years. The Company's strategy includes the following:
- CROSS SELLING OF EXISTING CONTENT TWL comes with a client base
of over 7,000 current clients. Since significant customer overlap
between industry verticals exists, efforts are being made to
cross-sell its content library of over 21,000 titles. Management
believes that there are numerous cross- and up-selling
opportunities in the combined Company and is refocusing its sales
force to realize these synergies.
- INCREASED CAPACITY UTILIZATION - In addition to its strategy to
grow its workplace learning products and services in existing
industry verticals and to expand into new industry verticals,
TWL's production facility has additional unutilized capacity.
Trinity Learning is in the process of increasing capacity
utilization by one or more of the following: subleasing unused
office space, finding additional third-party clients for video
production facilities, and identifying clients to share its
satellite service capacity.
- ACQUISITIONS Recognizing that there is no single instructional
method or technology that works for every skill, every type of
worker or for all types of content that might be required in a
major employer's overall human capital planning, the Company
intends to continue to acquire operating companies that, when
combined with Trinity's existing platform, represent a blended
learning approach to workplace learning.
Since Closing of the Asset Purchase Agreement on April 1, 2005, the
Company estimates that it has reduced operating expenses of the Business by
approximately $3.5 million on an annualized basis through the following
initiatives, which are not reflected in the Pro Forma Financial Statements
included in this CurrentReport:
- Because Primedia refreshed and updated the content library prior
to the sale of PWPL, the Company believes that minimal
investment, if any, in content is needed over the next 12 months.
Historically, Primedia spent approximately $1.1 million per
quarter on content development. Finally, because the content
library has just been refreshed and updated, the Company should
not need to write down the value of its current inventory, which
would eliminate an additional $440,000 of expenses that likely
would have been recorded by Primedia;
- As a result of its acquisition of PWPL from Primedia, corporate
overhead expenses of approximately $1.9 million allocated from
Primedia to PWPL should be substantially eliminated;
- The Company has converted 29 temporary and/or contract employees
to permanent status for an annual savings of approximately $1.3
million;
- Because of the office space and administrative support that the
Company acquired as a result of its acquisition of the Business,
the Company has implemented annualized cost savings of
approximately $300,000 through the elimination of duplicate
overhead, such as office space and certain financial staff in
California;
- Other anticipated savings include:
- Annual savings of approximately $125,000 from reduced
maintenance costs related to the purchase of a new computer
system. No significant capital expenditures are planned
during the coming 12 months;
- $90,000 reduction of licensing fees paid for learning
management system;
- Bonus and legal fee accruals by PWPL that are no longer
payable of $212,000 and $100,000.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements
See Exhibit 99.1
(b) Pro Forma Financial Information
See Exhibit 99.2
(c) Exhibits
10.1 Asset Purchase Agreement dated April 1, 2005 among the Company,
PRIMEDIA Inc., a Delaware corporation, its wholly-owned entity
PRIMEDIA Digital Video Holdings LLC, a Delaware limited liability
company, and PRIMEDIA Workplace Learning LP, a Delaware limited
partnership.*
10.2 SBI Agreement dated April 1, 2005 between SBI and the Company.**
99.1 Audited consolidated financial statements of Primedia Workplace
Learning, Inc. for the fiscal years ending December 31, 2004 and
December 31, 2003.
99.2 Proforma consolidated financial statements of Trinity Learning
Corporation for the periods ending March 31, 2005 and June 30,
2004.
* Previously filed as Exhibit 10.1 to Current Report on Form 8-K
filed with the SEC on April 7, 2005.
** Previously filed as Exhibit 10.2 to Current Report on Form 8-K
filed with the SEC on April 7, 2005.
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
September 13, 2005 By: /s/ Douglas Cole
-----------------------------------
Name: Douglas Cole
Title: Chief Executive Officer
Exhibit Index
Exhibit No. Description
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10.1 Asset Purchase Agreement dated April 1, 2005 among the
Company, PRIMEDIA Inc., a Delaware corporation, its wholly-
owned entity PRIMEDIA Digital Video Holdings LLC, a Delaware
limited liability company, and PRIMEDIA Workplace Learning
LP, a Delaware limited partnership. *
10.2 SBI Agreement dated April 1, 2005 between SBI and the
Company. **
99.1 Audited consolidated financial statements of Primedia
Workplace Learning, Inc. for the fiscal years ending
December 31, 2004 and December 31, 2003.
99.2 Proforma consolidated financial statements of Trinity
Learning Corporation for the periods ending March 31, 2005
and June 30, 2004.
* Previously filed as Exhibit 10.1 to Current Report on Form
8-K filed with the SEC on April 7, 2005.
** Previously filed as Exhibit 10.2 to Current Report on
Form 8-K filed with the SEC on April 7, 2005.