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): January 2, 2008
_________________
WIDEPOINT CORPORATION
(Exact Name of Registrant as Specified in Charter)
| Delaware |
000-23967 |
52-2040275 |
| (State or Other Jurisdiction of |
(Commission File Number) |
(I.R.S. Employer |
| Incorporation) |
|
Identification No.) |
| One Lincoln Centre, Oakbrook Terrace, Illinois |
60181 |
| (Address of Principal Executive Office) |
(Zip Code) |
Registrant’s
telephone number, including area code: (630) 629-0003
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)) |
Item 1.01 Entry into a
Material Definitive Agreement.
On
January 2, 2008, WidePoint Corporation (the “Company”) entered into a Commercial
Loan Agreement with Cardinal Bank relating to a $5,000,000 revolving credit facility and a
$2,000,000 term loan. See the disclosure under Item 2.03 below for a more detailed
description of this financial transaction.
On
January 2, 2008, the Company entered into a Membership Interest Purchase Agreement with
iSYS LLC, a Virginia limited liability company (“iSYS”), and Mr. Jin Kang, the
sole owner-member of iSYS, pursuant to which the Company agreed to acquire all the issued
and outstanding membership interests of iSYS from Mr. Kang. The Company issued a press
release on January 2, 2008, announcing that the parties had entered into the Membership
Interest Purchase Agreement. See the disclosure under Item 2.01 below for a more detailed
description of this acquisition transaction. See also the press release filed herewith as
Exhibit 99.1.
Item 2.01 Completion of
Acquisition or Disposition of Assets.
On
January 4, 2008, the Company completed the closing of the acquisition of all the issued
and outstanding membership interests of iSYS from Mr. Jin Kang, the sole owner-member of
iSYS, pursuant to the terms of a Membership Interest Purchase Agreement, dated as of
January 2, 2008, between the Company, iSYS, and Jin Kang. Pursuant to the terms of the
Membership Interest Purchase Agreement, the Company paid Jin Kang the following
consideration at the closing: (i) $5,000,000 in cash, (ii) $2,000,000 principal amount in
an Installment Cash Promissory Note, which bears simple annual interest at the initial
rate of 7% through December 31, 2008, and thereafter the simple interest rate will
increase to 10% from January 1, 2009 through the date of maturity, which will be on the
earlier of either April 1, 2009 or the filing by the Company of its Annual Report on Form
10-K for the year ending December 31, 2008, and (iii) the issuance of 1,500,000 shares of
Company common stock. The Company also issued an additional 3,000,000 shares of Company
common stock in the name of Jin Kang, which shares were delivered into escrow to be held
subject to the satisfaction of certain earnout provisions under the Membership Interest
Purchase Agreement, and which shares are subject to return to the Company in the event
such earnout provisions are not achieved under the terms of the Membership Interest
Purchase Agreement. Under the terms of the Membership Interest Purchase Agreement, Jin
Kang also entered into an Employment and Non-Compete Agreement, dated as of January 4,
2008. For a full description of the terms of this acquisition transaction, see the
Membership Interest Purchase Agreement, Installment Cash Promissory Note, and Employment
and Non-Compete Agreement filed herewith as Exhibits 2.1, 10.1 and 10.2, respectively.
Item 2.03 Creation of a Direct
Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a
Registrant.
On
January 2, 2008, the Company entered into a Commercial Loan Agreement with Cardinal Bank
relating to a $5,000,000 revolving credit facility and a $2,000,000 term loan. Advances
under the revolving credit facility will bear interest at a variable rate equal to the
prime rate plus 0.25% and the repayment date for such facility is April 30, 2009. This new
revolving credit facility replaces the Company’s prior $2,000,000 revolving credit
facility with Cardinal Bank. The term loan bears interest at 7.5% annually and the
repayment date of such term loan is January 1, 2012. For a full description of the terms
of the revolving credit facility and the term loan, see the Commercial Loan Agreement,
Security Agreements, Promissory Notes, and Debt Subordination Agreement filed herewith as
Exhibits 10.3, 10.4, 10.5, 10.6, 10.7 and 10.8, respectively.
Item 3.02 Unregistered
Sales of Equity Securities.
As
indicated in Item 2.01 above, the acquisition consideration with respect to the
acquisition by the Company of all the membership interests of iSYS from Jin Kang included
the issuance of a total of 4,500,000 shares of Company common stock (the
“Shares”), of which 1,500,000 Shares were delivered to Jin Kang and with the
balance of 3,000,000 Shares being delivered into escrow pursuant to the terms of the
Membership Interest Purchase Agreement. The Shares have not been registered under the
Securities Act of 1933, as amended (the “Securities Act”). The Shares are exempt
from the registration requirements under the Securities Act pursuant to the “private
offering” exemption under Section 4(2) of the Securities Act.
Item 9.01 Financial
Statements and Exhibits
| (a) |
Financial
Statements of Businesses Acquired |
The
Company will file any financial statements required by Item 9.01(a) by amendment not later
than 71 calendar days after the date that this Current Report on Form 8-K must be filed.
| (b) |
Pro
Forma Financial Information |
The
Company will file any pro forma financial information required by Item 9.01(b) by
amendment not later than 71 calendar days after the date that this Current Report on Form
8-K must be filed.
| 2.1 |
Membership
Interest Purchase Agreement, dated as of January 2, 2008, between the Company, iSYS LLC,
and Jin Kang. |
| 10.1 |
$2,000,000
Installment Cash Promissory Note, dated January 4, 2008, issued by the Company in favor
of Jin Kang. |
| 10.2 |
Employment
and Non-Compete Agreement, dated as of January 4, 2008, between the Company, iSYS LLC and
Jin Kang. |
| 10.3 |
Commercial
Loan Agreement, dated January 2, 2008, between the Company and Cardinal Bank. |
| 10.4 |
Security
Agreement, dated January 2, 2008, between the Company and Cardinal Bank. |
| 10.5 |
$5,000,000
Promissory Note, dated January 2, 2008, issued by the Company in favor of Cardinal Bank. |
| 10.6 |
Security
Agreement, dated January 2, 2008, between the Company and Cardinal Bank. |
| 10.7 |
$2,000,000
Promissory Note, dated January 2, 2008, issued by the Company in favor of Cardinal Bank. |
| 10.8 |
Debt
Subordination Agreement, dated January 2, 2008, between the Company and Cardinal Bank. |
| 99.1 |
Press
Release, dated January 2, 2008. |
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.
|
WIDEPOINT CORPORATION |
|
/s/ James T. McCubbin |
| Date: January 8, 2008 |
James T. McCubbin |
|
Vice President and Chief Financial Officer |