Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities and Exchange Act
of 1934
Date of
Report (Date of earliest reported): February 28, 2017
BREKFORD CORPORATION
(Exact
name of registrant as specified in charter)
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Delaware
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000-52719
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20-4086662
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(State
or Other Jurisdiction of Incorporation or
Organization)
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(Commission
File Number)
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(IRS
Employer Identification No.)
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7020
Dorsey Road
Hanover,
Maryland 21076
(Address
of principal executive offices) (Zip Code)
Registrant's
telephone number, including area code: (443) 557-0200
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))
As
previously reported on a Current Report on Form 8-K that was filed
with the Securities and Exchange Commission, on February 7, 2017,
Brekford Corporation (the “Company”) entered into a
Contribution and Unit Purchase Agreement (the
“Agreement”) with LB&B Associates Inc. (the
“Purchaser”) and Global Public Safety, LLC
(“GPS”).
The
closing for the transaction set forth in the Agreement occurred on
February 28, 2017 (the “Closing”) and on such date the
Company contributed substantially all of the assets and certain
liabilities related to its vehicle services business (the
“Business”) to GPS. After the Closing, Brekford will
continue to own and run other business operations that are not
related to the Business.
On the
Closing, GPS sold units representing 80.1% of the units of GPS to
the Purchaser for $6,048,394, after certain purchase price
adjustments of prepaid expenses and unbilled customer deposits.
$4,048,394 was paid in cash, including a $250,000 deposit that was
paid on February 6, 2017, and $2,000,000 was paid by Purchaser
issuing the Company a promissory note (the “Promissory
Note”). After the Closing, Brekford continues to own 19.9% of
the units of GPS.
The
Promissory Note is subordinated to the Purchaser’s senior
lender and accrues interest at a rate of 3% per annum. The maturity
date of the Promissory Note is March 31, 2022. The Promissory Note
is to be repaid as follows: (a) $75,000 plus all accrued interest
on each of September 30, 2017; December 31, 2017; March 31, 2018,
June 30, 2018 and September 30, 2018 (or, in the event any such
date is not a business day, the first business day after such
date), (b) $100,000 plus all accrued interest on each of December
31, 2018; March 31, 2019; June 30, 2019 and September 30, 2019 (or,
in the event any such date is not a business day, the first
business day after such date) (c) $125,000 plus all accrued
interest on each of December 31, 2019; March 31, 2020; June 30,
2020; September 30, 2020, December 31, 2020; March 31, 2021, June
31, 2021; September 30, 2021; and December 31, 2021 (or, in the
event any such date is not a business day, the first business day
after such date), and (d) $100,000 on March 31, 2022.
The
Promissory Note is secured pursuant to the terms of a Pledge
Agreement (the “Pledge Agreement”) between the Company
and Purchaser. Pursuant to the Pledge Agreement the Purchaser
granted the Company a continuing second priority lien and security
interest in the Purchaser’s units of GPS subject to liens of
the Purchaser’s senior lender.
Pursuant to the
Agreement, the Company and GPS executed a Transition Services
Agreement (the “Transition Services Agreement”).
Pursuant to the Transition Services Agreement, the Company will
perform certain support services to promote the efficient
transition of the Business for the fees set forth in the
Agreement.
In
connection with the Agreement the Company entered into an Amended
and Restated Limited Liability Company Agreement of Global Public
Safety, LLC (the “LLC Agreement”). The LLC Agreement
provides for the operations of GPS and provides that all limited
liability company powers of the Company shall be exercised by and
under the authority of the Board of Representatives except as
otherwise provided by the LLC Agreement or applicable law. The
initial number of representatives constituting the Board of
Representatives is three, of which the Company appointed one member
and if the number of Board of Representatives is increased the
Company shall be able to appoint the number of members required to
maintain 1/3 of the seats on the Board of
Representatives.
Pursuant to a
month-to-month sublease agreement between GPS and the Company, the
Company will continue to occupy 3,362 square feet of office space,
located at 7020 Dorsey Road, Suite C, Hanover, Maryland
21076.
The
Company also entered into a Pre-Novation Agreement with GPS
pursuant to which performance under certain contracts being
assigned to GPS will be made while these contracts are being
assigned to GPS. The Company will also enter into a Novation
Agreement pursuant to which the government contracts being assigned
to GPS will be transferred.
The
foregoing information is a summary of the agreements described
above, is not complete, and is qualified in its entirety by
reference to the full text of the Agreement and the other
agreements attached as exhibits to this Current Report on Form
8-K. Readers should review the Agreement for a complete
understanding of the terms and conditions associated with this
transaction.
Item 8.01 Other Events
On
March 1, 2017, Brekford Corporation (the “Company”)
issued the press release annexed hereto as Exhibit
99.1.
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Item 9.01. Financial Statements and Exhibits.
(d)
Exhibits. The following exhibits are filed with this
report:
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Exhibit No.
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Description of Exhibit
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10.1
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Contribution
and Unit Purchase Agreement (incorporated by reference to the
Current Report on Form 8-K filed with the Securities and Exchange
Commission on February 7, 2017.)
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Subordinated
Promissory Note issued to Brekford Corp.
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Pledge
Agreement by LB&B Associates Inc. in favor of Brekford
Corp.
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Transition
Services Agreement between Brekford Corp. and Global Public Safety,
LLC
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Sublease
Agreement between Global Public Safety, LLC and Brekford
Corp.
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Amended
and Restated Limited Liability Company Agreement.
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Press
release, dated March 1, 2017
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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.
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BREKFORD CORPORATION
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Date:
March 6, 2017
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By:
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/s/
Rodney Hillman
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Name
Rodney Hillman
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Title
President and Chief Operating Officer
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