Attached files
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)
December 27, 2017
LIBERATED SYNDICATION, INC.
(Exact
name of registrant as specified in its charter)
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Nevada
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333-209599
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47-5224851
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(State or other jurisdiction of incorporation)
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(Commission File Number)
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(IRS Employer Identification No.)
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5001 Baum Boulevard, Pittsburgh, PA
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15213
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(Address of principal executive offices)
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(Zip
Code)
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Registrant’s telephone number,
including area code (412)
621-0902
(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
(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))
Indicate by check mark whether the registrant is an emerging growth
company as defined in Rule 405 of the Securities Act of 1933
(§230.405 of this chapter) or Rule 12b-2 of the Securities
Exchange Act of 1934 (§240.12b-2 of this
chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange
Act. ☒
Item 1.01. Entry into Material Definitive Agreement
On December 27, 2017, Liberated Syndication, Inc. (the
“Company”) entered into and consummated a share
purchase agreement (the “Share Purchase Agreement”)
with Kevin Martin (“Seller”), pursuant to which the
Company acquired all the outstanding capital stock of pair
Networks, Inc., a Pennsylvania corporation (“pair
Networks”), in exchange for consideration of $16,063,778,
consisting of $13,563,788 in cash, $4,190,461 of which was used to
pay pair Network’s net debt and transaction expenses), and
$2,500,000 million in stock, consisting of 1,579,613 shares of the
Company’s common stock, par value $0.001 per share. The value
of the shares of the Company’s common stock issued as share
consideration was based on the average closing daily price
per share of the Company’s common stock in the OTCQB®
Venture Market for each of the 30 trading days ending on the day
immediately preceding the date of the Share Purchase Agreement.
Pursuant to the Share Purchase
Agreement, $1.0 million of the share portion of the consideration,
based on the average price, was placed into an escrow account to
serve as security for the indemnification obligations of Seller for
the benefit of the Company.
The foregoing description of the Share Purchase Agreement is
qualified in its entirety by reference to the full text of the
Share Purchase Agreement, which is incorporated herein by reference
and is filed as Exhibit 2.1 to this Form 8-K.
On December 27, 2017, the Company entered into a loan agreement
(the “Loan Agreement”) among the Company, Webmayhem,
Inc., a Pennsylvania corporation and a wholly-owned subsidiary of
the Company (“Webmayhem”), and pair Networks (pair
Networks, together with Libsyn and Webmayhem, the
“Borrowers”), and First Commonwealth Bank, a
Pennsylvania bank and trust company (the
“Bank”).
The Loan Agreement provides for: (i) a revolving credit facility
pursuant to which the Borrowers may borrow up an aggregate
principal amount not to exceed $2,000,000 (the “Revolving
Credit Facility”); and (ii) a term loan in a principal amount
equal to $8,000,000 (the “Term Loan” and, together with
the Revolving Credit Facility, the “Facility”). A
portion of the Revolving Credit Facility, up to $500,000, may be
used for standby letters of credit for the account of any of the
Borrowers.
The Term Loan is repayable in quarterly installments of $400,000
commencing on March 30, 2018 and on the last day of each June,
September, December and March thereafter, through and including
September 30, 2022. Accrued interest is payable in arrears not less
frequently than quarterly. The remaining unpaid principal balance
of the Term Loan, together with accrued interest thereon, is due
and payable in full on December 27, 2022.
The Borrowers have granted the Bank a blanket security interest in
their respective assets, and the Company has pledged the stock of
Webmayhem and pair Networks to the Bank, as security for their
obligations under the Loan Agreement.
Borrowings under the Facility are at variable rates which are, at
the borrowers’ option, tied to LIBOR (London Interbank
Offered Rate) plus an applicable rate or a prime rate. Interest
rates are subject to change based on the borrowers’ combined
cash balances. The Facility contains covenants that may have the
effect of limiting the ability of the borrowers to, among other
things, merge with or acquire other entities, enter into a
transaction resulting in a change in control, create certain new
liens, incur certain additional indebtedness, engage in certain
transactions with affiliates, engage in new lines of business or
sell a substantial part of its assets. The Facility also requires
the borrowers to maintain certain consolidated fixed charge
coverage ratios and minimum liquidity balances.
The Facility also contains customary events of default, including
(but not limited to) default in the payment of principal or,
following an applicable grace period, interest, breaches of the
Company’s covenants or warranties under the Facility, payment
default or acceleration of certain indebtedness of the Company or
any subsidiary, certain events of bankruptcy, insolvency or
liquidation involving the Company or its subsidiaries, certain
judgments or uninsured losses, changes in control and certain
liabilities related to ERISA based plans.
On December 27, 2017, the Company drew $10,000,000 under the
Facility to finance a portion of the cash consideration payable to
the Seller pursuant to the Share Purchase Agreement described under
Item 1.01 above.
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The foregoing description of the Loan Agreement is qualified in its
entirety by reference to the full text of the Loan Agreement, which
is incorporated herein by reference and is filed as Exhibit 10.1 to
this Form 8-K.
Item 2.01. Completion of Acquisition or Disposition of
Assets
As described above in Item 1.01, which information is incorporated
in this Item 2.01 by reference, on December 27, 2017, the Company
entered into the Share Purchase Agreement and acquired all the
outstanding capital stock of pair Networks.
Item 2.03. Creation of a Direct Financial Obligation or an
Obligation under an Off-Balance Sheet Arrangement of a
Registrant.
As described above in Item 1.01, which information is incorporated
in this Item 2.03 by reference, on December 27, 2017, the Company
entered into the Facility.
Item 3.02 Unregistered Sales of Equity
Securities.
As described above in Item 1.01, in connection with the Share
Purchase Agreement, the Company issued 1,579,613 shares of common
stock to Seller. The issuance of the shares was in reliance on the
exemption from registration pursuant to Section 4(a)(2) and/or Rule
506 of Regulation D of the Securities Act of 1933, as amended (the
“Securities Act”). The shares sold are subject to
transfer restrictions, and the certificates evidencing the shares
contain an appropriate legend stating that such shares have not
been registered under the Securities Act and may not be offered or
sold absent registration or pursuant to an exemption
therefrom.
Item 8.01 Other Events
On January 3, 2018, the Company issued a press release announcing
that it completed its acquisition of pair Networks. A copy of the
press release is attached hereto as Exhibit 99.1 and is
incorporated herein by reference.
Item 9.01. Financial Statements and
Exhibits .
(a)
Financial
Statements of Business Acquired.
The
Company will file the financial statements required to be filed by
this Item 9.01(a) not later than 71 days after the date on which
this Current Report on Form 8-K is required to be
filed.
(b)
Pro
Forma Financial Information.
The
Company will file the financial statements required to be filed by
this Item 9.01(b) not later than 71 days after the date on which
this Current Report on Form 8-K is required to be
filed.
(d) Exhibits
Exhibit No.
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Description
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Share Purchase Agreement, dated December 27, 2017, between
Liberated Syndication, Inc. and Kevin Martin.*
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Loan Agreement, dated December 27, 2017, among Liberated
Syndication, Inc., Webmayhem, Inc., and pair Networks, Inc. and
First Commonwealth Bank.
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Auditors Opinion and pair Networks, Inc. and Subsidiary Consolidated Financial Statements | |
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Liberated
Syndication Inc. and Subsidiaries and pair Networks
Inc. and Subsidiaries, Unaudited pro forma
combined consolidated financial information.
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Press Release dated January 3, 2018.
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*
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Schedules
and exhibits have been omitted pursuant to Item 601(b)(2) of
Regulation S-K. A copy of any omitted schedule or exhibit will be
furnished supplementally to the Securities and Exchange Commission
upon request; provided, however that Liberated Syndication, Inc.
may request confidential treatment pursuant to Rule 24b-2 of the
Securities Exchange Act of 1934, as amended, for any schedules or
exhibits so furnished.
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SIGNATURE
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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LIBERATED SYNDICATION,
INC.
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January 3,
2018
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By:
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/s/
John
Busshaus
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John
Busshaus
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Chief
Financial Officer
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LIBERATED SYNDICATION, INC.
EXHIBIT INDEX
Exhibit No.
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Description
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Share
Purchase Agreement, dated December 27, 2017, between Liberated
Syndication, Inc. and Kevin Martin.*
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Loan
Agreement, dated December 27, 2017, among Liberated Syndication,
Inc., Webmayhem, Inc., and pair Networks, Inc. and First
Commonwealth Bank.
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Auditors Opinion and pair Networks, Inc. and
Subsidiary Consolidated Financial Statements
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Liberated
Syndication Inc. and Subsidiaries and pair Networks
Inc. and Subsidiaries, Unaudited pro forma
combined consolidated financial information
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Press
Release dated January 3, 2018.
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*
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Schedules and
exhibits have been omitted pursuant to Item 601(b)(2) of Regulation
S-K. A copy of any omitted schedule or exhibit will be furnished
supplementally to the Securities and Exchange Commission upon
request; provided, however that Liberated Syndication, Inc. may
request confidential treatment pursuant to Rule 24b-2 of the
Securities Exchange Act of 1934, as amended, for any schedules or
exhibits so furnished.
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