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
18, 2018
PROBILITY MEDIA CORPORATION
(Exact name of registrant as specified in its
charter)
Nevada
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000-55074
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33-1221758
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(State or other jurisdiction
of incorporation)
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(Commission File Number)
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(I.R.S. Employer
Identification No.)
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1517 San Jacinto Street, Houston, Texas
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77002
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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:
(713) 856-7022
(Former name if changed since last report)
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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:
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicated 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.
☐
CURRENT REPORT ON FORM 8-K
ProBility Media Corporation
January 18, 2018
Item 1.01.
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Entry into a Material Definitive Agreement.
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Item 2.01.
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Completion of Acquisition or Disposition of Assets.
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Item 2.03
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Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
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Item 3.02.
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Unregistered Sales of Equity Securities.
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Acquisition of North American Crane Bureau Group, Inc.
On January 30, 2018,
ProBility Media Corporation (“ProBility Media”) completed the purchase of all of the outstanding shares of common stock
of North American Crane Bureau Group, Inc., a provider of crane operator training, certification and inspection (“NACB Group”),
pursuant to the terms of a Stock Purchase Agreement, dated as of January 18, 2018 (effective as of November 1, 2017), by and among
ProBility Media, NACB Group and the stockholders of NACB Group (the “NACB Stock Purchase Agreement”).
The aggregate consideration
at closing for the acquisition of NACB Group consisted of (a) a cash payment of $500,000 and (b) the issuance of a promissory note
in the principal amount of $250,000, payable in two equal installments of $125,000 on the first and second anniversaries of the
closing date. The note bears interest at the rate of 1.68% per year, is not convertible into ProBility Media shares and is secured
by a pledge of the NACB shares acquired by ProBility Media in the transaction. Payments under the note may be withheld to satisfy
indemnifiable claims made by ProBility Media with respect to any misrepresentations or breaches of warranty under the NACB Stock
Purchase Agreement by NACB Group or the stockholders of NACB Group within two years after the closing of the acquisition. As part
of the acquisition, ProBility Media also assumed NACB Group’s loan from BankUnited, N.A. in the approximate amount of $120,000
and note to a former stockholder of NACB Group in the approximate amount of $110,000.
At the closing of the
acquisition, ProBility Media entered into a three-year Consulting Agreement with Ted L. Blanton Sr., the former principal owner
and Chief Executive Officer of NACB Group. Mr. Blanton will continue to be the President of the NACB Group subsidiary of ProBility
Media. Under the terms of the Consulting Agreement, ProBility agreed to pay Mr. Blanton a consulting fee of $100,000 per year and
issue to him shares of ProBility common stock valued at $750,000 (using the common stock price of $0.50 per share), payable in
three equal installments of 500,000 shares on each of the closing date, 18 months after the closing date and 36 months after the
closing date. The shares of ProBility Media issued to Mr. Blanton are subject to a lock-up agreement pursuant to which he may not
sell or otherwise transfer the shares for one year following the respective share issuance date and is limited during the second
year to a monthly sale amount equal to 10% of the daily volume from the prior month. The Consulting Agreement also contains covenants
restricting Mr. Blanton from engaging in any activities competitive with ProBility Media or NACB Group during the term of such
agreement, and prohibiting him from disclosure of confidential information regarding either company at any time.
Based in Lake Mary,
Florida, NACB Group’s mission is to provide the most comprehensive safety training courses, materials and certifications
for operators, inspectors and trainers within the crane and lifting industries both in the United States and around the world.
NACB Group is a partner with the National Center for Construction Education & Research (NCCER) in the development of its original
mobile crane operations curricula and most recently in the development of its nationally accredited crane operator certification
program. NACB Group is an accredited training sponsor (ATS) and an accredited assessment center (AAC), offering a variety of programs
and assessments under the auspices and guidance of NCCER, and the entire technical staff are NCCER master trainers.
NACB offers a multitude
of training services and coursework for heavy equipment operators and offers sophisticated simulation technology for mobile, overhead
bridge and tower crane training. NACB Interactive Educational Systems, Inc. (NACB-IES) has designed “The Dominator”
series of crane training simulators. In a safe, controlled virtual environment, operators can develop, test and refresh their abilities
on a variety tasks and skills necessary to safely operate a crane in today's work environment. NACB Group’s Mobile Crane
Telescopic Boom Simulator, Overhead Bridge Crane Simulator, Hammerhead Tower Crane Simulator, Personal Desktop Simulators and the
Mobile Crane Lattice Boom Simulator are the latest technology in simulation training for NACB-IES.
The purchase price
was determined as a result of arm’s-length negotiations between the parties. The foregoing description of the acquisition
does not purport to be complete and is qualified in its entirety by reference to the full text of the NACB Stock Purchase Agreement,
Promissory Note and Pledge Agreement, and Consulting Agreement, copies of which are attached hereto as Exhibits 2.1, 10.1 and 10.2,
respectively, and are incorporated herein in their entirety by reference.
The cash portion of
the acquisition was funded from the net proceeds of the second closing of ProBility Media’s November 2017 private placement.
See “Second Closing and Amendment to Securities Purchase Agreement” below.
ProBility Media had
no previous relationship or association with NACB Group. There are presently no significant changes anticipated in the business
or product lines of either ProBility Media or NACB Group.
The securities to be
offered in connection with the acquisition have not been registered under the Securities Act of 1933, as amended, and may not be
offered or sold in the United States absent registration or an applicable exemption from registration requirements.
Acquisition of Disco Learning Media, Inc.
Separately, on January
30, 2018, ProBility Media completed the purchase of all of the outstanding shares of common stock of Disco Learning Media, Inc.,
a technology company offering immersive technologies, digital learning and compliance solutions for the education and training
markets (“Disco Learning”), pursuant to the terms of a Stock Purchase Agreement, dated as of January 18, 2018 (effective
as of January 1, 2018), by and among ProBility Media, Disco Learning and the stockholders of Disco Learning (the “Disco Stock
Purchase Agreement”).
The aggregate consideration
for the acquisition of Disco Learning consisted of (a) a cash payment of $100,000 at closing, and (b) the issuance of $350,000
in the form of shares of ProBility Media common stock in two tranches of $50,000 in shares at closing and $300,000 in shares on
the date that is six months following the closing date, in each case valuing the shares based on the three trading day average
closing price per share prior to the applicable payment date (but not at a price of more than $0.50 per share).
Additionally, ProBility
Media agreed to make three contingent earn-out payments to the stockholders of Disco Learning, subject to the continued employment
of at least one of the principal stockholders. For the year ending December 31, 2018, for achieving stand-alone Disco Learning
revenue in excess of $900,000, ProBility Media agreed to deliver to the stockholders an amount equal to $350,000, payable all in
the form of shares of ProBility Media common stock. For the year ending December 31, 2018, for achieving (A) stand-alone Disco
Learning revenue in excess of $900,000, ProBility Media agreed to deliver to the stockholders an amount equal to $100,000, or (B)
Disco Learning revenue in excess of $1,200,000, ProBility Media agreed to deliver to the stockholders an amount equal to $200,000,
in each case payable 25% of such amount in the form of cash and the remaining 75% of such amount in the form of shares of ProBility
Media common stock. For the year ending December 31, 2019, for achieving (A) stand-alone Disco Learning revenue in excess of $1,800,000,
ProBility Media agreed to deliver to the stockholders an amount equal to $100,000, or (B) Disco Learning revenue in excess of $2,400,000,
ProBility Media agreed to deliver to the stockholders an amount equal to $200,000, in each case payable 25% of such amount in the
form of cash and the remaining 75% of such amount in the form of shares of ProBility Media common stock. Payment in the form of
shares of ProBility Media common stock will be based on the three trading day average closing price per share of the ProBility
Media common stock prior to the applicable payment date, as reported by the OTCQB Venture Market or the primary stock market on
which the ProBility Media common stock is then traded.
At the closing
of the acquisition, ProBility Media entered into an Employment Agreement with each of Juan Garcia and Coleman Tharpe, former executive
officers and principal stockholders of Disco Learning, for a three-year term commencing as of January 30, 2018. Pursuant to the
Employment Agreements, Messrs. Garcia and Harris have agreed to devote their time to the business of ProBility Media as the President
and the Director of Digital Training and Development of the Disco Learning subsidiary, respectively. The Employment Agreements
provide that Messrs. Garcia and Tharpe are entitled to receive a salary of $125,550 and $100,200, respectively. The Employment
Agreements provide for termination by ProBility Media upon death or disability (as defined therein) or for Cause (as defined therein).
The Employment Agreements contain covenants (i) restricting the executive from engaging in any activities competitive with the
business of ProBility Media or Disco Learning during the term of the agreement and for a period of one year thereafter, and from
soliciting ProBility Media’s or Disco Learning’s employees, customers and prospective customers for a period of one
year after the termination of the agreement, and (ii) prohibiting the executive from disclosing confidential information regarding
ProBility Media or Disco Learning.
Founded in 2014 and
based in Austin, Texas, Disco Learning has been executing on a vision to create a fundamental shift in learning by offering interactive
educational content. Disco Learning pioneered app-based textbooks, known as “course apps,” for higher education. The
team’s approach can be used in a variety of educational programs beyond the classroom, including employee training, professional
development and customer education.
Disco Learning has
also developed Energy 101, the world’s first course app, which integrates the best features of an eBook with interactive
learning experiences including interactive data, games, quizzes and videos. A sampling of Disco Learning’s other accomplishments
includes (a) developing and managing a corporate social responsibility program for Itron, a world-leading energy services and technology
company, that explores conservation, sustainability, and the deep connection between energy and water resources, and (b) evolving
and deploying Top Energy Training and the TOPCORP program, commissioned by a consortium of the University of Texas at Austin, the
Pennsylvania State University and Colorado School of Mines, to inspectors, regulators and other stakeholders in the oil and gas
sector.
The purchase price
was determined as a result of arm’s-length negotiations between the parties. The foregoing description of the acquisition
does not purport to be complete and is qualified in its entirety by reference to the full text of the Disco Stock Purchase Agreement
and each Employment Agreement, copies of which are attached hereto as Exhibits 2.2, 10.3 and 10.4, respectively, and are incorporated
herein in their entirety by reference.
The cash portion of
the acquisition was funded from the net proceeds of the second closing of ProBility Media’s November 2017 private placement.
See “Second Closing and Amendment to Securities Purchase Agreement” below.
ProBility Media had
no previous relationship or association with Disco Learning. There are presently no significant changes anticipated in the business
or product lines of either ProBility Media or Disco Learning.
The securities to be
offered in connection with the acquisition have not been registered under the Securities Act of 1933, as amended, and may not be
offered or sold in the United States absent registration or an applicable exemption from registration requirements.
Second Closing and Amendment to Securities
Purchase Agreement
On January 29, 2018,
pursuant to the Securities Purchase Agreement, dated as of November 3, 2017, with several institutional accredited investors, ProBility
Media completed the second closing of its private placement of original issue discount amortizable promissory notes (referred to
as the notes) in the aggregate principal amount of $1,166,725, upon the satisfaction of certain closing conditions including the
entry into definitive documents to effect the consummation of the NACB Group and Disco Learning acquisition transactions described
above. Each note was issued at a price equal to 85% of its principal amount, or $1,000,000 in aggregate purchase price.
As part of the second
closing, ProBility Media, the original investors and one new investor entered into Amendment No. 1 to the Securities Purchase Agreement,
dated as of January 19, 2018, to provide for the addition of a new investor, clarify the use of proceeds from the second closing,
increase the number of “commitment shares” to be issued at the second closing and decrease the exercise price of the
warrants to be issued at the second closing, as discussed below.
ProBility Media issued
to the investors at the second closing three-year common stock purchase warrants (referred to as the warrants) to purchase up to
3,333,500 shares of ProBility Media common stock at an exercise price of $0.175 per share (compared to a warrant exercise price
of $0.45 per share at the first closing), and issued 941,851 shares of ProBility Media common stock to the investors at the second
closing as “commitment shares” in consideration for entering into the private placement, as required by Amendment No.
1 to the Securities Purchase Agreement.
ProBility Media used
the net proceeds from the second closing of the private placement primarily to fund the closing of the NACB Group and Disco Learning
acquisition transactions.
The second closing
of the financing transaction was completed through a private placement to unaffiliated institutional accredited investors and was
exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended.
RK Equity Capital
Markets LLC acted as the placement agent for the private placement. At the second closing, ProBility Media paid a cash placement
fee of $70,000 to RK Equity for acting in this capacity and issued a warrant to RK Equity to purchase 400,000 shares of ProBility
Media common stock on the same terms given to the investors.
The securities offered
in the private placement have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold
in the United States absent registration or an applicable exemption from registration requirements. This current report shall not
constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state
in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws
of any such state.
The Securities Purchase
Agreement, the form of note and form of warrant were filed as exhibits to ProBility Media’s Current Report on Form 8-K filed
on November 13, 2017 with the SEC. The foregoing summary of Amendment No. 1 to the Securities Purchase Agreement is qualified in
its entirety by reference to the full text of such document, a copy of which is attached hereto as Exhibit 10.5 and is incorporated
herein in its entirety by reference.
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Item 9.01.
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Financial Statements and Exhibits.
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(a)
Financial Statements of Businesses Acquired
. In accordance with Item 9.01(a), the financial statements of NACB Group, Inc.
shall be provided not later than April 5, 2018. The financial statements of Disco Learning do not meet the requisite significance
levels, as defined under Item 8-04 of Regulation S-X.
(b)
Pro Forma Financial Information
. In accordance with Item 9.01(b), the pro forma financial information for NACB Group shall
be provided not later than April 5, 2018. The pro forma financial information for Disco Learning does not meet the requisite significance
levels, as defined under Item 8-05 of Regulation S-X.
(d)
Exhibits
. The exhibits listed in the following Exhibit Index are filed as part of this current report.
Exhibit No.
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Description
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2.1
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Stock Purchase Agreement, dated as of January 18, 2018 (effective as of November 1, 2017), by and among ProBility Media Corporation, North American Crane Bureau Group, Inc. and the Stockholders of North American Crane Bureau Group, Inc.
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2.2
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Stock Purchase Agreement, dated as of January 18, 2018 (effective as of January 1, 2018), by and among ProBility Media Corporation, North American Crane Bureau Group, Inc. and the Stockholders of North American Crane Bureau Group, Inc.
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10.1
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Promissory Note and Pledge Agreement, dated January 18, 2018, made by ProBility Media Corporation to Ted L. Blanton Sr., as Stockholders’ Agent, on behalf of the Stockholders of North American Crane Bureau Group, Inc.
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10.2
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Consulting Agreement, dated January 18, 2018, between ProBility Media Corporation and Ted L. Blanton, Sr.
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10.3
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Employment Agreement, dated as of January 18, 2018, between ProBility Media Corporation and Juan Garcia.
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10.4
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Employment Agreement, dated as of January 18, 2018, between ProBility Media Corporation and Coleman Tharpe.
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10.5
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Amendment No. 1 to Securities Purchase Agreement, dated as of January 19, 2018, by and among ProBility Media Corporation, the original investors listed on the Schedule of Buyers attached thereto and the new buyer.
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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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PROBILITY MEDIA CORPORATION
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Date: February 5, 2018
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By:
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/s/ Evan M. Levine
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Evan M. Levine
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Chairman and Chief Executive Officer
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