CURRENT REPORT FOR
ISSUERS SUBJECT TO THE
1934 ACT REPORTING
REQUIREMENTS
FORM 8-K
CURRENT REPORT
Pursuant to Section 13
or 15(d) of the
Securities Exchange
Act of 1934
|
| September 30, 2004 |
Date of Report
(Date of Earliest Event Reported) |
|
WIDEPOINT CORPORATION
|
| (Exact name of registrant as specified in its charter) |
|
|
|
Delaware
|
000-23967
|
52-2040275
|
(State or Other Jurisdiction
of Incorporation) |
(Commission File Number) |
(I.R.S. Employer
Identification No.) |
|
One Lincoln Centre, Oakbrook Terrace, Illinois 60181
|
| (Address of principal executive offices, including zip code) |
|
630-629-0003
|
| (Registrant’s telephone number, including area code) |
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 240.13d-4(c)) |
Item 1.01 Entry into a
Material Definitive Agreement; Item 2.01 Completion of Acquisition or Disposition ofAssets; Item 3.02 Unregistered Sale of Equity Securities
On October 25, 2004, Widepoint
Corporation completed the acquisition of Operational Research Consultants, Inc., a
privately held information technology and engineering firm providing mission-critical
sensitive and strategic information security solutions to the United States Government. To
finance the acquisition, the Company completed a convertible preferred financing with
Barron Partners, LP, an accredited investor, and utilized a line of credit which Widepoint
maintains with RBC-Centura. We entered into a Stock Purchase Agreement with ORC and its
stockholders to effectuate the acquisition, and entered into a Preferred Stock Purchase
Agreement and a Registration Rights Agreement with Barron in connection with the
financing.
ORC specializes in IT integration and
secure authentication processes and software, providing services to the Department of
Defense, General Services Administration, and associated Federal Agencies and trading
partners. ORC was at the forefront of implementing Public Key Infrastructure technologies.
Therefore, ORC maintains secure facilities and is currently the only commercial credential
service provider (at Assurance Levels 1, 2, 3 and 4) to the Federal Government,
contractors to the Department of Defense and the United States Government, and individuals
transacting electronic business with or for the United States Government. Secure
authentication is a key element to the success of many secured integration e-Government
initiatives emerging in the government sector.
ORC is currently the only External
Certificate Authority for the United States Government. As such, it is authorized to issue
all permissible certificate types and services in accordance with Defense Information
Systems Agency and National Security Agency standards, necessary for the interoperable,
secure exchange of information between U.S. Governmental agencies, contractors, and
international allies such as members of NATO. The Federal market for secured
authentication software and e-Government IT initiatives collectively represent major
growth markets — within which ORC is prominently positioned.
Pursuant to the Stock Purchase
Agreement between Widepoint, ORC and the stockholders of ORC, we agreed to purchase and
acquire all of ORC’s outstanding common stock from the ORC stockholders. In
consideration for the ORC stock, we will pay the shareholders of ORC an aggregate of
$5,000,000 payable in a combination of cash, promissory note and Widepoint common stock,
less a receivables holdback. The receivables holdback will be held in escrow and released
at certain milestone dates, over a three year period pursuant to a formula negotiated
between the parties.
The aggregate consideration to be
paid by Widepoint to the ORC shareholders shall be adjusted in the event that ORC’s
2004 revenue is less than $8,000,000 and for any set-offs, recoupments and/or payments of
losses. The agreement also provides a clawback provision in the event that the losses or
indemnity amounts exceed the receivables holdback.
The convertible preferred financing
with Barron was for $2,000,000, under a Preferred Stock Purchase Agreement and related
agreements. Net proceeds from the offering after estimated costs and expenses, including
fees of finders and agents, were approximately $1,800,000. The Company issued 1,142,857
shares of Series A Preferred Stock of Widepoint. The Series A Preferred Stock is
convertible into an aggregate of 11,428,570 shares of common stock of Widepoint at a
conversion rate equal to $0.175 per share. In addition, Widepoint issued to Barron
warrants to purchase up to an additional 5,714,286 shares of common stock of Widepoint at
an exercise price of $0.40 per common share. The shares of Widepoint common stock which
may be acquired by Barron upon its conversion of its Series A Preferred Stock and/or the
exercise of its warrant are subject to limitations which restrict the ability of Barron
and its affiliates to acquire shares as a result of which Barron owns more than a total
of 4.99% of the outstanding shares of Widepoint common stock at any time, which
restriction may be removed upon 61 days notice to the Company by Barron, but in the event
Barron elects to remove such restriction, then Barron and its affiliates can only vote 75%
of the shares of Widepoint common stock held by Barron and its affiliates.
Under a related Registration Rights
Agreement between Barron and the Company, we are obligated to file a registration
statement within 60 days of the closing covering the resale of the shares of Widepoint
common stock issuable upon conversion and/or exercise of the Series A Preferred Stock and
the warrant issued to Barron. We have agreed to use our best efforts to cause the
Registration Statement to be declared effective by the SEC within 120 days of the closing
date. If our registration statement is not declared effective by the SEC in the period
from 180 days following the closing date through two years following the date thereof,
subject to permissible blackout periods and registration maintenance periods, then in such
events we will be required to pay Barron penalties a one-time payment, as liquidated
damages, in the amount of $100,000.
2
The private equity financing
described herein was made pursuant to the exemption from the registration provisions of
the Securities Act of 1933, as amended, provided by Section 4(2) of the Act and Rule 506
of Regulation D promulgated thereunder. The securities issued have not been registered
under the Act and may not be offered or sold in the United States absent registration or
an applicable exemption from registration requirements.
Item 9.01: Financial
Statements and Exhibits
| |
(a) |
Financial
Statements of Business Acquired. |
| |
WidePoint
intends to file the financial statements under cover of Form 8-K/A no later than 71
calendar days after this report is filed. |
| |
(b) |
Pro
Forma Financial Information. |
| |
WidePoint
intends to file the pro forma financial information under cover of Form 8-K/A no later
than 71 calendar days after this report is filed. |
| |
10.1 |
Preferred
Stock Purchase Agreement Between WidePoint Corporation and Barron
Partners LP* |
| |
10.2 |
Common
Stock Purchase Warrant between WidePoint Corporation and Barron Partners LP* |
| |
10.3 |
Registration
Rights Agreement between WidePoint Corporation and Barron Partners LP* |
| |
10.4 |
Certificate
Of Designations, Rights And Preferences Of The Series A
Convertible Preferred Stock between WidePoint Corporation and Barron
Partners LP* |
| |
10.5 |
Stock
Purchase Agreement between WidePoint Corporation, Operational Research Consultants, Inc.* |
| |
* |
Exhibits
to be filed by amendment. |
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
|
|
| By: |
/s/ Steve Komar
|
|
|
Steve Komar
President and Chief Executive Officer |
|
Dated: October 29, 2004
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