0001078782-13-002083.txt : 20131023 0001078782-13-002083.hdr.sgml : 20131023 20131023164335 ACCESSION NUMBER: 0001078782-13-002083 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20131017 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Completion of Acquisition or Disposition of Assets ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20131023 DATE AS OF CHANGE: 20131023 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SOFTECH INC CENTRAL INDEX KEY: 0000354260 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [7373] IRS NUMBER: 042453033 STATE OF INCORPORATION: MA FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-10665 FILM NUMBER: 131166110 BUSINESS ADDRESS: STREET 1: 59 LOWES WAY, SUITE 401 CITY: LOWELL STATE: MA ZIP: 01851 BUSINESS PHONE: 978-513-2700 MAIL ADDRESS: STREET 1: 59 LOWES WAY, SUITE 401 CITY: LOWELL STATE: MA ZIP: 01851 8-K 1 f8k102313_8k.htm CURRENT REPORT ON FORM 8-K Current Report on Form 8-K

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): October 17, 2013



SOFTECH, INC.

(Exact name of the Registrant as specified in its charter)



Massachusetts

0-10665

04-2453033

(State or other jurisdiction

of incorporation)

(Commission

File Number)

(I.R.S Employer

Identification No.)



59 Lowes Way, Suite 401, Lowell, MA 01851

(Address of principal executive offices and zip code)



Telephone (978) 513-2700

(Registrant’s telephone number, including area code)



Not Applicable

(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:


      . 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 October 17, 2013, SofTech, Inc. (the “Company”) entered into an agreement with Prides Crossing Capital L.P. and Prides Crossing Capital – A, L.P., its lenders (the “Lenders”), wherein the Lenders consented to the CADRA Sale, as described below, and released all liens and security interests in the CADRA assets. In exchange, the Company deposited $1.35 million of the proceeds from the CADRA Sale in a restricted account for the benefit of the Lenders, pending an agreement by the Company and the Lenders to an amendment to the existing $2.7 million Loan Agreement (“Loan Agreement”) within 30 days of the closing of the CADRA Sale.


The Company exceeded the maximum ratio of debt to earnings before interest, taxes, depreciation and amortization expense for the trailing twelve months ended August 31, 2013, an event of default under the Loan Agreement. The Lenders agreed to a limited conditional waiver of the aforementioned event of default while the parties negotiate an amendment to the Loan Agreement. If the parties are unable to agree to the amended terms of the Loan Agreement during the 30 day period following the CADRA Sale, all of the indebtedness currently outstanding under the Loan Agreement may become immediately due and payable at the discretion of the Lenders.


Item 2.01

Completion of Disposition of Assets.


On October 18, 2013, the Company completed the previously announced sale of substantially all of the assets of its CADRA product line, including all intellectual property related to that technology but specifically excluding cash, billed accounts receivable and liabilities other than the deferred maintenance liability associated with CADRA customer maintenance contracts for support services, to Mentor Graphics Corporation (the “CADRA Sale”), pursuant to an Asset Purchase Agreement dated August 30, 2013 (the “Asset Purchase Agreement”).  The aggregate consideration for the CADRA Sale is up to $3.95 million, which is comprised of (i) $3.2 million, $2.88 million of which was paid on the closing date and $320 thousand (representing a 10% holdback) of which will be paid on the one year anniversary of the closing date (subject to any indemnification claims), and (ii) earn-out payments of up to an aggregate $750 thousand over the three-year period subsequent to the closing date, based on 10% of the net revenue generated by the CADRA business, subject to the terms of the Earn-Out Agreement dated August 30, 2013 (the “Earn-Out Agreement”).  


The foregoing description of the CADRA Sale is qualified in its entirety by reference to (i) the Asset Purchase Agreement and the Earn-Out Agreement, copies of which were filed as Exhibits 2.1 and 2.2, respectively, to the Company’s Form 8-K as filed with the Securities and Exchange Commission (the “SEC”) on September 6, 2013, and (ii) the Company’s Definitive Proxy Statement relating to the CADRA Sale as filed with the SEC on September 30, 2013, each of which is incorporated herein by reference.


A copy of the press release announcing the completion of the CADRA Sale is attached hereto as Exhibit 99.1 and is incorporated into this report by reference.


Item 9.01.          Financial Statements and Exhibits.


(b)       Pro forma financial information.


The unaudited pro forma consolidated condensed financial statements required pursuant to Rule 8-05 of Regulation S-X were previously included in Annex D to the Company’s Definitive Proxy Statement filed with the SEC on September 30, 2013, and pursuant to General Instruction B3 of Form 8-K, are hereby incorporated by reference and not additionally reported herein.


 (d) Exhibits


99.1     Press Release issued October 23, 2013.







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.



SOFTECH, INC.


Date: October 23, 2013


By: /s/ Joseph P. Mullaney

Joseph P. Mullaney

President & Chief Executive Officer








Exhibit Index


 

 

Exhibit No.

Description of Document

 

 

99.1

Press Release issued October 23, 2013

 

 

 

 

 

 







 EX-99.1 2 f8k102313_ex99z1.htm EXHIBIT 99.1 PRESS RELEASE Exhibit 99.1 Press Release

Exhibit 99.1


SofTech Completes Sale of its CADRA Product Line


LOWELL, Mass. – October 23, 2013 – SofTech, Inc. (OTCQB: SOFT), a proven provider of Product Lifecycle Management (PLM) solutions today announced that it has completed the previously announced sale of substantially all of the assets of its CADRA product line pursuant to an Asset Purchase Agreement dated August 30, 2013. The transaction included all intellectual property related to the CADRA technology but specifically excluded cash, billed accounts receivable and liabilities other than the deferred maintenance liability associated with CADRA customer maintenance contracts for support services (the “CADRA Sale”).


The aggregate consideration for the CADRA Sale is up to $3.95 million, which is comprised of (i) $3.2 million, $2.88 million of which was paid on the closing date and $320 thousand (representing a 10% holdback) of which will be paid on the one year anniversary of the closing date (subject to any indemnification claims), and (ii) earn-out payments of up to an aggregate $750 thousand over the three-year period subsequent to the closing date, based on 10% of the net revenue generated by the CADRA business, subject to the terms of the Earn-Out Agreement dated August 30, 2013.  


In addition, SofTech entered into an agreement on October 17, 2013 with Prides Crossing Capital L.P. and Prides Crossing Capital – A, L.P., its lenders (the “Lenders”). In exchange for consenting to the CADRA Sale and releasing its security interest in the CADRA assets, $1.35 million of the CADRA Sale proceeds will be held in escrow for 30 days by the Lenders while the parties negotiate an amendment to the existing $2.7 million loan agreement (“Loan Agreement”). SofTech exceeded the maximum ratio of debt to earnings before interest, taxes, depreciation and amortization expense for the trailing twelve months ended August 31, 2013, an event of default under the Loan Agreement. The Lenders agreed to a limited conditional waiver of the aforementioned event of default while the parties negotiate an amendment to the Loan Agreement. In the event whereby such an agreement cannot be reached, the Lenders may require full repayment of the outstanding debt.

 

“For the first time since 1998, the Company’s cash position exceeds its outstanding bank debt,” said Joe Mullaney, SofTech’s CEO. “Our significantly improved financial position will allow us to pursue additional initiatives to increase shareholder value. The proxy statement filed with the SEC seeking shareholder approval for the CADRA Sale details these initiatives and we are very excited about our prospects for profitable revenue growth in the future,” he added.


About SofTech


SofTech, Inc. (OTCQB: SOFT) is a proven provider of product lifecycle management (PLM) solutions, including its ProductCenter® PLM solution.


SofTech’s solutions accelerate productivity and profitability by fostering innovation, extended enterprise collaboration, product quality improvements, and compressed time-to-market cycles. SofTech excels in its sensible approach to delivering enterprise PLM solutions, with comprehensive out-of-the-box capabilities, to meet the needs of manufacturers of all sizes quickly and cost-effectively.


SofTech and ProductCenter are registered trademarks of SofTech, Inc. All other products or company references are the property of their respective holders.


Forward Looking Statements


This press release contains forward-looking statements relating to, among other matters, our outlook for fiscal year 2014 and beyond. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “could,” “would,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “projects,” “predicts,” “potential” and similar expressions intended to identify forward-looking statements.  These forward-looking statements are based on estimates, projections, beliefs, and assumptions and are not guarantees of future events or results.  Actual future events and results could differ materially from the events and results indicated in these statements as a result of many factors, including, among others,  (1) generate sufficient cash flow from our operations or other sources to fund our working capital needs and growth initiatives; (2) maintain good relationships with our lenders; (3) comply with the covenant requirements of the loan agreement; (4) successfully introduce and attain market acceptance of any new products and/or enhancements of existing products; (5) attract and retain qualified personnel; (6) prevent obsolescence of our technologies; (7) maintain agreements with our critical software vendors; (8) secure renewals of existing software maintenance contracts, as well as contracts with new maintenance customers; (9) secure new business, both from existing and new customers; and (10) the success of future initiatives in increasing shareholder value.




These and other additional factors that may cause actual future events and results to differ materially from the events and results indicated in the forward-looking statements above are set forth more fully under “Risk Factors” in the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended August 31, 2013.  The Company undertakes no obligation to update these forward-looking statements to reflect actual results, changes in assumptions or changes in other factors that may affect such forward-looking statements.


CONTACT:


Joseph P. Mullaney

President & Chief Executive Officer

SofTech, Inc.

(978) 513-2700